The First Meeting
Your goals when meeting an investor for the first time should be to 1/ qualify the investor, and 2/ learn from them. To do that, make sure to make the meeting two-sided.
People say that you never get a second chance to make a first impression. And they are right. The first conversation with an investor is particularly important because it shapes their opinion of you. Let’s talk about how to navigate that meeting.
Meeting Purpose
Your primary objective in a first meeting is to qualify the investor and figure out if they are relevant for your round. That goes back to the idea that you are filtering rather than convincing.
Remember: you are not asking for an investment or applying for funding. You are offering an opportunity to a VC to make an investment in an exciting startup that can be foundational to their very career. You are partnering with them for a very long time, and you want to assess them the way you would any other partner - which is exactly what they will be doing as well.
A secondary objective is to learn from the VC. That tends to be a natural consequence of qualifying investors, but it is worth calling out separately because it might require special preparation. For example, you should look up companies that the investor has backed that are relevant for your startup. And you should think about questions that might help you learn things that you can’t otherwise find out. After all, you are speaking with some of the most accomplished, intelligent, and connected people on the planet, who also have insider knowledge that you can only dream of. It makes sense to take advantage of such an opportunity as much as possible.
Typical Meeting Agenda
Let’s assume that you have scheduled a 60-minute first meeting with an investor. Here is how it would typically go:
It is common for the investor to offer to introduce themselves and their firm first (and if they don’t offer, you should probably prompt them). They will probably spend 5-10 minutes doing that. You should pay close attention to what they say and how they say it. In the back of your mind, you should be thinking about follow up questions.
Afterwards, it’s your turn to introduce yourself and your company. That will probably take 20-30 minutes. You should be concise, confident, and clear in your delivery, which should come in easily because you have had lots of practice with entrepreneurs. Your personal story should ideally flow directly into your observations about key worldly trends, which became the basis of your startup. Recall the best practices summarized in 10-Pager (Main Deck) and stick to them.
The remainder of the time should be spend discussing. You should try to make this part a two-way conversation as much as possible.
Make The Meeting Two-Sided
As you tell your story, you should expect questions. That’s a good sign - it means the investor is paying attention and engaging. And because you practiced with entrepreneurs beforehand, you will probably have great answers to their questions.
Similarly, you should come prepared with questions of your own. Some of those you will have natural opportunities to inquire about - for example, it makes sense to ask about the investor’s opinion about the market and the competition when you bring that up. Other questions you can ask in the last 5-10 minutes of the meeting, just before you wrap up.
Here are a few typical examples of different types of topics and questions:
About the firm - it is pretty important to understand how the firm works early on. Otherwise, you run the risk of process being used against you - typically to buy time or gain leverage. You can ask something like “walk me through how you make investment decisions as a firm.” Details really matter here. For example, is the firm consensus-driven, based on a majority vote, or can partners make unilateral decisions? How long does a typical process take, from meeting to term sheet to money in the bank? What does due diligence look like?
About the partner - ultimately, you are partnering with a specific person and thus should focus the majority of your due diligence on them. There are many questions that you can ask. If they have a lot of experience in your space and/or competitive investments, how do they think about conflict resolution? If they have little experience in your space, what is their understanding of the market and its evolution? How do they help existing portfolio companies? How do they handle investments that failed? And so on..
About your market and competition - good investors see most deals in verticals they are interested in. You can take advantage of that to assess the VC as well as learn from them. For example, when you describe your market and how you are different than the competition, you can ask if they are familiar with the company. What do they think of it? Did they see the pitch for that company’s latest round and if so, why did they pass or invest?
Don’t try to ask all of these questions in the first meeting. Instead, think of this as the beginning of a conversation. Start with whatever fits naturally and bank the rest of the questions for follow up meetings.
Tactical Advice
Using a deck - I highly recommend not using a deck in the first meeting. Remember: you are not fundraising yet. You are starting a conversation to get to know someone - and see if they want to get to know you back. You just met, it’s too early to ask for their hand in marriage (which is what a deck signals)!
Answering questions - don’t try to answer every question that you get asked. Instead, assess things critically. If the questions are good, engage as you see fit. And if they are not, then ignore them or push back. Remember: investors are trying to assess you the same way you are assessing them. And a big part of that is trying to get a feel for the judgement and critical thinking capabilities of the other party.
Name dropping - as I mentioned in Network with VC-backed Entrepreneurs, one of the goals of networking is to have multiple strong connections to investors. One or perhaps a couple of those will do the intro. The rest can make for great references. So you should find a way to naturally mention them in your conversation with the investor. Interested VCs will certainly be doing due diligence on you after the meeting and in this way you can influence them to talk to people in your network that are already willing to bat for you.
Exiting meetings - hopefully your meetings are engaging and productive. But what if you are just not connecting with the investor? Perhaps they are quiet and obviously disinterested, or even rudely looking at their phone. Or perhaps you are just not compatible for whatever interpersonal reason. In those cases, it helps to have a plan for exiting meetings. I suggest pivoting at an appropriate time to something along the lines of “What we are working on is really specific, so it’s not a good fit for most investors. Tell me, what are you most excited about?” Then let them talk about their priorities and interests and offer to connect with entrepreneurs working on those verticals. Afterwards, thank them for their time and move to the next meeting.
Assess Founder / Investor Fit
Ultimately, startups are very much a personal affair. Your job is to assess the fit you have with the investor you are meeting.
That’s not an exact science. But you will know it when you experience it. When the fit is there, the conversation is enjoyable, exciting, and productive. Both sides are on the same wavelength. There is a discussion rather than a one-sided monologue. And a desire to follow up in multiple ways.
In those follow ups, you ultimately have to answer whether you can imagine working with this person for the next 10 years. Can you trust them? Can you confide in them? Do you value their opinion? Will you seek their advice in tough situations?
Those are all hallmarks of a healthy partnership. Naturally, neither party can answer such big questions on the basis of one meeting. That’s the topic of the next section.