RTC #27: This brings you into the VC investment committee

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📢 Top 7 links of the week

👉 Letters to a Young Founder: Vinod Khosla (Link) - My favorite this week

👉 Don’t know who Vinod Khola is? You better look here (Link)

👉 How to find a unicorn? A tactical guide to sourcing legendary investments (Link)

👉 How VCs become assholes (Link)

👉 Solo founders are 2.6 times as likely "to own an ongoing, for-profit venture”. (Link)

👉 These are the SaaS benchmarks European VCs look at (Link)

👉 This is how it looks like when a startup founder tells a VC that everything is under control (Link)

📖 Report of the week

The Master Investor Lists: By Stage, Location, Industry, Angels, and all Accelerators 💸💸💸

🤿 This brings you into the VC investment committee

I believe in the concept of thinking step by step.

After you have spoken with a VC for the first time, the next step you want to achieve is to make it into their investment committee.

Not sure who to approach for your first conversation with a VC👇

At VC firms, there is always one person who is closest to the startup, usually the one you have spoken to before and presented your case.

This person “owns” the respective investment case and has to “defend” it in front of their colleagues

What is an Investment Committee all about and how does it work?

• Increased Interest: This is the most important part; it means that the VC firm is seriously interested in your startup and sees potential in your business.

• Detailed Evaluation: It is the make-it-or-break-it point and your startup will undergo a thorough evaluation process. This includes deeper due diligence, scrutinizing your business model, financials, market opportunity, and team.

• Decision-Makers: The investment committee includes the key decision-makers at the VC firm.

• Q&A Session: These meetings usually include in-depth Q&A sessions discussing every detail, concern, or question.

☝️ Now comes the important part:

Let’s look at how this works in practice

At my investment firm Beyond Tomorrow we are a small team - it is only my founding partner Sharon and myself. The way we decide on potential investment opportunities works as follows:

• Each of us is responsible for his deal pipeline

• Once there is a deal that fits and looks interesting, I assess it based on our deal assessment procedure

• The assessment procedure includes for example

  • Cross-checks with other investors or industry leaders

  • Our deal assessment questionnaire

  • To answer the question of why “this opportunity changes the way we live and think tomorrow”

• If I stay convinced and feel 100% that Beyond Tomorrow should invest, I present it to Sharon (my “Investment Committee”) who then challenges it from all angles

☝️ Now comes the SECOND important part:

Sounds obvious?

Well, I can tell you that quite a few deals do not make it to the next step, even though I have liked them.

Let’s make sure you avoid this in the future when approaching a VC 💪

Here are four of my tips I give to founders when they ask me:

✅ Follow the VC deal assessment procedure

• This can be via a form on the website, a certain email address, or directly to their email.

• If not clear, ask: where shall I send my pitch deck/info?

✅ (Only) Send as much information as needed

• More does not mean better; it can be confusing.

• If sending an email:

  • Keep it short & simple.

  • Include your deck (12-15 pages).

  • Add 3-4 bullets highlighting your superstar achievement/traction.

✅ Listen to what info the investor/your contact person asks for

• I often ask founders to include two things in their email when sending me their deck

  • A one-liner on why their company “will change the way we think and live tomorrow.”

  • One sentence on how they envision their company as a USD 1.0bn company in 10 years.

Guess how many emails include these two things?

✅ Be proactive to help me get to 100% conviction and understanding

• Don’t just send me generic materials or answers; try to get me over the finish line. Remember, I am on your side in the committee.

• Ask: “What are the questions or topics you need to get covered for your investment committee?”

• Answer in a precise way

  • Long studies or presentations are less helpful than short and tailored answers

  • In an ideal world, the answers you gave me are so clear that I can take them “copy/paste” into the committee

Don’t forget: the better you prepare me, the higher your chances!

Final thought: Do not assume that I will understand and know because it is stated on slide 15 in the right corner of your deck. 🕵️

💰 Want to discuss your investor approach to make it into the investment committee?

➡️ Book one of my “20 minutes for EUR 20” sessions and I get you covered

Explore today’s topic further with these useful reads

📅 Calendar of events in the upcoming weeks

June
• TNW Conference | Amsterdam, The Netherlands | Jun 20-21

July
☀️☀️☀️

👉 Get the full list of events in 2024 here

This was it for today.

If you liked this issue, why don’t you recommend Road-To-Capital to one person today?

You would make my day! Thank you so much.

Yours,
Stephan 👋

Issue #27 | 18 June 2024