As a startup, it's tempting to believe that with a little investment you'd have a much easier time establishing partnerships with companies or acquiring business customers. The fact of the matter is that it's not always the case.  Yes, money makes it easier to hire the right people who have relationships you can leverage, and it does provide some degree of credibility.  However, if you're targeting a risk-averse customer base it's unlikely you can pick up the phone and close deals just because some VC firm put money in the bank.  A risk averse target market still wants to see market validation and a sustainable business. They still want to see others take the risk before they jump on board.  And, you're still going to have to do that cold-calling we all love so much.

Keep your eye out for an earlier adopter - a company with a proven track record of adopting non-standard solutions.   

With a 60-page business plan, no customers, a seriously disruptive technology and two entrepreneurs still in college, I guess it was no wonder we didn’t find an investment post Internet bubble.  While numerous people subtly told us we were raising capital in an ass backwards way, it never clicked that they were talking about us (we rocked of course!) and, when it did, we thought they didn’t get the power of what we were building (stupid fools!).

I wouldn’t be surprised if other first time/young entrepreneurs find themselves in our shoes at some point.  Even close friends agree that what my team did was crazy, but never even notice that they’re doing the same thing. While every team is different, and our experiences won’t necessary hold true for others, I did learn a very important thing about how to best approach VCs:

VCs invest in people, not ideas so you should approach them as people and not for business.  Let me elaborate. 

VCs invest in people they know and/or believe in based on, for example, the entrepreneur’s past experiences or personal knowledge of the individual/team in question. If I could do the capital raising process again, I would have approached VCs for advice first, built a friendship and then, if the interest was strong enough in my product, approach. 

I believe this strategy is most effective because you may only have one bullet.  Once you pull the trigger, that’s it - you’re out of ammunition. VCs are busy people: they get spammed with business plans from sane and not so sane people, attend conferences, manage their portfolio companies, have partner meetings and, yes, also have families too.

Given their time constraints, once you pitch and they “pass,” you’re either not going to feel you have the relationship to go back latter for advice or getting their attention the 2nd time around will be significantly more difficult.

So, by approaching for advice first, you never actually shoot but open the platform for them to pull the trigger. If the VC does have interest, don’t worry, you’ll know!