The team here at MV is experimenting with a blog series on decoding the relationship between founders and venture capitalists. The series will begin where the relationship begins- The first meeting.
This article would be aimed at understanding best practices for both the VC and the founder and some fundamentals of creating a good first impression on each other.

The meeting:

• Team: Understanding the experiences of the founding team and what led them to venture out

• Problem: How big of a pain point have the founders discovered and the depth of their understanding of it

•  Solution: The MVP the company has created and why they have an edge

• Market: How big the market is, the speed of the market and the competitive landscape surrounding the company

•  Traction: What have you achieved so far and where do you want to get to

Team MV believes that even though the first meeting will revolve around these 5 parameters, the Founder and the Investor can and should invest in a mindset that significantly elevates the quality of such meetings.

The VC’s perspective:

More often than not, VCs treat the first meeting as a means to determine if the company is worth a second meeting or not. While this is the eventual outcome, we believe that it should not reflect in the process of the investor.

Here is what we as investors try to follow:

1)      Doing your very best to connect with the entrepreneur: If you are meeting the founder in person, it implies that the startup as passed the initial screening process. From here on out, there should be an equal focus on the selection and elimination of the company.

2)      Encouraging the entrepreneur to get feedback on you and your firm: Instead of references, we like to ask the founders to connect with our portfolio companies, so as to form their own opinion before working with us.

3)      Adding value during the process: We talk about the strategy issues facing the company and try to help with these issues even before we are an investor by creating connects and introductions.

4)      Use the product or service. Ideally one should be testing the product before the initial meetings. But we try to use the product smartly so that we can ask better questions.

5)     Providing transparency to founders: Reasons for passing/going ahead. What one liked/disliked--with their decision making and prompt

The Founders perspective:

Mark Suster has elegantly portrayed the mindset Founders should bring towards financing and developing relationships with investors. Apart from preparing for the pitch itself, founders need to approach fund-raising as part of their job description and treat it as a continuous process.

What we have learnt from founder meetings:

-        Clarity is a must, in terms of where the start-up is right now and where they want to take it.

-        Decision making should have an action bias as time is of essence at the early stages.

-        Transparency in internal conflicts and all potential roadblocks the start-up is facing.

Qs Founders should ask potential Investors:

1. How does my company fit with your sector and stage focus?

Not every fund has a sector focus. But for those that do, your chance of raising investment is much higher if you fit that focus. Founders should target funds that match their sector and stage, enhancing the likelihood of success.

2. Do you have anything competitive in your portfolio?

Ideally VCs will mention if any of their portfolio companies pose a conflict of interest but unfortunately, that doesn’t always happen. A VC already invested in a competitor is unlikely to invest in you and is almost certainly trying to get market insight than see you as an investment.‍

3. What are the steps to your investment process?

Every VC’s investment process will be different, so it’s important to ask what to expect. The duration of the process can vary significantly, so obtaining this information upfront helps you manage your fundraising efforts effectively.

4. How do you work with portfolio companies?

A good VC offers much more than just capital. You should understand what additional value the VCs you are meeting can bring When seeking investment, look for a partner whose offerings align with your company's needs, and consider any additional support they can provide in your decision-making process.