At the recent Fireside Conference held just outside Bancroft, Ontario, top Canadian fintech venture capitalist Christian Lassonde shared some insights into the mindset of a venture capitalist (VC). Focusing on fintech, Lassonde has invested in companies such as Wealthsimple, Honk and Sensibill as the Founder and Managing Partner of Impression Ventures. Here are some of the insights (secrets, really) that Lassonde shared:
- Stay on thesis. Like a great story, every VC has his or her own thesis. For Lassonde, it is investing in fintech companies and not just any startup. If a startup knows this in advance they would be less likely to waste their time chasing for a meeting with any and all VCs. Instead, they would pick the VC whose thesis lines up with their own business objective.
- VCs will take meetings. Like other startups who have funding, VCs answer to the people who invested in their fund. As a result, the VC now has an obligation to take meetings to uncover investment opportunities with companies she or he wants to invest in. If a startup founder knows that a VC has just started a fund then they will know that they are more than willing to take a meeting.
- Lassonde says that VCs will not say no. In fact, they will give founders any excuse to not invest in a startup but they won’t actually say the words, “no.” Rather, they’ll say “come back in three months.” So, if a VC doesn’t call you back right away, they are really saying, “no.” So move on.
- If you’re a startup founder, find someone who will cheer you on and evangelize on your behalf. This type of VC is very valuable to any startup. A VCs role is to not just provide valuable financial resources and mentorship to a startup. Helping to tell the story of your business can help develop users, customers and future investors.
- There is no cookie-cutter, perfect VC. Founders should never wait for a VC to approach them with nuggets of knowledge and valuable connections. Don’t wait. Startups should work hard in developing a real relationship to uncover opportunities.
- VCs are looking to invest in companies that have a real opportunity for month-over-month growth. Why? As Lassonde says, VCs need to generate a 25 per cent return year-over-year for their own fund and investors. Therefore, when it comes to investing, the math has to work. And not just for the startup, but for the VC as well. The investment has to be suitable for venture capital.
- “Before approaching a VC with your pitch make sure you socialize it,” says Lassonde. Founders should speak with friends and family and obtain feedback to make sure that the most important aspects of their startup are brought forward early in their pitch deck. Startups should not leave the punchline until the end as the VC might mentally check out early. “Once you start to receive feedback, that’s when you know your pitch is VC ready, ” said Lassonde.
- Tell VCs that you’re not actually interested in raising capital. Say that you simply want the opportunity to tell their story. If founders show enough passion and the business plan makes sense, most VCs will initiate discussions about investing in their startup. Wealthsimple founder, Michael Katchen, raised $30 million in a Series A round from Power Financial. Katchen tells the story of continually meeting with Power over multiple breakfasts due to their shared interest in financial technology. After building mutual trust, Power Financial stepped up with a serious investment. Lassonde calls this, “finding your lead order.” This is also known as a lead investor who will attract and bring on board other investors.
Whether you consider these secrets or insights, these eight tips from Lassonde will help anyone, or any business, looking to raise capital.