Inside VC – 5 tips for finding capital

Microsoft for Startups
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Whether you’re a first-time founder or a serial entrepreneur, one of the biggest challenges you will face will be securing outside capital. To provide you with insider tips and advice, we are talking with investors and venture capitalists and asking them to share some of their insights with the Microsoft for Startups Founders Hub community.

We sat down with Kate Beardsley, founding partner at Hannah Grey, a pre-seed seed fund investing in customer-centric founders reimagining everyday experiences. Her fund looks at companies across a wide range of verticals and aims to be as inclusive as possible at the earliest stage, and she had lots of insightful tips for founders.

1. What are the most important characteristics of an investable founding team?

Transparency – We want to understand what the working relationship is going to be like. I prefer founders who are willing to tell us the good, the bad and the ugly, rather than someone spinning a perfect story of the things they want us to know. We know they won’t have it all worked out and that’s part of why they’re looking to partner with us.

Demonstrated discipline – What have you done, either in a previous startup, or as an executive, or even in college, where you have demonstrated discipline and had success. You don’t need to have had an exit already, but there are ways that you can show how your work and success is attributable across different experiences.

Magnetism – Your goal is to attract capital, customers and employees. There is a magnetism that has to exist on some level. Often founders are great visionaries, but they need to hire people to fill the roles they’re less qualified for. We’re looking for people who can inspire others to take a risk and quit their job to join them in their startup.

2. How can founders nail the “remote pitch”?

I’m a big fan of how meetings have switched from in-person to online. I think it’s more efficient for everyone’s time. We can meet with almost anyone in a shorter period of time. The type of investors you can target is much broader because everyone is available.

Take advantage of the virtual meeting by creating a more integrated presentation, switching between deck and demo and experiences from a pilot as part of your pitch. I would also recommend that founders ask to record the meeting so they can watch it back later to see how they performed.

3. How should founders prepare to meet with VCs?

If you look at our website at hannahgrey.com, you’ll see that we’ve kept the process very simple. One click takes you through to our Investment Consideration Form which collects 33 data points on the company. This is the best way to get some perspective on the types of questions we would ask and it’s a great way for founders to practice. We’ve seen more and more VCs adopt this kind of approach, frontloading key questions for the startups to answer ahead of that first meeting.

This way we don’t have to go over this ground in our meeting and the onus is on me as a potential investor to ask more granular questions around what you’re solving. Going over these questionnaires is a great way to discover what matters to the investor before you sit down with them.

4. What’s the best way for founders to land meetings with an investor?

The best way to get to any kind of capital is through their current portfolio. When a founder that I’m already working with makes an introduction to someone they think is great, I take that seriously. Go through your contacts and start mapping the ways you’re connected to the investors you want to work with. Use your network’s connections to get in front of the people that matter.

5. What should female and underrepresented founders know about raising funds?

When I started investing there was only one type of investor, with a certain education, socio-economic background, geography and gender. In the last decade there has been an explosion - today there are a number of differentiated types of investors. We’re not at parity, but things are much better. 

Given there are so many forms of capital available today, the responsibility falls on the founder to some extent to research who would receive your business and understand it from the best angle. If you’re a female entrepreneur and you’re building something for a female consumer base, connect with female investors, or at minimum people who understand the problem you are trying to solve.

Don’t pitch anyone with capital. Be strategic about who you talk to, especially with early stage investing which tends to be emotional and local. I don’t recommend trying to edit yourself or be something you’re not. Be authentic and if it turns out that it’s not a good fit, that’s fine. You’re going to get hundreds of “nos”, but it will be so much better to be working with a group that understands what you’re trying to solve.

This is the best time ever to be starting a company. From a US perspective, there has never been more capital and resources in the market to support you along the journey. Of course, there is some risk involved, but I’ve never met anyone, whether they had a success or failure, who didn’t think it had been worth doing.

Do you have a great idea for a startup? Sign up today for Microsoft for Startups Founders Hub.