I suspect that in my 13 years years or so in the venture business I have received somewhere on the order of 5,000 executive summaries directly from founders. And, as I told the audience, I didn't reject the businesses out of hand. I read all 5,000 executive summaries. I met with some of those entrepreneurs too. Yet, I didn't fund a single one of them.
A member of the audience asked if perhaps I was biased against entrepreneurs I didn't know, or who didn't know someone I knew. It was certainly a reasonable question. I thought about it and responded that I thought the reason I hadn't invested in those companies was that the founders were not resourceful enough to find a connection to me.
But it got me thinking. Maybe I was biased. Maybe I was missing out on some great businesses because I wasn't giving them a fair shot. I decided to see if I was the only one. I started asking my fellow VCs if they had funded any companies that had come to them un-introduced. And it turned out that the answer was "no." No one I asked had funded a company without some sort of introduction. While they all agreed that it wasn't out of the question, and most of them still read unsolicited executive summaries (as do I), not one VC had funded an un-introduced business. Not one of them.
So how do you get funded? Step one — get an introduction. Find someone you know who can introduce you to the person you want to pitch. The closer your relationship with the person making the introduction, the better. And the closer that person's relationship with the VC the better. I've written about this before and described it as "borrowed credibility." If you are being introduced by someone who has credibility with the VC, and you have credibility with the person making the introduction, you will have credibility with the VC.
I learned about this in elementary school math class — it is called the transitive property:
has credibility with B
B has credibility with C
A has credibility with C
And as a corollary to the traditional transitive property, (1) the stronger the credibility between A and B, and (2) the stronger the credibility between B and C, (3) the stronger the credibility between A and C.
Needless to say, getting introduced to a VC will not, in and of itself, get you funded. I've said "no" to many more entrepreneurs who've been introduced to me over the years than I have to entrepreneurs who have come un-introduced. But I've said "yes" to infinitely more who've come introduced to me than not. If the sample of VC's with whom I've spoken is any indication, getting an introduction to a VC is necessary but not sufficient to get funded.
I know that I'm starting to sound like a broken record here on VentureBlog. And, yet, I continue to get unsolicited executive summaries every day. Which means one of two things: either entrepreneurs haven't taken my advice to heart or they aren't reading VentureBlog. Since I can't imagine the latter is true, it must be that I have been insufficiently persuasive on the topic. So I've given it one more try. Let's hope this time will do the trick.
If you want to pitch me, get an introduction. Please.
Enough said. I hope.