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Funding Early-Stage Ventures and What You Need to Know from the Women Shaping Venture Capital in NYC

 

women innovate mobile

Last week, Women Innovate Mobile (WIM) held a panel discussion that addressed funding concerns before a packed house at Apple’s SoHo store.  WIM, an accelerator that focuses on women-founded companies in mobile technology, invited 5 female venture capitalists who brought their unique experiences and advice to the event.  The panel consisted of Jeanne Sullivan, Partner at StarVest Partners, Joy Marcus, Venture Partner at DFJ Gotham, Ellie Wheeler, Senior Associate at Greycroft Partners, Kathleen Utecht, Investment Professional at Comcast Ventures and Donna Novitsky, Co-Founder and CEO of Yiftee.

The evening’s host, Kelly Hoey, Co-Founder of WIM, opened the discussion by asking the panel to share their thoughts on how to make the right impression during the first 5 minutes of meeting a venture capitalist.

“Just get it out of your mouth,” said Sullivan, referring to the fact that entrepreneurs need to be able to succinctly state their business plan without being “hung up” on the features and functions of a product.  It was an idea echoed by the rest of the panel who also contributed the following suggestions.

1. Think about what the problem is and how your product solves that problem.  Joy Marcus gave an example of a recent trip to Tel Aviv where she met many enthusiastic entrepreneurs who were eager to show their product, but did not explain why that product was made.

2. Have passion for your product.  What attracts Kathleen Utecht is when she’s able to really get to know individuals and their background and can understand how the idea for a product was first formed, thus showing how much passion they really have for their product.

3. Really consider your audience.  Donna Novitsky stressed that the goal of a venture capitalist is to make money for limited partners.  So, when seeking out funding, consider how big of an opportunity there is to gain substantial profit from your product.  At times, other outlets such as angel investors might be the more appropriate routes for funds.  The panelists were later asked when a company should seek VC funds and Novitsky stated that if you’re able to proceed with your business by keeping 100 percent equity, there’s nothing wrong with taking that route.

So, you know what makes them smile, but how about what makes them cringe?

For Joy Marcus, it’s never wise to say, “I built this last night,” which entrepreneurs have actually said to her.  Carefully thought-out products are much more acknowledged.  However, don’t only consider the product itself.  Other items of importance?

1. Supply the necessary data.  Sullivan noted that she cringes if she gets blank stares when asking entrepreneurs about the business side of things, such as pre-evaluation.

2. Consider your team and the breakdown of work.  For Joy Marcus, outsourcing your tech team isn’t the best course of action.  It shows more stability and security when a leader is running things internally.

3. Don’t oversell your pitch.  If you set high expectations and fail to meet them, you’ll come out looking worse than if you had set realistic goals.

4. K.I.S.S. (keep it simple, silly).  As Donna Novitsky pointed out, she definitely prefers a presentation with a maximum of 20 slides as opposed to 50.  Nevertheless, all the panelists said they appreciated the effort that goes into a presentation and can always use it as a source to gauge an entrepreneur’s way of thinking.

Before you reach that PowerPoint stage, entrepreneurs have to know some venture capitalists to talk to about their idea.  So, what’s the best way for people to try and connect with one?

1. Develop a warm introduction.  Before you begin to talk money, a friendly demeanor is always appreciated.

2. “Use your ecosystems,” suggested Ellie Wheeler.  Remember that these can include accelerators, meetups, universities or even LinkedIn as sources to find someone that can introduce you to a VC.

3. Once you’ve met them consider that you’re essentially, “Marrying this person,” as Donna Novitsky stated.  Sure, they can fund you, but is this person someone you want on your team that you can trust?

Finally, you’ve made the connections and had a meeting.  Unfortunately, it’s a “no.”  What comes next?

1. First, consider if it’s a “soft no.”  As the panelists described, there are only a handful of companies that secure an investment.  Sometimes though, a company shows promise, but may have to tweak certain things.  If the VC you meet is giving you constructive feedback, absorb it and apply necessary changes.  Kathleen Utecht described one company who would provide regular updates about their progress.  If you keep a VC in the loop about improvements, you might create another opportunity for a second meeting.

2. However, if you hear multiple “no’s,” it’s probably your team.  It might not be that team members need to be replaced, but maybe the VC is more comfortable with a different CEO while you lead the tech team.  Consider how flexible you’ll be with this.

Now that you know what they’re looking for, is your business ready to impress these ladies?

For full coverage of tech events in New York, visit The Watch.

About the author: Stephanie Santana

After receiving a dual degree in magazine journalism and anthropology, Stephanie moved to Korea to teach English to elementary students for two years. During her time there, she started a website for salsa dancing in Korea, BusanSalsafied.com. She is currently an editorial assistant at AlleyWatch and is happy to back in New York at an exciting time for startups.  She likes to document her experiences here: stephaniesantana.tumblr.com.