Behind the scenes #15 | Why do we contact startups numerous times?
היA founder approaches a VC, who arranges a meeting… then another and another and still they keep asking for more data. Sounds familiar? Are we causing you frustrating? Welcome, dear founders, behind the scenes so that you can see what hides behind this unintended joke. As in all editions, we will share with you our very own perspective on the matter. In other funds, of course, details may vary a little, but the rule is the same: get to know your future partner as best you can.TDJ Pitango Ventures team
Why do we contact startups numerous times?Top prize goes to the person who correctly guesses how often founders expect decisions to be made when meeting their funders for the first time – what else is needed if all the info requested was in the pitch deck, just followed by a wonderful presentation? We have decided to shed some light on this question, showing you step by step why we need to make regular contact with any new potential startups.Our fund considers offers from some 800 companies each year, meaning that we cannot get to know all of you as much as we might like when we meet to learn all about how your company functions, although we do have to get close to each and every startup in order to have a generally accurate overview of your operations. This is when we look at how compatible startups and funds are, whether you are in our investment mandate and if we able to add real value to your project.We really value personal contact and the chance for many of our team to get to know you directly. TDJ Pitango Ventures works on a consensus principle, so that we all become convinced we are getting into a promising business venture, one which fits our criteria, but also that we are entering into partnership with persons we will be able to treat like our partners. This is why we initiate meetings with various people.In this part of the investment process we do what is necessary for us to understand the analytical data, sales plans, unit economics, growth, etc, but also we aim to meet so we can get to know the founders better. This is also a chance for you to become firmly convinced of who we are and how we work. You also have time to collect opinions about us from your networks or by contacting companies in our portfolio.Only after a few meetings are we able to collect all the data and decide whether we want to move forward. If so, we will present a term sheet and begin a process of due diligence, which aims to verify all the things we have learnt thus far as being for real.
In today’s world, there are situations in which competing VC’s are making very quick investment decisions, sometimes in a matter of hours. We believe it’s neither good for the VC’s nor for the Founders. After all, an investment is a bit like marriage – only a beginning of a trip together. If you embark on this trip after barely talking to your bride/groom, chances are it will end in disaster. Wojciech Fedorowicz
Founders may ask themselves why a VC needs to meet the team a few times, prior to making a decision. The goal of the VC is to watch the founders in action. It’s not only about what they say but about the process for reaching the answers. The investor want to witness a real time simulation of how problems are described, who is consulted and ultimately how decisions are reached. So, meeting a VC is just a dry run of the real world activity for the startup.Daniel Star
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