5 THINGS TO AVOID WHEN NEGOTIATING WITH PRE-VENTURE VCS

If you can avoid the most critical mistakes outlined below, you will increase your chances of getting funded. To be clear: flawless pitch secured pre-seed funding. A fantastic pitch can undoubtedly boost your chances of receiving finance, but even the best pitches cannot salvage a bad firm. 

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1.Not Describing One’s Background

All too frequently, when VCs are asked a founder about their background, get something like this: "I studied X and worked in tech for the previous ten years..." and then they go right into outlining what they are developing.

The assessment and understanding of a company's staff, especially at pre-seed, is far too crucial to be summarized in ten seconds. This type of reaction always prompts to rewind the tape or interrupt to ask further questions about the background: where you worked, what were your best successes there, why you moved on, and so on. This frequently consumes valuable meeting time. 

When asked about your past accomplishments, brag: list your achievements, list the triumphs of the firms you've worked for, identify the highlights from that time, and discuss your own achievements (sports, hobbies, etc.).

2. Rambling When It Is Inappropriate

Meetings typically begin with a simple question, such as "Do you have any income at this point?" or "What is your current MRR?" and receive a ridiculously convoluted response. As perplexing as the explanation for the response may seem, the bottom line is frequently as follows: 

Spend no time answering yes/no or number questions. Allow VCs to ask further questions if they believe the answer is insufficient (their job is to go deeper). 

It's natural to want to add background while answering more open-ended inquiries. Being overly brief is significantly more prevalent and destructive than missing the point.

3. Not Explaining The Problem Clearly

Generalist VCs cannot be specialists in every field in which they invest. In truth, they frequently know little or nothing about the industries in which they invest, and they sometimes know nothing! This is also true for many pre-seed VCs. 

Founders generally assume that VCs understand the industry and the problem they are attempting to solve since it is so evident to them. As a result, creators frequently bypass the fundamentals and dive right into the solution's genius. This can be a very expensive mistake. They must understand the problem being handled to properly appreciate your business. They must understand that it is genuine, and that people care profoundly about it. This becomes very difficult to explain without stepping through the basics when VCs have not lived the challenge. As a result, you should express the issue as though the VC is five years old. Explain the industry's underlying structure and the difficulties inherent in that structure that you hope to tackle. The value of this cannot be overstated by venture capitalists. 

The challenge is frequently at the heart of the business, and if you execute this successfully, you will be able to answer one of the most important questions that VCs have: 

Is this a genuine, major problem that people/businesses care about?

4. Going Into Too Much Detail In The First Meeting

If you've properly framed the problem, it's time to explain how your solution solves it. The Art of Summarization is critical at the first meeting, however so many founders go ballistic in presenting the tech specifications of the product, how the AI works, and the user journey in detail. Although vital and frequently spectacular, diving into these things now will simply dilute and distract. 

Instead, begin at a high level and work your way down to the individual, practical level. Allow the VC to inquire about the specifics.

5. Lack Of Information Of The Competitive Landscape 

"How does this differ from X?" is a frequently asked question among venture capitalists. If the founder is unable to answer this issue convincingly, it is frequently the VC's responsibility to determine how a specific company's approach differs from that of others. Because of a generalist VC's insufficient industry knowledge, this greatly lengthens the evaluation process and makes it prone to misconceptions and blunders. Furthermore, it indicates that the creator is unfamiliar with the company's competition and that the company may lack considerable distinctiveness.

Knowing and explaining who your competitors are, what they do, and how you differ helps you prevent negative signals, raise the chances of a correct evaluation, and decrease the time it takes to obtain feedback. Few people do this successfully, partly because it is unpleasant to investigate competition, but if you can, you will stand out.