The New VC /
How contemporary investors differentiate themselves to founders
Founders have a lot of options to raise capital these days. It seems like there’s a new $100M fund entering the scene every week or so, and money from overseas from funds like Softbank are giving startups even more options.
Of course, it’s true that female entrepreneurs are not seeing the majority of this capital with 2% of VC going to women-led companies in 2017. However, female-focused funds and networks like the Female Founders Fund, XFactor Ventures, Portfolia, Ready Set Raise, BBG Ventures, Golden Seeds, Pipeline Angels, Allraise, and more are adding significant value to the marketplace. Options for women founders are growing as more VCs start to realize the overlooked opportunity in investing in women-led companies.
What does this mean? Capital is competing with capital and investors must work to differentiate themselves.
One way funds can differentiate themselves is to provide value to founders upfront. VCs used to meet with companies only after they were ready raise capital, and funds did not feel pressure to show their unique value to founders before the raising process.
Today, funds use a variety of tactics to earn brownie points pre-raise. They’re making customer intros, sending recruiting leads, and sometimes hold office hours and topic-specific sessions to provide information and guidance to entrepreneurs. These casual sessions offer founders access to information, as well as the chance to build relationships with investors who may make a valuable introduction or ultimately — invest.
Another way VCs are trying to stand out from the crowd of capital is through the pitch process itself, which is becoming increasingly informal. Investors will help build decks, hold unofficial pitches, and do their own research to better understand the founder’s business.
VCs can no longer lean on the founder to do the heavy lifting for them--- and this new process often leads to a condensed timeline from first meeting to term sheet.
Another way modern VCs strive to be distinct is by building thought leadership and influence in the areas in which they invest. They market themselves by producing white papers, writing blogs, creating content, and participating in speaking engagements — all with the goal of creating a springboard to help partners build their own personal brand.
The WXR team is taking note of these developments and incorporating them into our program. Each year, WXR Venture Fund is committed to running at least 2 Cohorts and Mentorship Programs for female-led startups in the immersive technology space. After a public WXR Pitch Showcase with leading angel investors, VCs, and industry experts, each Founder in the Cohort participates in a 10-week program where they are paired with an industry mentor (i.e. subject matter expert, successful entrepreneur or investor).
The program also offers closed sessions on topics voted by the Cohort. For the 1st WXR Cohort, we invited venture capital investors to speak to the founders about how to best approach fundraising. The investors provided varied perspectives on what they look for in early stage investments.
This private content session for WXR Female Founders provided a broad overview of how to think about positioning a startup for a raise. Cohort members had opportunity to ask questions in an informal setting.
After wrapping up the beta version of the mentorship program with our first cohort, we’re continuing to curate mentor matches, build more internal events and information sessions, and bring more public speaking opportunities and personal introductions to the founders in our second cohort and beyond.
See below for insight on early-stage companies from four VCs featured in our internal WXR Speaker Series on venture strategy.