How to Meet VC's

I've been asked the question, mostly when on panels, of how to get access to VC's. So I thought instead of giving some non-specific advice, I'd simply explain how I found the deals I've done. Maybe this will give a better idea of how to get access to and interest from a VC. Note, I am focussing more on how to get the initial meeting and shortly thereafter. The heavy lifting which takes place on both sides as part of the due diligence process is not addressed with this post. 

Since joining Neuhaus Partners in late 2006, I've done 6 deals directly. I have a couple of new deals in the pipe but these are the six I will focus on. As you can tell, there's always a different angle to initial introductions.

apprupt

The apprupt founders initially launched and received funding from us for Jupidi. I've discussed before how the initial idea flopped and turned into apprupt. Further, I've also given specifics to the turnaround which took place there a couple of times when on stage somewhere. Nevertheless, this is one of the rarer situations where two founders found me, pestered me and eventually grew on me. I had initially started OpenCoffee in Hamburg (now organized and run by Tobias Worzyk). Kjell and Jascha, the two founders of apprupt started coming to this before even launching the business. They were interested in learning and asked lots of questions. They didn't simply do this once. They used a lot of opportunities to interact and basically received a lot of advice from me before even pitching their idea. Long story short, we initially became friends and when they were far enough along, they came to me with their case. To be honest, had I not known them to some extent by this point and had I not seen how "hungry" they were to launch something, they probably wouldn't of had a chance of getting an investment from us. We've had our ups and downs with the business but eventually I am convinced these guys will make something great of apprupt. 

Cellity

We've already exited Cellity, having sold it to Nokia in 2009. Nils, one of the founders, knew a lot of the people whom we knew. Nils and a couple others guys had founded Elkware while still in high school and eventually sold it very successfully to Infospace. One of my colleagues spoke to them about then investing in Elkware. This was before my time with Neuhaus Partners. Anyway, they passed on that, if I remember correctly turning their nose up at venture capital. :-) Yet, when Nils had launched Cellity, they came back to us to pitch this idea (together with Mangrove who had already injected seed money) and we eventually ended up investing shortly thereafter. As a side not, this was my first investment at Neuhaus Partners. 

Emporis

This one is a bit of an outlier. A former colleague of mine from SAP introduced me to this business. He was turned on to their business model as their tax advisor was also his tax advisor. I never thought I'd be getting dealflow from tax advisors so go figure. The founders of this business hadn't raised money from VC's prior to starting Emporis and were very open and honest in the initial process, making it clear that they were just as interested in feedback and our support as they were in our money. We spent a bit of time before actually investing here, creating a deal and working together with management to structure the company for investment. This was a good process to learn about their business and get to know management.  

OSN/verwandt

This business has been acquired since our investment by MyHeritage. I originally met Sven and Daniel when they pitched Dealjaeger to us. We simply couldn't get a deal done there. I don't specifically remember why but it just wasn't meant to be. Nevertheless, I still think both Daniel and Sven are one of the strongest manager combinations in Germany. Daniel is the organized, thinking, back-end manager. Sven's the analytical, out front guy. I don't think that anyone can wrap his head around ideas better than Sven. This intrigued me when they came back to us with their idea for verwandt. We simply liked what they planned on doing and they laid out a clear plan for what they were going to do. We were sold quickly on this one. 

PropertyBase

This is my most recent deal. PropertyBase was brought to us by HTGF, whom we have a close link to as one of my partners since in an investment committee of theirs. Having worked in the real estate sector as well as software space, I simply liked what they were doing. After meeting the two founders, I was quickly sold. Super smart guys with tons of experience in the space and a hunger to succeed. The process to close the deal took some time here but we decided to actually invest here like 5 minutes after they pitched our partnership. 

Smava

The last deal I am involved directly with is Smava. This deal came to us via one of their business angels who knew one of our investment managers. We were also sold on this company basically right after hearing their initial pitch to our partnership. Even though we were a bit skeptical on the segment, we truly felt comfortable investing in the management team here. Alexander and Eckart are super managers. I don't know of a team who is more analytical and diligent in their execution than these two guys and it's a pleasure to work with them.  

As you can tell, not one of my deals is an unsolicited business plan. Each and every deal we've done has come to us via our network. Either someone knew us or knew someone who made the intro. I stress over and over again not to just send you business plan via email. It's not going to happen that way. You have to take the personal angle and use your network to get access. If you don't have a network, get started building one. It's not really that hard to get some introductions. You better have a good idea which can get financed if you want to talk to VC's. Most importantly though, you have to get that first meeting if venture capital is the path of financing you want to take. 

Comments

[Fred T]

Absolutely networks because there already is trust among colleagues referring companies to each other. The first scenario was definitely of a trust-building nature which I truly admire.

One thing I can say up to this day, is I still admire an investor from FLOODGATE who took the time to remember and advise me after a very brief introduction of my company after the panel. To me, that is already a value-added "intellectual" funding that will help the company down the road.