From the VC’s corner (16): The productive relationship

Founders would love to engage in fundraising processes that are running at the ”fast and furious” speed. It’s not the transaction execution speed which matters, but the relationship that builds; and this takes time, the more you might stay with the VCs for some good years. Like many others, I’m not the person to write you a check for deposit the day we meet.

Personally, I prefer investing time and sweat in the (six to twelve or so) months period before the ”pitching marathon” starts, the time when there is no pressure of an ask or price. The time when everyone has time to develop comfort with each other, and the founders focus on building the team, product/service and getting market traction. Having time for coffees, visits and phone calls streamlines the communication down the path and aligns expectations for the future. Building a pre-deal relationship with the founders improves also the “honeymoon” period post-deal, when both parties are getting to know each other much better. And we all know that the honeymoon doesn’t last forever, and there may come situations where the interests of the VCs and founders are not aligned in the long run. In some cases, this tension ends into a nightmare, in others the relationship is strengthened.

Keeping a regular information flow and being transparent are essential ingredients of a solid relationship between the VCs and founders. Having a productive (if not great) relationship is all that’s required for pushing the success envelope further; and also helps me calibrate around relationship building. In this context, I usually go to pitch events that are more around some niches, and focus on those I would consider backing not less than six months to one year from that date, with a very few exceptions; don’t get me wrong, I can close in the same week we meet, if needed to, but, for me, it didn’t happen this way till date.

In terms of references and intros, I tend to use trusted connections that I know for years; I trace my sources and keep existing connections warm with my social media streams. “I would say most of the times that I’ve gotten an introduction to someone, it came right after the person making the intro read something that I put out there”, writes Charlie O’Donnell in a blog posting which you can read here. Charlie did a lot of inbox mining and, in his case and on average, something he did almost two and a half years in advance let him get those deals, and from the first time he encountered them, it took about five months for the deals to close. “It’s the network of people who respect what you can do for a founder enough to make an intro”, Charlie clarifies.

Meeting someone to catch up at a coffee or so might be considered pitching or not (most VCs would probably say it’s pitching.) That’s a great time to better know the founder(s), understanding their strategy, uniqueness, problem solving passion and to build relationships for the later rounds. And even if there are founders that I’ve met and didn’t back, staying in touch is really important. A lot of my activities connect me also to interesting non-founders.

“So if you don’t see me at a pitch event or a demo day, it’s probably because I’m meeting up with someone from the future.” (Charlie O’Donnell)

My today’s preferred: StartupDecks — 100s of startup pitch decks, and can submit your own.