5 Things VC Associates Wish Founders Knew Before Their Call
The venture capital screening call is an important step to get right in due diligence. To get to partners, often you’ll have to go through the associate first. In this Dreamit Dose, associates Alana Hill and I, Elliot Levy, offer five things we wish founders knew after screening over 1,000 startups in the last year. These are easy tips if you know what to look out for. Learn how to pass a VC associate screen in under 10 minutes!
Do your research
You should do your research before talking to an associate. We understand that as an entrepreneur you’ve got a lot on your plate. But doing just some basic research before the first call gives you major points. We talk to companies all the time that don’t know we’re a sector-specific fund. It’s good to make sure we’re aligned before our call or else it’s likely a waste of both of our times. What does good prep look like? Alana suggests that before speaking to an associate, you gain a basic understanding of the fund’s focus and stages they invest in. Looking at their portfolio companies will give you a good idea of whether or not your company will be a fit for their fund.
Our time is limited
A screening call with an associate is often 30 minutes long and in some cases only half that. So in that short amount of time, I need to walk away from our meeting with a good understanding of a couple key elements. I like to start my calls with quick small talk, then jump right into an overview of Dreamit, where we play, and how we add value. So by the time that’s all done, we’re only left with roughly ⅔ of the meeting to talk more about you and your great company.
The first thing I need to understand is what you do and the problem you solve. Before the call, I will try to visit your site and check out your deck, but as an associate, I talk to tons of companies and don’t always have the time to do a proper deep dive. So context is key. That’s something I didn’t realize when I was a founder sitting on the other side of the table. It’s critical you help the associate context switch by clearly describing your business model, industry sub-set, who you sell to, and how everything fits together. Because if I don’t have that context, it’s hard for me to fight for you. When I take this deal to weekly meetings, it will lack the key elements we need to move forward. I’ve tallied roughly 8 elements that we’ll need to cover on the call.
If you leave an associate screen without covering these elements, something’s wrong. It means you haven’t properly framed this deal in the associate’s mind and that makes it hard for us to come to a definitive conclusion. Something we’ve found helpful is adding a snapshot slide in the beginning of your deck so the associate can capture many of these key details from the start.
Answer Our Questions Directly
Assoicates can tell when you’re dancing around a question. Make sure to answer questions directly and as concisely as possible because there are critical pieces of information that we need to gather quickly.
For example. When we ask about your traction, we share Steve’s sentiment in our previous dose about traction that, “being in discussion with a company doesn’t mean that you’ve got traction yet.” So be transparent with us.
Transparency will only help you. On the other hand, though, lack thereof could keep us from moving forward. It’s honestly refreshing when we hear a founder that’s no BS and succinct during the Q/A. As a final tip, try to avoid rambling. Concise answers to questions show that you’re prepared and allows us to spend more time on other questions. You want to avoid forcing us to quickly run through major points like your funding timeline and revenue model.
How do we find you?
It’s important to know how we find companies and how you can get on a call with us. We find companies in a number of different ways, but for now, we’ll focus on our three main sources: startup databases, industry news, and referrals.
Startup databases include Crunchbase, AngelList, Pitchbook, and more. It is crucial that you update these regularly because we do searches and diligence on companies using these databases on a daily basis. You’ll want to ensure the description of your company is accurate, funding details are up to date, and that you’ve provided accurate tags on your company profile.
We regularly look out for newsletters, major updates, and events in our respective industries. If your company has made some considerable progress, reach out to news distributors in your industry to get the word out.
We cannot put enough emphasis on how important utilizing your network is. We’ve found some of our best companies through referrals from fellow investors, other funds, and accelerators. If you’re raising, ask people in your network to help. Don’t underestimate the value of maintaining good relationships with anyone who has been part of your company’s journey.
Build a Relationship
At the end of your meeting, the question on your mind should be what’s the next step? Is the associate interested in moving forward? In our experience, there are three types of post-meeting outcomes: clear no, clear yes, or grey-area maybe.
If it’s a clear yes, you’ll know it. The associate will typically tell you there’s interest on their side and we’d like to move forward in the next stage of diligence.
If the meeting outcome is a maybe, they need to consult the rest of their team before they do anything else.
That leaves us with the third outcome: the ‘no’.
The first type of no is the “no - not a fit”. Good associates will be direct about this and just tell you.
The more common no is “no - too early”. That means the associate is at least interested enough to keep in touch. This is where relationship management with the associate matters. Figure out what they’d need to see from you to move forward next time. VCs love when founders come back to them having hit or exceeded the goals they laid out.
Follow up is key. After your call ends, the associate is off screening another startup. Newsletters are a great way to keep associates informed of your progress. The ones that don’t check in some way, fizzle out. The ones that do are the ones we remember. The best founders find ways of giving associates a reason to continue their relationship with their startup.
By Elliot Levy, Healthtech Associate at Dreamit Ventures
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