There’s a galaxy of talented and/or well-connected startup founders out there, but few have any prior fundraising experience, which levels the playing field by an inch or two. Everybody loves a go-getter, but in many communities, asking strangers for money is still considered a sign of poor character, not characteristic of an entrepreneurial mindset.
But the rules are different in startup-land: although there are basic best practices for putting together a pitch deck or term sheet, there are no hard rules for approaching potential investors. For some, a LinkedIn DM may be an appropriate way to get their attention, but others may filter notes from unknown senders into their spam folder. Likewise, some investors may ask to review your deck in detail; others may prefer a probing one-on-one conversation.
Even after doing due diligence, it’s still hard to determine exactly what kinds of deals an investor is looking for at the moment. To learn more about where top VCs are searching for opportunities, and solicit their advice for entrepreneurs who want to attract positive attention, I asked the following investors to share their thoughts:
- Christine Choi, partner, M13
- Arvind Gupta, partner, Mayfield Fund
- Mike Ghaffary, general partner, Canvas Ventures
- Sarah Kunst, managing director, Cleo Capital
Editor’s note: The answers have been edited for space and clarity.
Christine Choi, partner, M13
What kind of opportunities are you looking for in Q1 2022?
Everyone at M13 is super passionate about consumer behavior, and we back founders building technology that powers the future of commerce, money, work and health. We are following the effects of web3 or blockchain-enabled technology across each of these verticals. M13 invests in seed to Series A/B, so we work with founders who are pre-ideation as well as with those with strong product-market fit. Examples of companies within our four investment areas are here.
Tell us how you’d like to be approached by a founder with their initial pitch.
Diversity, inclusion and access are important to us and for the industry to succeed, so we like to meet founders beyond our own affinity networks. We speak at panels to meet promising entrepreneurs and also welcome cold emails. In fact, a metaverse founder recently DMed me on LinkedIn because she is eager to meet investors who understand consumers.
That brings up the importance of research. When a founder pitches us DTC, we know they haven’t done their homework about our evolved investment thesis. Content about our latest investments and insights on nascent markets is our way to be transparent with our community about ideas that matter and how we spend our time.
What’s one piece of advice that can help a first-time founder stand out from the crowd?
When we get to know founding teams, we ask ourselves the following three questions:
- Why this team?
- Why this product/service?
- Why now?
We love teams that can thoughtfully articulate and back up their vision, and have a unique perspective on the market.
On timing: it can be difficult to invest in applications in a space where the underlying infrastructure is still in progress, and conversely we don’t invest in markets that are already too mature.
Recent investments include Milo, whose founder realized that his mortgage underwriting works for crypto and is now the first to offer crypto mortgages, and Weecare, whose team started out building the largest childcare network in the U.S., and then during the pandemic, began offering childcare as a workplace benefit.
These examples show that we appreciate founders who are honest about the evolution of their journey, aren’t too precious, and can move quickly. It’s less important to get it right the first time and more important to be agile and responsive to market feedback.
Tell us about the best pitch you’ve seen recently: at what point did you realize you wanted to invest?
Form Health founder Evan Richardson, who had been part of Grand Rounds’ founding team, came to us with a vision to improve health with science-backed and personalized care for weight loss, a crowded space that requires credibility and trust. Evan has an impressive background in healthcare and tech, and so does Form Health’s chief medical officer, Dr. Florencia Halperin.
I’m a fan of tech + humans, so hearing Florencia, with her impressive medical background and deep empathy, describe her patients’ journeys and outcomes convinced me that Form would use telehealth to leverage humans — board-certified obesity specialists and registered dietitians — for the consistent application of science-backed personalized plans.
It’s not enough to be technically gifted and strategic. I admire founders like Evan and Florencia who care about outcomes for their customers in challenging categories like obesity. Through their efforts, obesity will follow a similar path as depression, which unlocked innovations and solutions after it was identified as a medical condition.
Finally, I’ll add that M13 is unique in our hands-on vertically focused support for founders; the firm’s ten full-time partners and our expertise in brand, data, ops and talent can be valuable accelerants. Both Evan and Florencia were open-minded and candid from the start, which enabled M13 to be useful right away. Their collaborative spirit gave me further conviction that physicians would trust them to improve their patients’ health — as they have.
What are you reading/watching/listening to right now?
When I’m not listening to WBGO (yes, jazz!), I listen to BBC News, Squawk Pod and Equity (and hope that Christine Hall will one day pipe in). The Afghanistan Papers was a devastating read and a lesson in the importance of leadership and communication (also The Vietnam War is required viewing for American citizens). As a tonic, I started re-watching Silicon Valley, which gives me deep pleasure and LOLs.
Arvind Gupta, partner, Mayfield Fund
What kind of opportunities are you looking for in Q1 2022?
- Companies that are broadly reversing climate change and curing disease.
