Forum Blog

Winning the VC Fundraising Game

Alexis Clarfield-Henry
May 17, 2018

The day after closing a multi-million dollar seed round, sales specialist and Bravado CEO Sahil Mansuri visited Forum Ventures’s San Francisco office to chat about his experiences securing investors. His preface did not beat around the bush: “I’m going to be super blunt and direct. I literally just went through the humbling process of fundraising. I know how hard it is and my advice is meant to be as real as possible.”

Instead of prepared slides, Sahil sat with us and shared his off-script experiences from the front lines of fundraising. “Being great at getting funded is nothing like being great at running a business”, he shared. “If being great at running a business is like being a great student, then being great at fundraising is like being great at the SATs. They are somewhat correlated, but not directly.”

Sahil’s seen all sides of venture capital, and not just because he’s married to an investor. In 90 candid minutes, he offered insights into how to build relationships with VCs in a way that will have them lined up and fighting for a piece of your company — and this is our juicy recap.

While these strategies are ones that he has seen work, Sahil provided this disclaimer: “others may give you the exact opposite advice. Take everything I say with a grain of salt, because fundraising is personal and you need to find a process that works for you and your company.”

What do VCs see in you?

VCs don’t care about your company in the same way you do. For VCs, it’s a numbers game. For every thousand companies in which a VC invests, even if nine-hundred-ninety-nine of them fail, if one of them turns into the next Uber, they win. (Read more about the Power Law in VC first, then continue on this post.) To convince a VC to invest, they need to believe your business has the potential to be that exception to the norm. If not, you’re not worth the time.

That makes market size one of the most important slides in your deck. When preparing to pitch VCs, spend a lot of time thinking about how you’re going to build a massive, massive company. VCs don’t need the granular nuances of how cool your tech is; they want to hear your story of how the future looks completely different, with your service at the center of the transformation.

What are VCs afraid of?

A VC’s biggest nightmare is missing out on the next big thing. No one wants to be the person who turned down an opportunity to invest in the next Airbnb (let alone the first Airbnb).

Sahil describes his latest experience: “The first handful of VCs that we pitched for this round said no. Then, the 12th VC we pitched really loved the idea and gave us a term sheet within a week. The next 6 VCs we pitched, we got 6 more term sheets.” What changed? “The biggest thing that changed is I got one. All you need is one.”

When you find that first VC who’s willing to go out on a limb and invest in your company, more will follow. And it’s not just because they believe in you, but because they recognize that if one of their respected colleagues was willing to make a bet on you, there’s a chance you have what it takes to make them a winner — and they don’t want to miss out on the next big thing. VCs are experts in pattern matching, so if one VC is willing to back you then they are much more likely to look a little closer.

Luckily, there are hundreds of VCs. Find one that gives you a yes, build your confidence, and give the next partner you meet a signal that they should look closely at your business.

How VCs act when they are interested

VCs are never lukewarm — they are either pleading to invest, or they’re not interested. When a VC sees an opportunity to back an amazing founder they believe in, they will not be shy.

Sahil recounts one of his earliest fundraising efforts, a pre-seed round: “I pitched a few different investors, with no bites. Then I met our first investor… 40 minutes into the meeting he’s like, ‘I’m going to invest in this thing!’” Sahil was blown away by how quickly the investor had expressed interest in coming on board, and went home to tell his wife, whose response was, essentially, “duh”. If they haven’t left your meeting unambiguously committed to investing in your project, they just aren’t interested.

Sahil maintains that every VC who’s ever given him a term sheet has enthusiastically accelerated the process during the first meeting, and anyone who wasn’t over-the-top excited after the first meeting never ended up giving him a penny. So Sahil puts 150% of his effort into preparations for the first meeting. “If at the end of the first meeting they don’t immediately invite me for a second meeting and start introducing me to their partners and start the ball rolling, I’ll just write them off.”

A lot of new companies waste their time trying to convince a VC that seems a bit skeptical. VCs will tell you they need to do due diligence before they make a decision, or that they would really love to invest but they just need to see some changes first. Convincing a skeptic is way harder than just moving on to the next person who might be a true believer. Give everyone the feeling this round of funding is getting done with or without them. If they’re really interested, they will not let you go.

