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Pitch VCs Like a Pro: Expert Insights from Our Q&A with Investor Andrew Berg

Month: April 2024

Pitch VCs Like a Pro: Expert Insights from Our Q&A with Investor Andrew Berg

Posted on by erin

For startup founders, mastering the art of the pitch is akin to unlocking the door to growth and opportunity. Now with the market heating up again, we’re bringing you insights directly from the POV of the Venture Capital (VC) firms themselves—so you can better position your company for success. 

This month, we sat down with Companyon Investor Andrew Berg for his take on what to do—and what to avoid—when pitching a VC as a founder. 

 

Q: How many pitches do VC firms typically receive, and what percentage of those mature to the next stage? 

Andrew Berg: At Companyon, I end up looking at anywhere from hundreds to thousands of companies in a single quarter. We’re looking to catch B2B software companies in the gap between seed and Series A where we can help them achieve go-to-market fit with a whole host of internal resources on our end. It’s different at every VC firm, but because we’re super focused and get heavily involved with each and every company, we choose to pursue one deal every quarter. So, less than 1% of the pitches that I’m getting are going to move through the pipeline. 

 

Q: What’s the top mistake founders tend to make when pitching for an initial meeting?

AB: Not doing their research beforehand. VCs have a very particular type of company that they’re hoping to see, and it’s important that you know as much about their ideal fit before reaching out to make sure you’re not wasting your time. Some of what they’re looking for might be published on their website, and much of it probably is not. 

You’re going to have to talk to a lot of funds and kiss a lot of frogs, but doing as much research as you can beforehand can definitely get you fishing in the right pond. 

 

Q: What tips should founders follow when attempting cold outreach? 

AB: It’s best to start doing outreach anywhere from three to six months in advance of when you plan to raise. You should also find out what types of metrics they are looking for, and if you can’t find that information on their website, then ask them directly. 

The worst thing you can do is email blast hundreds of funds at a single time, or buy a huge list and then try to email everyone on it. Most of those emails end up in Spam, but even those that make it to inboxes don’t elicit a response—because it’s very easy to see that you don’t fit their Ideal Company Profile. 

So again, doing your research beforehand and getting a handful of meetings with firms that match your thesis, focus, sector, and traction is crucial. From there, you can start to widen your search by asking them, “Hey, who are some funds that you know that may be a better fit for our round?”

 

Q: What should founders focus on when reaching out to VC funds? 

AB: Metrics are going to stand out the quickest from the beginning. When a founder can run through everything—for example, growth rate, number of customers, or capital raised to date—either in the email directly or with an attached pitch deck, it builds trust and confirms to funds that we wouldn’t be wasting our time. 

Investors are also going to disqualify anything you’re saying that hasn’t happened yet.  Projections two years into the future, pipeline pilots, or new revenue streams from products that haven’t been launched yet are pretty meaningless. 

The best place to start is by being honest and transparent with where you are today and how you have tried to build a repeatable, scalable process for growth. 

 

Q: Once a founder has booked that first meeting, what are best practices from the VC’s standpoint? 

AB: First meetings are usually only 30 minutes, so getting to the point is really crucial to success. Founders will often open by going through the entire team plus advisors and board members, and that’s really not essential for a first call. It’s best to save those intros for subsequent meetings and instead focus on the problem it is that you’re trying to solve. Distilling the pain points as simply as possible while highlighting why people are willing to pay—and pay a lot—for your solution is key. 

 

Q: What does the first-meeting follow up typically look like? 

AB: Exciting prospects that are at the top of the list are likely going to get a follow up from the fund either same day or next day, but certainly within the week. A lot of firms host their weekly pipeline reviews on Mondays, so keep that timing in mind when you’re scheduling a follow-up after the first meeting. 

Generally, if you’re waiting a while to hear back from a fund, it may be a sign that your company just is not a top prospect. If that’s the case, it might be better to spend your time focusing on finding some new relationships. 

 

Q: What’s your take on the market trends shaping the VC landscape today?

