Edited excerpt from What Do You Need to Do to Improve Sales? Here’s a Start… by Mark Suster:
I find that many entrepreneurs talk randomly to VCs about fund raising. But if you’re raising a seed round and talking to a billion-dollar growth-stage fund you’re not being very focused. Equally, if you’re talking with a $100 million fund about your $20 million round your hit rate will be low. So understanding the stage of a VC matters.
Also, you need to consider the type of investments each VC does. Can you look at their portfolio and see deals that are at least similar to what you do? Finally, you even need to qualify down to the partner level. If you are talking with a partner who hasn’t funded any gaming startups and you are a gaming startup it’s worth asking them the question before meeting whether they would consider investing in your sector. Or if you notice another partner in the firm active in that area it’s worth getting to the right partner to increase your hit rate.
So make sure you qualify before even making calls or asking for intros. The research you put into fund raising before you start the process will pay huge dividends in your efficiency and hit rate.
(1) To match the stage of your company to the type of VC, see Rob Go’s The real difference between funding rounds.
(2) Just because you get an inbound call from a VC doesn’t necessarily mean that firm is suitable for you. See David Cummings on What to do when an associate from a VC fund reaches out to you.