Here's how to meet a VC (hint: not by paying to pitch)

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This is our second guest post (here was the first) written by a London-based VC. To allow them to speak plainly without jeopardising their fund or their career in the small village that is the London VC scene, I’m allowing them to post anonymously. FYI, LondonVC is a genuine VC and TechCrunch Europe has met them face to face.

There’s been a lot of tremendous discussion recently regarding the embarrassing practice of paying to pitch, such as here, by AVC Fred Wlson, Robert Scoble, all kicked off by Jason Calcanis here and later on here

Since more than enough has been said on this, I won’t get on my own soapbox except to add that obviously given the sentiment of my last post I agree without reservation that start-ups should never have to pay in order to present or pitch their business plan and company. Additionally, it’s unfortunate to note that in London, this practice seems to be even more prevalent than in the U.S. I know off the top of my head of a few groups that charge, including Envestors, London (in the region of £5,000), London Business Angels (around £1200 plus 5% of capital raised) and the London-based Angels Den (£799 and a 5% success fee).

But that aside, I thought it might be useful to clarify whether or not we (VCs) use business/angel groups as sources of deal flow. Answer: No.

Or to put it another way: If you think that by paying to pitch for some kind of business plan pitch preparation scheme or Angel network that you will be starting on the road towards meeting a venture capitalist you are basically wrong.

So that should hopefully put your minds at ease that we are not supporting the current practice or practitioners, and if they tell you we do, don’t believe them. I think you’ll see from the many comments on Jason’s blog post and others that all of the VCs are consistent in saying that they don’t like charging companies to present. Full stop.

So how do we really source our deals. In roughly the order of interest to us, they are as follows:

Introductions: As you can imagine there are many sources, but the most common and valuable are from: Existing portfolio company founders and entrepreneurs. These are probably the most valuable because if we’ve backed one group of people and believe in their vision, work ethic, likelihood of success, ability to build a team and company, then we will very likely also value their judgement in other entrepreneurs and operators

Previous colleagues and co-workers: I’m obviously biased but I believe that the most valuable investors are ones with operational experience. Aside from the obvious benefit of being able to actually help build, grow and add value to a company, the other benefit (simply for the VC firm) is deal flow itself. Some of our best deals have come from people with whom we’ve worked directly in the past and whose judgement we value and respect based on our personal and firsthand experience.

Fellow investors: This could be someone who has already agreed to lead an investment and is looking for co-investors or to fill out a syndicate or club deal. On the other hand this could also be from another investment team who is not going to be involved in the deal for one reason or another (wrong stage, size, fit) but who suggests that we take a look.

Events and networking: This includes the ones you’d assume such as Seedcamp, LeWeb, The Next Web Conference and other events across Europe, as well as other independent and regional startup competitions. There is also OpenCoffee, MiniBar, and of course TechCrunch events in the US, Europe and globally.

You’ll see next that I also mention “cold calls” as a separate category, and the reason events are less of a cold call than other forms is because simply being at the same event already gives some form of context and mutual interest in some specific space, sector, approach, or category. Additionally, it’s very likely that at an event entrepreneurs are introduced by someone else at the event, so that gives the contact more of a personal introduction feel rather than a cold call – which is an important distinction.

“Cold calls”: Similar to an event introduction (but without the event), this is simply when entrepreneurs contact us directly and out of the blue. I won’t lie, an introduction from someone we already know – as mentioned above – is always much more valuable than a cold call, but if you’re able to seek us out, get in touch, and write an email/ping that gets our attention that’s appreciated and always considered as well. We get messages on LinkedIn, Xing, Facebook and of course tweets.

Self-sourced: Very occasionally because we really like a certain space, concept, idea or see an opportunity somewhere, we may go seek out someone who might be thinking about something similar or have a similar point of view. So don’t be surprised (and hope you don’t mind) if we come knocking on your door. And we’ll simply use the same methods described above – We’ll try first for a mutual contact to introduce us, but we’re definitely not afraid to cold call.