AB: The market in 2023 was undoubtedly slow from a VC funding perspective. After the 2021 – 2022 craze, VCs are just being much more careful; a lot of funds didn’t deploy capital at all. At Companyon, we already only do four investments every year, so while we didn’t slow down, we are being more particular regarding metrics and finding the right company fit. 

For now, the market is definitely heating up and VCs are starting to write more checks, especially with early stage deals, and that should continue to be protected.

 

Key Takeaways

Some of the most important things you can do when pitching to VCs are: 

  • Conducting background research on founder-fund fit 
  • Avoiding the use of email list purchases or massive cold email blasts 
  • Leading the conversation with an emphasis on key metrics that matter most to your target fund
  • Focusing the first meeting on these metrics, your pain points, and your growth goals 

 

Enjoyed this peek behind the curtain?

Companyon accelerates growth for early-stage software companies by connecting them with the talent (not just advice) they need to tackle the most pressing issues. From marketing and sales execution to data modeling, fundraising, and recruiting, Companyon is a force-multiplier on founders looking to execute their way to an outsized Series A or B. If you found this post informative, check out our blog for more insights into the expansion stage. 

Driving Scalability in the Transition from Founder-Led Sales: Q&A with David McFarlane, Evan Whelchel, Jenny Vance (Part II)

Posted on by erin

For expansion stage startups looking to create a capital-efficient, repeatable, and scalable sales process, it’s critical to transition from founder-led sales to team-led sales in a way that elevates trust among prospects.

However, as sales teams at these companies often look to the founder to lead their sales strategy, they may ultimately end up struggling to implement their efforts as they lack the same level of frontline knowledge and expertise—which can have a significant negative impact on their ability to scale effectively.

This month, we sat down with sales experts David McFarlane (Operating Partner, Companyon), Evan Whelchel (CRO, Allstacks), and Jenny Vance (Founder/CEO, GrowthJen; Companyon Expansion Team Member) to chat about best practices for empowering the sales team to be just as effective as the founder—if not more so—at connecting with their audience and selling their product.

 

 

Q: Why is transitioning away from founder-led sales “mission-critical” as described in our last post? 

David McFarlane: A big part of it is that the whole organization, if you’re not careful, can have a tendency to just rely on the CEO because they do such a great job. They have all the domain knowledge, they’re so passionate about solving this problem, and they have all the authority on how to deliver on that solution. So, you find salespeople sitting back and bringing in the CEO to do the pitch. That’s happening at the very beginning of the funnel and it’s just not scalable when you’ve got to significantly expand your breadth and touch.

Jenny Vance: What I’ve seen in founder-led sales is that the founder is usually selling off of industry expertise, which builds a lot of trust. They often win despite the sales process that’s in place, and so they get this false belief that they’re great at sales when really, they’re very good at selling their product. But in the context of scalable patterns, sales skills, and techniques—they’re not using those. So, when a salesperson does come in without that knowledge and tries to use the sales skills, the trust established doesn’t carry over. And that’s where we start to see that falter. 

 

Q: How can organizations more effectively lead this transition without sacrificing sales opportunities? 

Jenny: The big key is this transition of knowledge at the right points. And what I’ve seen the most success with is starting at the top of the funnel, where there’s high volume and the least complexity—that’s what I try to transition knowledge around first. I keep moving down the funnel, which also turns our founder’s ad hoc involvement in the sales process into a power position, instead of us giving away the power of founder involvement in our first call, which can hurt our sales process downstream.

Evan Welchel: I would say the ultimate goal would be to make the CEO or the founder the escalation point—the real gravitas to bring in at the end. Optically, it helps you—especially if you’re selling into enterprise or moving up the market—to say, “Hey, the CEO is not going to take the first discovery call.” They can, and they’re probably the best at it, but the reality is that getting access to them needs to be warranted. 

It’s all about how you present yourself in the market. You may be a 30-person company, but you don’t have to look like a 30-person company. It’s extremely important for a company, as they mature, to remove that complete, easy access to executives and use it as an escalation point. That resonates really well with prospects over time, and it also makes your company look more credible. 

