by David Nevas, Edison Ventures Principal
(originally posted on 9-12-2011)
Since our blog at Edison Ventures has a stated goal of “pulling back the covers” on VC, I thought I’d take a moment and give you a view into how an associate can help you get, and stay, on the radar at a VC firm (or at least our firm). I’ll provide an overview of what we do in general, specifically how we function here at Edison, and give you some tips on the care and feeding of your associate.
So what is a VC associate?
Like many titles in VC, the term associate is applied broadly and covers a wide range of experience, responsibilities, and skills. At Edison Ventures, most of us have held operating roles in startups or technology businesses and have advanced degrees.
The main metric of our success is a simple one: find great investments. So, for me winning = helping my companies raise money from our firm. I view my role as cheerleader/guide/coach, and I take responsibility for getting you through every step of our investment process. I am your eyes and ears on the inside.
How does the process work at Edison Ventures?
We team with the investment professionals to create an investment thesis about a sector, and then target the top handful of companies that we can find that fit that thesis. We contact the companies that we think have the highest potential in each sector and start forming a relationship with the management team. One of the ways that I think we are unique is that we view investing as the culmination of that relationship building process, not a one-off yes/no decision. Often our relationships span several quarters or a couple of years. We have found is that our best investments have come with teams we have gotten to know for several years prior to investing, often as a result of the relationship they have formed with our associates.
So I’ve gotten a call or email from an associate, what do I do now?
First, do your homework on the firm that reached out. A quick trip to the website should clue you in to their focus (have they done deals in your industry/geography?) and stage (pre-revenue, growth, expansion, etc…). If you think there is a fit, do a deeper dive and read the bios of the team that invests in your space, and check out the companies in their portfolio. You don’t need to immediately respond to the inquiry, give yourself a little time to research the firm, but within 1-2 days is probably a good rule of thumb. If the firm invests in your space, but only in later stage companies or you are not currently looking to raise money, my strong advice is to still respond. Let the associate know you are not a fit for them right now, but you’d like to get to know them. A 15-20 min call is a great way to get introduced, and there are often ways the VC can help prior to an investment. I’ve helped several early stage companies get their lead investors by introducing them to our network of angels and other VCs, and have made introductions to our portfolio companies that have led to high-level partnerships. You might get something out of the call as well, other companies with momentum in your space, possibly a customer referral to one of our portfolio companies.
Is the associate just fishing for info/diligencing a competitive investment/wasting my time?
This is a question I hear a lot, from both entrepreneurs and other VCs, and I can appreciate the concern. I haven’t seen this at Edison and I’d expect real cases of this “in the wild” are rare. It just doesn’t make a lot of sense – the most important thing I have as a VC is my reputation, and why would I risk it to get a bit of additional diligence data for a company we may not even invest in? I have very little to gain, and a whole lot to lose – this is a small enough community. An associate that does this on a regular basis would find their deal flow dried up in no time.
What you should be aware of is that if we’re interested in the space, it is natural that we are speaking with similar companies. There is no sleight of hand, we are simply trying to find what we believe is the best combination of product and team that we can invest in. We absolutely do not share anything confidential (for the same reason as above), and our goal for the call is not to shake lose some nugget of prized data. If an associate is asking about financials, it is in the interest of discovering if you are a fit for their firm (or how far off you may be) and to get a better understanding of your business model.
We’ve had a call, now what do I do?
This is one area where you can really differentiate yourself; follow-up and persistence counts. If it seems like there was a fit, make sure to nail down next steps (a follow-up call or meeting, intros to portfolio companies) and confirm any material needed from your end (financial model, deck, etc…). It’s perfectly acceptable to follow-up within a couple of days if you haven’t heard anything back. Momentum matters, and it’s in your best interest to keep a sense of urgency throughout the process.
If there wasn’t an immediate fit, you should go into relationship-building mode. An occasional email with big customer wins or product announcements is great. Even better if you can show how the business is performing versus plan when you initially spoke, and talk about new initiatives or adds to the team. If you have an online newsletter add me to it. The important thing is to be able to stay on the radar screen and show continual progress. Finally, check our Edison calendar. We list all the events that our team will be attending, and we love to use those as an opportunity to meet face to face.
I hope you’ll find this helpful, and if you have more questions or would like to speak with other entrepreneurs about their experiences working with associates at Edison, feel free to ask me or fire away on our Edison Forum.
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