Attracting VCs

It’s all too common for new startups to approach VCs seeming desperate. Among the many reasons that startups fail to impress VCs usually, one of the most subtle reasons boils down to a power dynamic.

There’s a huge psychological impact to knowing you hold the power in a situation, and it makes the other party seem less attractive. You have to learn how to play it cool and capture someone’s attention without seeming desperate, and that’s when the prospective VC wants in.

The secret to cultivating interest, whether in a top-flight recruit, a journalist, or a big investor, is to create a sense of scarcity. When you seem like you might be unavailable and have lots of optionality, you retain the power, which makes you enticing — you seem like a winner. There’s a saying that the only good time to fundraise is when you don’t need money. Winning companies have no need for your money because they can get it from anyone.

You Need A Wingman

VCs get thousands of emails per week from entrepreneur begging to meet them. Don’t be that gal / guy. Instead of trying to elicit interest, get other people to vouch for you and make the VC come to you. Trust me, you don’t want to be the one begging for a meeting. Have a friend approach them and say “Hey, I know these great entrepreneurs. You need to meet them. I don’t even know if they’re taking new meetings now, but you should fight to be on their calendar”.

This shifts the power dynamic in your favor, as every VC hates to miss out on a great company. Make friends who know the game, and develop a personal network of investors/entrepreneurs that talk to each other. If you don’t already know people, you need to go out and meet them. Do whatever it takes to get into this network, because this is how you successfully fundraise.

When compiling your spreadsheet on the investors you’re courting, be sure to include the following data:

  • Fund Name
  • Partner you want to meet
  • Stage they typically invest
  • Similar companies they’ve invested in that are somewhat analogous to what you’re doing
  • A rating of how interested you are in this VC
  • A list of who in your network knows them

Then corral all your friends, your LinkedIn network — find all the people connected to the venture community and ask how well they know each other. If you have a friend say “Oh, I’ve met this person a couple times”, you don’t want them doing the intro. You’re looking for an intro from the friend who says “Oh I’ve worked a couple deals with this partner!” or “We go skiing together every winter!”

Once you’ve found your wingman, pre-write what you would like them to say. Do not ask them to write you an intro, or you’ll risk them setting the wrong tone. Tell your wingman, “Here’s what I’d love for you say. Feel free to edit in your own voice, but here’s the talking points”.

Here’s an example of the type of message you want the email that lands in the VC’s inbox to convey:

To: Partner <>
From: Your Wingman <>


Hi! Your Name is CEO of Your Company. They’re awesome. You have to meet them. Your Company is the best thing I’ve seen come across my desk in years.

Your Wingman

— — — Forwarded email below — — —

To: Your Wingman <>

From: Your Name <>

Hi Your Wingman,

We’re raising $2 million, have interest from a few firms. Targeting a close date of April 30th. You mentioned Partner, s/he seems like a great connection, even if it’s not for this round. Here’s the deck, happy to chat. <link>

Your Name

Now, when that partner meets you the power dynamic is completely different. That’s the power of a wingman.

Impressing VCs

Now that you’ve got your meeting, and you can enter the room with confidence, that’s when you have to come in and blow their socks off. You have to show them it wasn’t a bunch of hot air. You need to give them the big picture vision about how this is the company they’ve been seeking for years.

When you explain why what you do is special, it has to be super simple. VCs are not nuanced experts in one specific industry, so don’t bore them with technical jargon and details. There are a thousand reasons why they shouldn’t invest in you. There’s only one reason they will — because they believe you are going to build an unbelievable company that will overcome all hurdles. To VCs, it’s not even worth getting out of bed if it’s not a $10 Billion idea. It’s just as hard to build a $10 Million company as a $10 Billion company, so they only back the ones that can be a fund-changing company if they are successful.

Don’t Be Afraid of Competition

Be prepared to field a question about who your competitors are. It’s tempting to downplay your competitors, so that it seems like you’ll lead the market. But in reality, the more competitors you have, the more it demonstrates how powerful your service is going to be. When AirBnB was raising SEED money, they thought their competitors would be Craigslist. They had no idea their competitors would include the every hotel chain in the world. Now they’re competing with Yelp and TripAdvisor to be category leaders of all things vacation. So don’t be scared of competition, but instead embrace it.