- Companies that are taking waste feedstock and using it to create a new product that people love while removing carbon from the supply chain.
- Companies that eliminate resource dependency through new sources of energy, food, water and industrial chemicals.
- Companies that can influence a consumer’s choice of product to be better for the planet at the point of purchase.
- Companies that have a novel approach to finding new targets for therapeutics.
Tell us how you’d like to be approached by a founder with their initial pitch.
Directly, with a deck, round size and location of the company. Email is best! Warm intros are not necessary.
What’s one piece of advice that can help a first-time founder stand out from the crowd?
The founder demonstrates mission-to-market thinking by showing how the business they are building simultaneously solves an enormous problem for society and generates high-margin revenues. They have energy and a deep passion for the problem they are solving. Finally, they are not married to their technological solution, but rather, solving the problem of their customers.
Tell us about the best pitch you’ve seen recently: at what point did you realize you wanted to invest?
The founder was pitching a company that is in a space where nothing new has worked in 50 years. They explained precisely why nothing worked in the past, and how their approach directly addressed the issues that plagued the industry, and was not possible prior to their insight. This precision in thinking, along with a world-class team, led to me leading an investment by Mayfield.
What are you reading/watching/listening to right now?
Re-reading “Zen and the Art of Motorcycle Maintenance” by Robert Pirsig. I agree with his view on activism being a prerequisite for quality in life and work – and especially in successful venture capital. And, a blog of technical investigations into the causes of airline accidents by admiral_cloudberg.
Mike Ghaffary, general partner, Canvas Ventures
What kind of opportunities are you looking for in Q1 2022?
At Canvas Ventures, our concentrated portfolio strategy focuses on four thesis areas within fintech, healthtech, marketplaces, and the infrastructure layer that powers them. My focus areas are: marketplaces, proptech, and foodtech. Right now, I’m particularly looking at vertical SaaS coupled with B2B marketplaces. I’m also really interested in my theme of “Rebuilding the Middle Class.”
Tell us how you’d like to be approached by a founder with their initial pitch.
The best way to approach an investor is usually with a warm introduction. We also read cold emails, but we can’t get back to everyone that way. So, the source of introduction is consistently an important indicator of potential.
I prefer receiving the deck by email in advance so I can read it beforehand and make sure a meeting is a good use of time for both me and the founder. It’s a yellow flag for me when a founder would rather waste a 30-60 minute meeting with a VC running through a full deck live instead of sending it in advance. Is that a good use of the founder’s time?
What’s one piece of advice that can help a first-time founder stand out from the crowd?
Get right to the point on what makes your company really unique and special. You can do this on the very first slide in your deck — and follow-up with the same point in the meeting. There can be a strong “Why Now?” macro component to the story, along with something very different about you, your team, and your product. Showcase defensibility, also known as your Strategic Advantage. More on that here.
Tell us about the best pitch you’ve seen recently: at what point did you realize you wanted to invest?
My most recent investment is OfferFit.ai. The founding team, including George Khachatryan and Victor Kostyuk (who met as PhDs in math at Cornell), are amazingly bright and engaging. The company’s product is one that everyone needs, and it has an identifiable strategic advantage. Customers rave about how much they need the unique product and how helpful it is. The OfferFit team is also great at sales and execution. It was a very compelling pitch!
What are you reading/watching/listening to right now?
I read most of my news on Twitter. It’s become the ultimate news feed once you follow the right people. It’s also a great place for founders to engage.
Some top books I advise founders to read (outside of the usual startup ones): Drive by Dan Pink (on motivating your team and autonomy), Getting to Yes on how to negotiate differently than what most people are taught, and Give and Take by Adam Grant.
I’ve been watching a lot of French television shows on Netflix recently, like Family Business, which was hilarious. The podcast I’ve been listening to is The History of Rome, which is fascinating.
Sarah Kunst, managing director, Cleo Capital
What kind of opportunities are you looking for in Q1 2022?
I’m looking for pre-seed companies in the areas of future of income and complicated consumer. I love founder-product fit and a differentiated customer acquisition strategy.
Tell us how you’d like to be approached by a founder with their initial pitch.
We make it super easy to pitch at Cleo Capital. Anyone can submit their deck via cleocap.com. No warm intros needed!
What’s one piece of advice that can help a first-time founder stand out from the crowd?
Use the Guy Kawasaki’s 10-slide pitch deck format and a non-ugly template from a service like Canva. Telling a story clearly and succinctly is table stakes, but so many founders miss this step.
What are you reading/watching/listening to right now?
I spend a lot of time reading about geopolitics, weather and other macro drivers of behavior. It impacts the public markets first, so I also keep a close eye on those and on consumer sentiment. I invest early, but understanding where mature markets are is helpful for seeing where new companies might be able to fill holes or upend legacy industries.
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