Monday, January 16, 2006

Setting VC Meetings: Leveraging Your Relationships

A personal connection is great, but the best way to get a qualified introduction to a VC is through your service providers. Lawyers, bankers and startup consultants all will help make introductions to investors on behalf of their clients. I have also heard others recommend that startups look to their accountants for investor introductions but I don’t have any personal experience with this. The bottom line is that anyone that wants to do business with you has in interest in getting you funded. Furthermore, LinkedIn and other social networking websites can be very helpful in getting an investors attention.

Corporate law firms are definitely a startups best source of investor introductions. Many entrepreneurs make the mistake of using an individual lawyer to save money. However, most of the top Silicon Valley law firms like Gunderson Dettmer, Fenwick & West, Wilson Sonsini, Heller Erhman and DLA Piper Rudnick have deep connections within the venture capital industry and will actually defer their fees until after the startup receives its funding. Thus, by working with one of these law firms the entrepreneur creates a partner that, through deferred fees, has an interest getting them funded. (I am happy to help make introductions to any one looking for a good corporate attorney.)

In the bay area there are also two banks that regularly help startups set appointments with investors. Silicon Valley Bank and Bridge Bank are definitely the banks for startups. There are no minimum balances required and both banks are creative in their financing practices to help startups. Furthermore, the individual bankers regularly introduce their clients to the investors in their personal networks and Silicon Valley Bank also holds regular breakfast club events where entrepreneurs can meet VCs.

Many startups also hire investment agents/consultants to help them find capital. While the value of these startup consultants has been widely debated in other blogs, it is clear that the best consultants do introduce their clients to investors. One such great consultant is Technology Ventures Corporation (TVC). While many startup consultants charge their clients, TVC is federally funded and doesn’t cost a thing. I am currently working with a TVC consultant and I have nothing but praise for him and his organization. I recently sat down with my TVC consultant and mapped approximately 10 VCs (who all meet the criteria described above for Cryptine Networks) that he can help introduce me to.

Social Networking is a hybrid between a personal connection and an introduction. The best way to describe it is as encouraging your own introduction. LinkedIn is clearly the best site for business networking with the venture community. Doostang (invite only) and Ryze are also worth investigating but I’ve only used these sites sparingly. LinkedIn’s people search with the term “venture capital” will produce many results for most people. However, using LinkedIn effectively does require attention to detail. Entrepreneurs should always attempt to network first through their 1st degree connections that they know best. However, when this is not possible, the golden rule is that the less you know the contact the more targeted and carefully explained your LinkedIn request needs to be. A well written networking request makes all the difference in the world between someone who you met once at the Churchill Club 6 months ago forwarding it on or declining the request.

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