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VC Tips: Qualifying the Buyer

I recently had an email exchange with a CEO that I was impressed with, and thought I would share.  I have eliminated some of the details that are proprietary to the conversation and the company, but you’ll get the point.  It highlights a key part of the fundraising process – qualifying your “buyer.”

I wrote a post a few months ago titled “Sell  Burgers to Meat Eaters,” which highlighted the importance of meeting with investors who know and have demonstrated success in your space.

Along these lines, it is just as important to ensure you are meeting with venture investors who a) have capital to invest, b) invest on the kinds of terms you are thinking of (stage, amount, valuation, etc.), and c) can move in the timeframe you’d like them to.  Experienced sales reps qualify their buyers all the time, but it’s an important part of the fundraising process as well.

Here’s the email exchange.  The first email was sent after our first meeting, and prior to our second meeting.  The CEO’s key email is highlighted.

———————————————————————

From: CEO
Sent: Monday, February 13, 2012 6:46 PM
To: Jeff Richards
Cc: Adam Altman
Subject: Re: Thank you

Adam/Jeff

A polite ping on what you are looking for us to cover tomorrow. Thanks.

CEO

———————————————————————

From: Jeff Richards
Sent: Monday, February 13, 2012 10:22 PM
To: CEO
Cc: Adam Altman
Subject: Re: Thank you

First meeting covered a lot of key details.  In tomorrow’s discussion we’d like to dive deeper on a) product roadmap, b) go to market plan (sales in particular), and c) competitive landscape.  Hope this helps.

Jeff

———————————————————————

From: CEO
Sent: Monday, February 13, 2012 10:30 PM
To: Jeff Richards
Cc: Adam Altman
Subject: Re: Thank you

It does, Jeff. Thanks. Before we spend more time further covering our business,  one question on my side, what is your appetite to invest in our next round of funding, which we are looking to do before end of this quarter?

CEO

———————————————————————

From: Jeff Richards
Sent: Tuesday, February 14, 2012 7:00 AM
To: CEO
Cc: Adam Altman
Subject: Re: Thank you

Great question.  We wouldn’t ask for the follow-up meeting if we didn’t have an appetite to invest.  I spent 10 years as an entrepreneur and raised more than $100M for my companies before joining a VC firm, so I know what fundraising is like and I am very focused on not wasting your time.

We’ve been tracking the space and the company for a year, and are looking to make an investment in this area.  My primary concerns center around XXXX, XXXX and XXXX (redacted).  The XXXX have existing relationships with customers and are clearly focused on the XXXX arena.  They shouldn’t own it, in my opinion, but my checks with XXXX tell me they are aggressively pitching your story.

Being direct here to try and facilitate open conversation.

Jeff

———————————————————————

From: CEO
Sent: Tuesday, February 14, 2012 7:16 AM
To: Jeff Richards
Subject: Re: Thank you

Jeff. I really appreciate the perspective. This is just what I want from an investor, especially one who has sat on my side of the table. I came from the XXXX space and can talk to your viewpoint. I look forward to a spirited discussion this morning.

CEO

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