I would expect that some folks will find this post to be overstating the obvious and others have posted similarly, including askthevc from earlier in the year (Where Do Venture Capitalists Find Their Companies?) but since I’ve been asked quite a few times – especially lately – I thought it couldn’t hurt to lay it out (again).

The bottom line is that as investors, we live and die by investing in great companies. In order to do this, we need to find these companies in the first place. No matter what anyone says, and even though we already have great deal flow, we still need and want to meet more great entrepreneurs. Like anything else in life, we never know when the next great thing is going to come along or how we might run into it. If you’ve got an introduction to make or an idea brewing, then get an introduction from an existing entrepreneur, or find the venture guy you want to talk to at the obvious event. But definitely don’t pay to pitch.

  • Daniel Tenner

    Great article. Another excellent one in this vein is from an enterpreneur-turned-VC, at . Specifically, he has a series of articles about pitching a VC at and one article outlining various ways to get access to a VC:

  • Frustrated inAtlanta

    I’m surprised so many writers on this topic have ignored the other Pay-to-Play scenario making the rounds, and that is of the deal brokers getting monthly retainers and success fees to use their contacts to provide these introductions. As the economy encouraged more first time entrepreneurs without VC connections enter the market, this practice has become exceedingly common.

  • Duane Jackson

    Paid-for services can and do work though.

    A business I’m involved in (not KashFlow) successfully raised the money they needed via London Business Angels.

  • Farhan Lalji


    Can work and do work, but at what costs? 5% of capital raised and a huge up front fee is a bit rich, no?

    If the venture is worth investing in, my guess is that it could and would have raised the capital in some of the other ways suggested.

    • Duane Jackson


      I agree entrely with the general sentiment of the post. It was just the comment
      “If you think that by paying to pitch for some kind of business plan pitch preparation scheme or Angel network that you will be starting on the road towards meeting a venture capitalist you are basically wrong”

      that I disagreed with. Not clever to pay, and certainly not ideal – but it’s not a broken model

  • Mark Littlewood

    Paying up front to present to investors should disqualify someone from being an entrepreneur.

    This is a different thing to using a corporate finance house to help you manage an investment process. Advisers can be very helpful in the latter situation but you need to get the right ones on board and know what you want them to do.

    A couple of panels we have run recently have considered how to find and close investors and the lessons learned by founders who closed funding this year.

    They seem pretty relevant to this conversation.

  • Mark Littlewood
  • Imri

    To meet VC’s, we so far mostly relied on recommendation from past colleagues.
    From time to time though, VC’s contacted us, sometimes based on our website, sometimes based on our listing in a startup index.

  • OoTheNigerian

    I for one believes in the value of the open market. If people charge to pitch, let them. If others do not, let them too. It is up to the entrepreneur to choose how he wishes to spend his or her money. I will never pay to pitch simple, but others will.

    There is a reason why propriety software and open source exist side by side and it is a question of choice. Let the people choose.

    If people are being deceived and taken advantage of, that is a different ball game.

  • Another anonymous, but (no really) very important person

    I’d love know who this guy is:
    “I’m obviously biased but I believe that the most valuable investors are ones with operational experience. ”
    Bullshit. Danny Rimmer couldn’t manage his way out of a paper bag but he’s got of Europe’s best returns. Ditto Mark evans.

    “Very occasionally …. we may go seek out someone who might be thinking about something similar or have a similar point of view.”

    ah! so you’re not one of the tier one VCs currently setting up an outbound calling operation.

    I wonder if this guy is really a proper VC at all…

  • Maxim

    Tons of companies pay for booth space in B2C and B2B events, why not to pitch an audience of potential investors? A good idea is a good idea, regardless to the context you present it. If I was a VC I wouldn’t dismiss VC events for the sake of it.

  • S Laylee

    Oh my word! To read this guy spouting his pious and sanctimonious BS, one would almost be forgiven for a minute for thinking that VCs were “salt of the Earth” decent people.

    I don’t normally make generalisations but in the case of Estate Agents, Headhunters and VCs I make an exception. Let’s all be in no doubt: VCs are morally bankrupt and devoid of humanity when it come to protecting their investment.

