The value of an accelerator program like JFDI Accelerate comes from its mentors. Their advice counts because they’ve been on the front line themselves. Frontier Ventures Vice President Pavel Alimov has been in the finance and investing industry for more than 10 years and has invested in several market leading internet companies , writes David Ongchoco
In a session that outlined the different phases in the fundraising process, Pavel shared nine key insights on how to navigate the venture capital (VC) world.
1. Map out all VCs active in your market
“You have to identify the wide choices of VCs who are active in your market then narrow it down, contact them, present your business, go through the process then close it. Make sure you do your research and check what the VC invests in. Check if they only invest in certain stages or certain countries.”
2. Approach only relevant VCs based on your strategy
“Keep in mind what you really want from the VCs. Are you only looking for money? Some VCs have more value add because they’ve already invested in other businesses, know certain spaces and have a network in certain areas.”
3. Get connected through personal introductions
“You have to approach VCs in a proper way. You don’t want to be lost in the thousands of pitches that a VC has to go through. The best way to do it is through a proper intro. The best way is to get a VC or entrepreneur to give you a positive intro.”
4. Be very respectful and don’t burn bridges
“VCs want to maximize their own returns. VCs rarely say ‘no’ directly (they like the option value) so learn to recognize ‘no’. Learn to know when it’s not a productive exchange anymore but make sure not to burn any bridges. It’s a very small community. Investors talk to teach other. Don’t destroy your reputation. Be very diligent and honest.”
5. Keep your teaser short
“This is your chance to get the VCs attention, make it professional and concise. The teaser is the pitch deck that you are comfortable in discussing without an NDA. Keep your teaser short – 10 pages should be the maximum. Feature the most exciting things and focus on your strengths.”
6. Do your research before your first pitch meeting
“You should be preparing yourself for the first meeting with the VC when you are preparing your pitch deck. VCs will judge you on your first meeting. They will ask you tough questions and you will be overwhelmed if you don’t prepare and go through the process of preparing your pitch deck and doing your research.”
7. Have a standardized pitch deck that answers common questions
“Every investor in one form or the other will ask the same questions. You will want to have a standardized pitch to answer all the question of most investors.”
8. The fundraising process is a long one
“For us, we will have a few weeks back and forth depending on how prepared the entrepreneurs are in answering our questions. Once we understand their business and are comfortable, we do our own memo and talk amongst ourselves before deciding. A typical cycle from introduction to closing typically takes 3-12 months. The more prepared you are, the faster it will be.”
9. Get ready for a lot of rejections
“In any given year, we screen thousands of pitches. The funnel is from 1000 startups to single digits for most VCs each year. You have to be ready for a lot of rejections. That’s the name of the game. It’s going to be unpleasant.”
David Ongchoco is a content marketing intern for JFDI Asia. He currently studies at the University of Pennsylvania and runs an international nonprofit called YouthHack, which has a goal of helping students learn more about startups, technology and entrepreneurship. He also contributes for top publications like the Huffington Post, Technical.ly Philly and the Philippine Daily Inquirer.