Dear VCs: Kill the ‘warm’ introduction
The Problem: It is practically impossible for a talented, but unknown founder to get a meeting with a top VC.
Before you start writing an angry email to me, let’s start with a major caveat: I guarantee that there are multiple true stories of someone “bootstrapping” their way to a meeting and investment from Marc Andreessen. However, for 99.99% of talented, unknown founders, the struggle, just to get a single meeting with a junior partner at a top firm, is real:
- When I first conceived of the concept behind QQQ, I did so in my bedroom thousands of miles from Sand Hill Road. No one in my network even worked at a startup, let alone even being a third-degree connection to any VC.
- QQQ got accepted to a prestigious startup accelerator. I networked with every available mentor and selected three to make official advisors to QQQ.
- QQQ reached a significant revenue milestone. I reached out to Advisor #1 to facilitate an introduction to a senior partner at Firm #1. Senior Partner #1 quickly responded to the email with three potential (known) risks to QQQ. I spent three hours formulating a detailed response to all three points. I received a one-line response stating that QQQ was “interesting, but too early” for firm #1.
- QQQ was featured on national TV. A junior partner at Firm #1, who happened to watch this feature, reached out to set up an ‘introductory’ meeting.
- Junior Partner #1 ended this introductory meeting by stating that QQQ was “interesting, but too early” for Firm #1. I was strongly encouraged to “keep Firm #1 in mind for (our) upcoming Series A.”
Requiring ‘warm’ introductions as a pre-requisite for a meeting is, at best, elitist, and, at worst, biases you against the exact type of founder that spends their nights coding in their basement instead of schmoozing at networking events.
We live in a world where seed-stage venture capitalists proudly display no email address on their websites, proudly state they require multiple strong introductions before paying attention to a company, or proudly list an incredibly generic email address that clearly demonstrates that there is no way your pitch is actually going to get read.
This is bullshit.
Everyone has heard the classic VC response: “If a founder can’t even get a simple introduction to a VC, how will they ever be able to make a key sale/hire/etc?!?”
‘Simple’ is always relative. Coming from an industry that literally exists to be non-consensus and right and show strong, early conviction to fund promising, risky ventures, the least you can do as VCs is to be more open to cold introductions that are clear, concise, and relevant. If Mark Cuban can do it with zero associates, you and your 26 partners can find the time to read a few extra emails.
Dear VCs: Here are three ways to solve this problem
1. Stop being stuck up about cold emails: I used to write cold emails to potential investors. Honestly, they wouldn’t be totally cold emails. Instead, I had the following general formula:
- I’d follow the investor on Twitter and regularly respond with insightful answers to rhetorical questions they tweeted out.
- I’d subscribe to the investor’s blog, and leave thoughtful responses to my favorite blog posts in the comments section.
- I’d invest a few months into the two proactive strategies above, and wait until the investor started regularly engaging with my messages and maybe even started following my Twitter and/or blog.
- I’d follow-up with a concise email introducing myself and offering to meet up for real to discuss how my thesis around QQQ closely fit an investment theme where they had recently shown significant interest.
For all of my effort here, these attempts at outreach resulted in zero meetings. Not zero investments. Zero meetings. Half the time, the investor would politely decline the meeting request due to QQQ being “outside their investment thesis.” The other half of the time, the investor would bounce me out to an associate, who would politely decline the meeting request due to QQQ being “outside their investment thesis.”
2. Accept (and review) every single pitch: This is the YCombinator approach. If an entrepreneur is willing to put in a few hours of work to develop a clear, concise application for your firm, it is your giri to give it a few minutes worth of review. While this method is likely to produce thousands of busts, it’s worth if it makes you take a second look at the next Airbnb (i.e. don’t do this). Of course, the obvious follow-up question is “how can we possibly handle all of this inbound interest?” That leads me to #3:
3. Hire extra associates to handle the added demand: This is the easiest piece of advice that I’ll likely ever offer to VCs. I’m sure there’s extra room within the 2% management fees on your latest $400M fund for a few more associates. If not, there are thousands of smart, hungry, young people willing to work for next to nothing to break into the VC game.
The VC/entrepreneur relationship is based on a simple trade. You give me strong, early conviction and I’ll return your whole fund.
While it may seem like investing in the seed round of a six-month old startup shows early conviction, it’s often the result of piling into the latest ‘hot’ startup out of one of the top accelerators.
Look back at the best investments your firm has ever made. How many of them were the hottest deals of their era? How many were the result of one partner passionately pushing the deal and everyone else going along for the ride? Often, it’s the firms willing to pull the trigger on this second set of investment opportunities that capture the greatest returns.
If I can’t convince you that accepting cold introductions is the right thing to do, at least consider taking my advice as a way to increase returns.