    I can’t get over this guy’s tone that tries ot come across as “the nice guy” and, dare I say it, a victim. His pompous and patronising drivel is reflective of an industry that has long since lost its way and has its head planted so far up its anus that it can no longer see the light of day. What concerns me even more is how people pander to this nonsense.

    Let’s be real for a second: firstly, if you get a VC involved in your startup, historical evidence suggests that in all likelihood they will try screw you at some stage. It’s a simple derivative of the fact that your interests are opposed: you, the Founder, want to grow and build, they want you to focus on exit (and think they know how to run the company better than you). When will the VCs of the world either find some hubris (you’d think by looking at the appalling returns most of them produce for their investors this wouldn’t be a problem but apparently it is!).

    Secondly, this crusade by Mike Butcher and TechCrunch against Angel Networks etc that charge people to pitch is populist BS and anyone who buys it frankly isn’t worthy of investment on the basis that they are so easily duped. Think about it folks: their main audience is you guys, the entrepreneurs who are naturally opposed to anything that increases your overheads so it’s a no-brainer for them to pick up this cause to pander to their target audience (and make revenues from your many site visits and attendances at conferences) – of course they’re going to be your champion regardless of what they really think.

    As an investor I can tell you that the reality is that most of the start-up ideas out thee are dross (sorry, but you are and the failure statistics back me up on this) and there needs to be a filtering mechanism to prevent the whole system clogging up with the crut and investors just taking their ball and going home. This is where the pay-to-pitch model comes n. the Angel networks filter for investors so that when they turn up the jokers and time-wasters aren’t there. I’ve been to Angel networks that do and don;t charge and the difference was marked. I agree with OoTheNigerian that free market economics should be allowed to work and that is what happening.

    The final point I’ll make is that in reading TechCrunch (a fine publication I would like to add and one against which I have nothing despite how my earlier comments may have come across), there is a tendency to believe that the only “start-ups” out there are tech start-ups. Of course, this isn’t so. My point is that the TechCrunch crusade against pay-to-pitch is dangerous as if a consensus is formed not to pay-to-pitch (and I feel one is developing) then as this is just a small (but significant) segment of the market, its overall impact will be minimal. The market of pay-to-pitch will continue on other industries unabated and Tech will just get left out an relatively unfunded. Then you all lose.

    So think carefully here about the facts and try to separate your emotions of what you’d like to see be the case from what reality demands must be the case. Hey, I’d like to go back to the days when I could watch Premiership football live in my TV every Saturday but the reality is that I have to pay for it because someone has to pay the guys to go and broadcast it. Just because it’s something I’d like to see, doesn’t make it happen.

    • not a techcrunch rep but

      “…in reading TechCrunch … there is a tendency to believe that the only “start-ups” out there are tech start-ups…”

      Was it the “tech” or the “crunch” in the name that gives you the impression it snould not focus only on tech start-ups?

      • Robleh Ali

        I think the point he was making that there are other people trying to raise money for new businesses – let’s say a chain of sushi bars – which have nothing to do with tech and in that context pay to pitch is not such an anathema.

        To be fair to Envestors, we had a (free) meeting with them on an earlier web startup we did and they said to us plainly they were not really web tech focused. Maybe they have changed focus since then (a couple of years ago) but there was no pressure on us to go through to the pitch, they were perfectly honest.

    • Tech industry veteran

      While I appreciate S Laylee’s comments, I believe that it is quite unreasonable to cast all VCs, all investors, all angel groups, as well as all start-ups, as identical in all respects. My personal experience with VCs is that some are on the banking/financial side and some from the operational side. Neither is immune from success or failure in producing successful financial returns for their investors. I have had the most joy (personal and financial) in dealing with VC firms that have both types in their ranks.

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  • Iqbal Gandham

    Use the £1000, hire someone for 0.5-1 month ( I know peoplewill ask where), and get them to go out and get you some customers, surely a better spend for £1000. That way the VC’s will start to come to you….maybe this is NOT what VC’s really want, and they need to create this artificial sense of “startups need VC’s/angels”


    P.S not that I am saying they do not, but what do they need more, money from customers or money from VC’s

  • شكشكه

    very nice Resources

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