Don’t Be Confident, Be Overconfident

VCs know that building a startup from scratch requires a lot of hard work… and a little bit of crazy. VCs are looking for people who are ambitious and confident enough to overcome all the odds. People who build incredible companies are often not “normal” folks (i.e. — Travis Kalanick, Steve Jobs, Elon Musk) but are instead people who deeply believe in themselves and their vision for the future. If you yourself are not inspiring to a VC that you’re trying to raise money from, how are you going to inspire an entire world of people to embrace your product? VCs respect strength and confidence.

Closing the Deal

After the VC is interested in your company, it’s time to get the deal done. Step one is to show mutual interest / admiration for them and their firm: “Your Wingman had such great things to say about you. I read your article/book. Really insightful stuff.” When an investor invites you to a second meeting, Sahil recommends doing a blind reference check and then casually telling them about it. “One thing I always do is a little due diligence on my end, so when I met with Partner At Competing Firm, they had really great things to say about you.” The subtext is huge — you aren’t desperate for cash and willing to take anyone who says yes. You have optionality and are looking for the best possible partner.

Set your criteria

Most investors won’t ask you how you’re going to decide on the firm to raise from, so just tell them directly. “My cofounders and I have set out some specific requirements of how we’re going to choose the firm / partner we’re going to partner with to build our company.” When Sahil was fundraising for Bravado, which is a professional network for salespeople, he insisted he was looking for investors who “deeply believe in the power of sales, and have a deep respect for salespeople.”

He laughs as he recalls the investor reactions, because in reality, few people in the world have a “deep respect” for salespeople. But was a great litmus test for who was really interested, as some investors would say things like “I’ve always thought that salespeople deserved to be treated better!” in order to win the deal.

Set the timeline

Another way to maintain mutual accountability is by setting the timeline, which you can tell your investors at every meeting. When asked how your fundraising process is going, you can answer: “I’m taking 1st meetings from April 1st to 10th. Then we’re doing follow up meetings / diligence from April 11th to 30th. May 1st to 3rd is when we’d like all term sheets in by, and May 4th my co-founders and I are going to make the decision of who to build this company with.”

After you get the first term sheet, your power to accelerate the timeline increases. When you tell them you already have a term sheet in hand, and are looking to make a decision in two weeks, they might retort that they typically can’t move that fast. To which you should reply: “In that case, I don’t want to waste your time, so let’s stay in touch for future rounds.” If they are truly interested, they’ll quickly make an exception for you. If not… plenty of other fish in the sea.

Regardless of what they tell you, VCs are able to make decisions quickly because startups at the pre-SEED stage do not offer much to evaluate. The only real criterion on which they base a decision is whether an investor truly believes in your idea. They can make that decision in a second. Sahil divulges, “I’ve had a VC turn around 48 hours after our first meeting and hand me a term sheet. Investors can move fast if they believe in you, and believe the round is competitive. It’s your job to inspire those beliefs.”

Dealing With Rejection

Every VC rejection email says the same thing. “It was such a pleasure meeting you. I spent a bunch of time thinking about your business, and I have to admit, it’s really exciting. What makes this email so hard is YOU, you’re fantastic. It’s just that the timing isn’t quite right for us, and we’re really hoping to see a company that’s more…” and what follows is a list of platitudes. Remember though, there’s no incentive for a VC to say “I think your business is a terrible idea” in case it turns out to be the next AirBnB, so they will always be kind in their rejections. Believe that they don’t want to invest, but don’t believe the reasons why.

This Will Suck

We’ve covered a lot of great strategies, but don’t think that because you’ve learned a bunch of tricks that suddenly fundraising is going to be easy. “This process is one of the most difficult things I have done in my entire career” emphasizes Sahil. “It will drain you and will be really hard and humbling. It will be demoralizing if you allow the rejections to get to you.”

Embrace the fact that it’s going to feel impossible, but don’t for one second let a VC know that you’re tired, or that fundraising is hard. They can smell that a mile away, and as soon as they feel that, they’re out. So inspire confidence, believe in your product and team, and know that you only need 1 person to say yes.

And that’s how you win the VC Fundraising game.

You can find more from Sahil on Twitter @svmansuri; @WeAreBravado or check his out his podcast or blog.

Interested in learning more about go-to-market or fundraising as a Pre-Seed or Seed stage company? Follow us on Twitter @ForumVentures.


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