Rachid Sefrioui was invited to speak about fundraising to a group of entrepreneurs in Paris. Most of them ranged in age from 25 to 50; some are recent university graduates, while others where senior executives who recently left senior jobs to launch their own company.The dilemma was the same for all. "Though we are passionate about the company we launched, we feel that investors are completely indifferent to our passion. We feel they don't relate to what we do or what we are going to achieve. Why is that?"
First of all, most entrepreneurs don't realize that a VC or investor sees about 5 to 15 pitches per week, and that after a while, he or she just focuses on a mental checklist of about 10 key items. Aside from that, they are indeed indifferent to the intricacies of your business. At least in the first meeting with the entrepreneur.
The goal of the first meeting is to get a call back for a second meeting. And the entrepreneur gets that by leaving a good impression, and to have subliminally checked off the 10 key items on the investors mind.
When the entrepreneur gets a callback for a second meeting, then his goal becomes to subliminally confirm to the investor the 10 key items on his checklist, and to describe a "little" bit more of how the technology works, how the company is going to succeed, and how the investor is going to exit. YES. Investors want to know about the exit BEFORE they enter!
It is probably not until the third meeting when a little bit more due diligence is done by the investor that the entrepreneur can really get into the intricacies of his business.
For details of terms on a termsheet, read this post.
