"When should we send the venture capitalist our ten page vision sheet? Should we incorporate it into our business plan? Or is it then too long? Or should we reserve it for later?"
The founder was wondering what to do after he found a venture firm woke up ("They finally got it!") after a well written vision statement ("What our idea is all about") was emailed to two associates that were finishing up due dilligence investigation work.
Here is the essence of what I emailed in response to that good question:
"I found your Vision Statement (VS) pretty much what I had expected. I had the advantage of having been keeping up to date on (a secret, new market segment in an Asian country) for the past 7 years, having read your bplan and had our talks over the phone.
- The VS is well written and the right length, as is your Bplan.
- A colorscreen shot or two (not many) would greatly boost the emotional power of the VS.
- Your presentation is also well done.
- The expected sequence for a VC is as follows:
- Personal introduction, typically over the phone (e.g. I call a venture capital firm partner).
- “Send me something” = Executive Summary, exactly from the Bplan is emailed by the founders (thereby establishing first company-VC contact).
- Elevator Pitch is made during the partner’s phone call to founders (by VC Partner, never accept a call from an Associate, it is death).
- Appointment for presentation to VC is made on phone.
- Sometimes (20%) the Bplan is requested in advance of the first meeting. Normally (80%) expect to send it if the first meeting goes well.
- Issues surface. Every VC has two or three sticking points after the first meeting.
- Send document(s) that resolve the sticky issues.
- (This is where your VS doc works well).
If you send a trunk of documents to the VC at the beginning, you’ll lose your emotional buildup to a final decision. The VC will get lost, in fact will moan, and not read most of the stuff you send. And you waste his and your time (and leak sensitive competitive information) if the VC is not interested in proceeding to the next step.
Hooking a VC is like hooking a fish: you have to get his attention (He sees lots of other things to eat), tempt him (Hmm, this might be very tasty!), lead him on (Looks good, but is it the real thing?), until he finally throws caution to the wind (Oh dear, I’ll lose it if I don't hurry up!) and lunges for the lure (Reaches for his checkbook) and is hooked (Sends the money to your bank account). It’s just like getting a date with that someone special, and other valuable things.
There is a rare situation in which all of the documents are used in one sitting. That occurs when you are invited to “spend a day with” a VC partner. Art Rock used to do that. He’s the Godfather of modern venture capital. But it cannot be counted on any more."
And that is how it is done by the serial entrepreneurs. So try it on your startup!