David: Part of the art form here is helping an organization to not try to do exactly what you may have done as the founder and the CEO, but helping it learn how to sell this product or service so that you can deliver it in a scalable form that isn’t dependent solely on your unique knowledge and expertise.

 

Q: What does this look like in practice? 

David: The first thing that you need to do is find a way to get all of the founder’s amazing knowledge, passion, and insight that has been at the forefront into a professional sales team—even into bots and an AI interface—in order to be able to engage the customer really successfully. That’s where I think conversational AI tools really come in, because they can help you go through that process of capturing and transitioning, which allows a CEO to engage asynchronously to the process. You can be in the meeting without being in the meeting. 

Through this technology, you can even intervene in real time if you want, but also understand what is being done successfully—and what is not—to help coach your team and move your involvement away from the very top of the funnel toward the end of the process, where you can be more useful and scalable. 

Jenny: When we think about this in the context of our revenue funnel, I want to start first by ensuring that the founder is not involved heavily in prospecting. Maybe they have to help with transitioning knowledge for pattern development and template design that helps get people started—but they need that volume off of their plate pretty quickly, because they can’t manage that as a founder. 

Then, they should focus on the next stage of the funnel and start to transition out of demos. What’s interesting to me is that we often see founders try to get out of the whole sales process all at once, but there has to be a transition plan in place. 

Evan: Any time you can replace a real-time call with a customer and give them the ability to learn asynchronously, you don’t have to block out time where you could be doing a new demo or following up with a new prospect or doing enablement on a trial—that’s critical, especially when you have a small team. 

Your high-value resources should be focused on pipeline progression and running the process and moving opportunities through the sales cycle. Those are your higher cost resources because of the competence required. And those should be focused purely on the closing motion whereas you can use things like asynchronous tools to focus on lower value activities like that but still have the same effect. 

 

Q: How do people in sales organizations or companies create that culture of trust where more entry-level sales people can be empowered to interface with higher-level prospects? 

Evan: I have a relatively controversial opinion on this—I am a firm believer that the way software or product is sold has changed dramatically. I don’t think it’s sold anymore. I think it’s bought. And those are two very different words.

The reality is, there has to be some sort of credibility. How many times have we all been prospected where the BDR doesn’t understand the first thing about the business and it’s very generic? We focus heavily on enablement with the sales team. 

They need to know the ecosystem, they need to know the problems they’re trying to solve and bring credibility in order to have a value-based conversation. They don’t have to know everything, but they just have to be able to bring the right people in at the right time who can help solve that problem. 

Jenny: When we look at that knowledge transition for the sales closer, many times there’s a belief that they have to know the answers to be credible—that’s not true. They have to create the belief that they can find the answers and that the company has the answers, as we are a whole entity that is working together. That’s the bridge. You have to enable them to be the person that can help the prospect find the answers, and that puts them in a position of power and establishing trust.

David: Active listening is such a critical part of this, which can sometimes play into the fact that your CEO and founder may not be the best salesperson if they don’t always actively listen. They think they have the answer—and they’re pretty convinced of that, or they wouldn’t have built the company. Sometimes they’re not picking up on really important objections and issues that are higher in the mind of the customer, because they can already see what they think is the solution. 

Good salespeople aren’t going to become experts in every asset of the company. They’re experts in managing this process. They’re experts in listening, they’re experts in not just waiting for the customer to make objections, but to find those objections and those challenges along the way and find the best way to handle them. That’s their expertise.

 

Key Takeaways: 

Some of the most important things you can do when building out your sales team and transitioning away from founder-led sales are:

  • Lean on your sales team and their expertise at implementing scalable patterns, skills, and techniques that founders may not be skilled in 
  • When it’s time to transfer founder knowledge to the sales team, ensure that you have a transition plan in place that starts at the top of the funnel first before moving on to tackle subsequent stages 
  • Leverage your founder as the primary source of gravitas by introducing them only as an escalation point during the sales process to both improve scalability and strengthen trust 

If you found this post informative, check out our blog for more insights into the expansion stage. Our team members have been there and lived to tell the tale—now we’re here to provide advice, guidance, and insider knowledge to the next generation of startup founders.