How to Build Relationships with VCs Before You Need to Raise Funds
Getting to know VCs long before you need to fundraise is one of the smartest things you can do as a founder. Taking the time to cultivate authentic relationships makes the process of raising capital infinitely smoother when the time comes.
Do Your Homework
Venture capitalists see hundreds of deals per year. You need to stand out. Do thorough research to identify VCs who focus on your specific industry sector and have invested in successful companies similar to yours by using platforms like Crunchbase, AngelList, or LinkedIn. Study their investment criteria, portfolio companies, blog posts, and social media to understand their preferences and specialities. Look for any shared interests, experiences, or connections you can leverage to establish rapport quickly.
Attend Events
Identify the conferences, meetups, pitch competitions, and other events VCs frequently attend. Use these opportunities to introduce yourself, start meaningful conversations, and build connections, not just shove a business card in their hand. Come prepared with a compelling elevator pitch that focuses on the problem you’re solving, not just what you do. Ask smart questions to show your interest in their work and perspectives.
Marc Benioff, CEO of Salesforce, is known for engaging in in-depth conversations with potential investors, asking thoughtful questions about their perspectives and investment philosophies. This demonstrated his genuine interest in building relationships and understanding their expertise.
Leverage Your Network
Ask mentors, advisors, and entrepreneurs in your network for warm introductions to VC firms or partners they already know. A personal referral goes a long way compared to a cold call or email. Before making an ask, develop those relationships yourself first. You want your network to vouch for you as a founder worth knowing.
Brian Acton and Jan Koum, founders of WhatsApp, received a crucial early investment from Sequoia Capital after Brian Acton, a former Yahoo employee, leveraged his network to secure a warm introduction to a Sequoia partner.
Steps they followed:
- Building relationships before they ask: Brian Acton and Jan Koum actively built genuine connections with individuals in their network before needing anything. This established trust and goodwill.
- Identifying potential introducers: They identified individuals familiar with their industry and familiar with VCs who might be interested in their company.
- Making targeted requests: They made specific requests for introductions to specific VCs, highlighting why their company would be a good fit for their portfolio.
- Following up and expressing gratitude: They expressed genuine appreciation for the introductions and followed up professionally, showcasing their dedication and professionalism.
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Provide Value
Offer VCs value rather than immediately asking them for money or a meeting. Forward relevant articles, market insights, or data that would interest them. Provide thoughtful comments on their social media posts and blog articles. Ask for feedback on your product demo or pitch deck. Position yourself as a peer and industry insider, not just another founder needing cash.
Aaron Levie, CEO of Box, regularly wrote insightful articles and shared market research on cloud storage and enterprise software trends. He positioned himself as a thought leader in the space, attracting the attention of VCs who were impressed by his expertise.
Stay Visible
Once you’ve made a connection, stay top of mind with VCs by providing regular business updates. Avoid spamming them constantly, but share major milestones achieved, new customers signed, product launches, team additions, etc. Help them connect the dots over time regarding your momentum and traction.
Gumroad founder, Sahil Lavingia, actively documented the growth of the platform and engaged with investors on LinkedIn. This helps investors get a clear idea of the growth projection of the platform making it easy to make an investment decision.
Admit You’re Not Perfect
Be transparent about challenges you’re facing, whether technical issues, hiring woes, growth stagnation etc. VCs know most startups don’t succeed overnight. Owning your vulnerabilities makes you human and shows you are committed to the long term.
Ben Silbermann, CEO of Pinterest, openly discussed the company's initial struggles with user growth and product development. He shared these challenges on social media and in interviews, showcasing his willingness to face setbacks and learn from them. This transparency resonated with VCs who appreciated his candid approach and commitment to overcoming difficulties.
Fundraising is all about relationships, not instant deals. Lay the foundation with VCs long before you need to raise capital. Nurture genuine connections, demonstrate you’re coachable, and keep communication flowing. The rest will follow.
