For years, the zero interest rate environment fueled an ambitious ecosystem of venture capitalists and technology innovators seeking to raise big rounds, drive hyperscale, and move on to the next if the first thing didn’t work out. The path, rules, and standard practices reflected an era of risk-on, almost free money.
Today, the technology industry is recovering from the bear markets of 2023 with a new discipline focused on traction, substance, and capital efficiency. Limited partners have become more selective with investments into venture funds. Venture investors have raised the bar for deals, requiring due diligence to reveal some traction to showcase a startup’s potential, depth in the data room demonstrating the substance behind the vision, and a path toward capital-efficient growth.
With these new areas of heightened investor focus, what are the new rules for identifying, pitching, and partnering with the right venture investor?
The following is a compilation of 12 “dos and don’ts” for how innovators should pitch and partner with a new class of technology venture investors who balance market realism with optimism in driving a vision with substance.
Overall
1. DO allow experience to inform and challenge your perspective
Venture capital often finds nonconsensus and nonobvious deals, but the process may take hundreds of meetings before the first yes.
More than ever, and just like any relationship, finding the right venture investor starts with building a foundation based on vision, values, and trust. Early-stage venture capital requires a team effort to find product-market fit and accelerate revenue growth. But value-add venture investors have the strategic advantage of guiding founders toward signals versus noise, drawing on prior case studies of success and failure in a particular domain, and connecting companies to valuable sales and distribution partnerships.
2. DON’T give up
Like many activities in the startup world, success finds those who have grit, courage, persistence, durability, and adaptability. Venture capital often finds nonconsensus and nonobvious deals, but the process may take hundreds of meetings before the first yes.
At the same time, balance this grit with the realistic optimism of taking feedback from every step of the process to confront and confirm the compelling need for venture capital. Almost every company is better serviced by not raising venture capital and instead relying on profitable growth and other sources of capital.