“Can you introduce me to US venture capital firms?” is a question I’m often asked. When I get this question, three things are quite clear:
- They don’t understand there are 5000+ venture capital firms in the United States.
- They don’t know that venture capital firms typically have a specific investment thesis and only invest in startups that tightly align with that thesis.
- They are going to have a very difficult time fundraising because they don’t understand how to ask for investor introductions.
As a 5X venture capital backed startup veteran and 3X CEO, I’ve made hundreds of venture pitches. I know first-hand how incredibly difficult and frustrating the fundraising process is. I’m very empathetic to any Founder who is trying to raise capital. I want to help. However, given there are thousands of venture capital firms and thousands of Partners in the US, I simply don’t have the cycles available to research the right target firms and right Partners for each startup to pitch.
If you’re serious about wanting to raise venture capital in the United States, mastering the art of seeking warm introductions to the right Partners at the right venture capital firms will materially increase your odds of success. This blog post will hopefully be a good starting point for understanding how to ask for (and get) introductions to investors in the US.
Personal Introductions Are Critical
General Partners at top tier US venture capital firm receive hundreds of cold inbound email pitches, every single day. This volume of email is too ridiculous for anyone to manage, and most of these cold pitches are not a fit for the firm or their investment thesis. A personal introduction from a trusted source who understands the type of deal flow the firm is targeting will undoubtedly get the attention of the Partner receiving the referral. Many VCs in the US make it a practice to only work through trusted referrals. If you want to successfully pitch US VC firms, you will almost certainly need personal introductions.
Do Your Due Diligence
Venture capital firms in the US will have one specific or a small set of investment themes. These investment themes include a combination of a startup’s stage (Seed, A, B, etc.), sector (eCommerce, machine learning, etc.), round check size, geography, and certain key metrics ($1M ARR for example). At larger firms Partners will cover specific investment sectors for the firm. The start of your US fundraising journey is to research which specific US VC firms have a target investment thesis that aligns with your company. Tools like Crunchbase and Pitchbook have search functionality that allow you to quickly create lists of VC firms based on their investment thesis. Once you have your list of firms to target the next step is to find the right Partner at the firm to pitch. Most VC firms have bios of the Partners on their website that include their specific areas of focus. Once you have a qualified and targeted list of the right VC firms and Partners to pitch, the odds of getting a personal introduction improve exponentially.
Resources for Introductions
LinkedIn is the quickest and easiest way to determine if someone in your network knows a Partner on your qualified target list. Just go to the target Partner’s LinkedIn profile page and look for “mutual connections” a few rows below their name. Ideally, you will find names of people you know well enough to help with an introduction.
Certain professional services providers such as lawyers, accountants, and banks can play a critical role in helping introduce Founders to their target VC Partners. This phenomenon is well understood in the US startup community but much less so in the UK and European startup communities. In the US lawyers, accountants, and banks are viewed by startups as important strategic partners, not just vendors. It’s not that a law firm like Wilson Sonsini is materially better at filing Delaware C Corporations or drafting US employment agreements than any other law firm, it’s their deep roots in Silicon Valley, vast relationships in the venture capital community, and their willingness to make VC introductions for their clients that makes that relationship so important. Be thoughtful and strategic about your professional relationships and always be mindful about which firms can help with investor introductions.
Another potential avenue for introductions is the CEOs of a venture capital firm’s portfolio companies. If you’ve done the appropriate research, you may be surprised how many CEOs will be willing to help introduce another CEO to their investors when you ask for their help.
The Introduction Ask
It typically takes 100+ VC pitches to get that first term sheet for a round of funding. This means you’re going to need to ask for hundreds of investor introductions. You’ll quickly find that you end up asking the same very well-connected people for investor introductions repeatedly. Make it as easy as possible for them to help you. Also, it’s important to remember that each time you ask someone to make a personal introduction to an investor they are extending their personal credibility with a very important relationship on your behalf.
When you initially reach out to someone and request an investor introduction it’s important to let them know you’ve done your homework and you know that your company is a fit for the investment thesis of the Partner and firm you are targeting. It’s also important to give them an easy “out” if they aren’t comfortable making the introduction for any reason. Remember, you will likely ask this same person for multiple introductions. Make it as easy as possible for this person to help you. Offer to send them an email they can easily forward along with background information on your company highlighting (using bullet points, not lengthy copy) the key things an investor will want to know about your company including, stage, sector, key metrics and customers, location, and how your target raise amount. Also be sure to include a copy of your pitch deck. If you create an email with all the relevant information, it saves them time from having to write a lengthy (and potentially inaccurate) introduction email they are sending to the investor.
An introduction request via text or email might look something like this:
Hi Mark,
Do you know Cooper Powell at Dodson Capital well enough to introduce us? I see the two of you are connected on LinkedIn.
My company is a B2B SaaS Fintech startup based in London with $1M ARR and targeting a $5M equity raise this year. Our company appears to align well with Dodson’s investment thesis.
If you’re able to help with an introduction, I’d be happy to send you a separate email requesting an introduction to Cooper that includes some background and metrics on our company plus our investor deck you can easily forward along to her. If not, no worries.
Many thanks,
David
If you’ve conducted thorough research to identify the right targets and ensure the introduction process is as frictionless as possible, it will instill confidence in the person you’ve asked for an introduction and, hopefully, lead to obtaining multiple introductions at your target VC firms.
It’s important to note that if you simply reach out and ask a contact, ‘Can you introduce me to any US venture capital firms?’ they will most likely not be able or willing to help. However, if you specifically request an introduction to a Partner at a targeted VC firm whose investment thesis aligns well with your company, you’ll be amazed at how many people and resources in the US startup community are willing to assist with introductions.
If you have questions about raising venture capital in the US or US expansion best practices, feel free to use this link to book a meeting with our CEO. We are always happy to talk.
