June 15, 2021

VC Explained: How venture capital firms find startups

VC Explained: How venture capital firms find startups

How venture capital works can be opaque, particularly for the many people who don’t have a lot of previous exposure to the space. That's why I'm starting my VC Explained blog series. Once a month, I'll pull from the many questions I get from founders and entrepreneurs to break down a different area of VC: from what we look for in startups to the economics of early-stage investing and more.

One of the most common questions I get from founders the first time I speak with them is pretty simple: they want to know how I found them. It’s a question they have because the founders I speak to are usually quite early in their journey — seed stage founders, often who are genuinely hoping to get an email like the one they’ve received from me reaching out.

And as a Partner at an early stage venture capital firm, one of the most important parts of my job, if not the single most important part, is finding great startups to talk to — without that, we can’t make any investments at all. Because of the value on both sides, I figured I could kick off this series by de-mystifying it, because there aren’t any secrets here!

Send VCs clear and compeling emails

Hands down, the absolute easiest way for you to get in front of me, and any investor, is just...sending  an email. My email is public (it’s just allison@hydeparkvp.com!), and on top of that, we have an open submission box on the Hyde Park Venture Partners website, and all submissions go directly to my email inbox there as well. The rest of the team also has easily identifiable emails. And — we read everything that comes in.

That doesn’t mean we respond to everything — but if you send me an email with a compelling pitch deck that’s in our investment scope (software or software-enabled, with a team based in the midcontinent), I’m quite likely to respond and set up a call to learn more. But let me reiterate that, because it’s important — I will absolutely read and respond to your email if I clearly understand two things: One, that you’re located inside our investment geography (since it’s a required part of our thesis) and two, that you’re building a business that is primarily software with a compelling story based on who you are, the problem you’re solving, and your evidence of success.

Leave a good impression on one venture capital firm to get intros to others

Some funds (particularly the most established, and often later-stage funds) require a warm introduction from another fund, entrepreneur, or person they respect in the venture capital network. And it makes some sense — if another smart person is willing to use their political capital to make an introduction to a company, it’s likely that there’s significant value on both sides of the table.

Being honest, most of the best startups we source are identified this way. A regular part of the workday for all venture investors is talking to other investors — peers with overlapping theses who might invest in different stages, are in a slightly different geography, or who are focused on an industry vertical differently. Introductions move in all directions, and there’s value throughout. This network can seem really difficult to break into from the outside, particularly if you don’t come from a community that’s tightly linked to investors, but once you make a positive impression on one investor, even if they don’t invest, it’s quite likely they’ll introduce you to others who might be a good fit.

Make yourself visible in the startup community

Of course, it’s outbound that triggers the most questions from founders about how I found them. It’s usually one of two things: they were on a list (accelerator, incubator, pitch competition, conference, etc) or they were in the media.

For founders, that means that a big part of the value of doing pitch competitions isn’t just the prize money, it’s so that folks like me can find you and learn more. The best accelerators focus on helping you get your business to the next step and refining your pitch — and pre-seed and seed stage investors will happily reach out when they’re excited. Any media coverage you get (local news very much included, and generally easier to achieve) will likely catch the attention of an eagle-eyed investor as well.

At the end of the day, how venture capital firms find you matters much less than their excitement about your story. In that first call, we’re going to ask you some basic questions:who you are, what problem you’re solving, how you came to the problem and figured out the solution, and where you are commercially. Then we’ll  dig in from there. Have excellent answers to those questions, and you’re well on your way. And when you think you’re ready to answer them — send me an email, and I’ll be here.