With a competitive marketplace, new technology companies may find that they need more capital to accelerate their company’s growth. The question becomes how to effectively approach investors outside the company’s geographical market. At FoleyTECH Chicago 2016, Liam Donohue, co‑founder and managing partner of Boston-based .406 Ventures; Ned Schwartz, partner of Ohio‑based Drive Capital; Tasha Seitz, the chief investment officer of Impact Engine, a Chicago venture capital firm; and Joshua Siegel, the general partner of Rubicon Venture Capital, a firm with ties to both the East Coast and the West Coast, discussed the finer points of fundraising from coast to coast on a panel moderated by Foley’s Lisa Conmy. Below are a few of their tips.
What Investors Are Looking for from You
As can be expected, your target investor’s appetite for risk may vary depending on where the fund is located, and it’s important to keep this in mind as you travel from coast to coast. Additionally, different geographical regions may have different expectations for their investment: the Chicago market may be more conservative, with a large focus on your company’s revenues. East Coast venture capitalists are more likely to require certain milestone events before they’ll invest, while the West Coast market, with a wealth of investors, may be less concerned with this. Regardless of where you’re seeking capital, you should keep the following tips in mind:
Position Your Company to New Investors for Additional Capital
Leverage your existing network to obtain introductions to venture capitalists in different geographical markets. Once you have arranged the introduction and initial meeting, be sure to use your time valuably. Additionally, be sure you can explain why you’re seeking capital outside of your geographic market as many investors will want to know why you’re not seeking local capital. If you don’t have an answer ready for this, some investors may assume an investment was deemed too risky by the local market. Here are a few key tips to keep in mind:
If your target investor ultimately chooses not to invest or it is clear from the pitch that it is not a good investment fit, ask for feedback on your presentation so you understand how to improve for future pitches, and keep the investor apprised of your company’s growth. While an investor may initially say “no” to investing in your company, that same investor could become an ally for your company in terms of making future introductions or investing in a later round. Remember that the venture capital market is a relatively small industry, and word travels fast: a particularly bad first impression could significantly impede your ability to find capital in the future.