This week we’re featuring a Q&A with both Caitlin Bolnick of OpenView Venture Partners and Sheel Mohnot of Better Tomorrow Ventures on what’s changed in investing now that it’s done online more than in-person and why it’s important for founders to build trust before they pitch. We also dig into our Pitch Deck Interest metrics, which have shown higher interest this summer compared to 2019.
Q&A with Caitlin Bolnick
Investor (former) at OpenView Venture Partners
Caitlin is on the Investment team where she identifies B2B software companies at the expansion stage, evaluates, and executes on investment opportunities.
Q&A with Sheel Mohnot
Founding Partner at Better Tomorrow Ventures. Sheel co-founded BTV, an early-stage venture fund focused on building the future of fintech by leading seed and pre-seed rounds of fintech companies.
Based on our Pitch Deck Interest metrics, investor interest in pitch decks is higher this summer than the traditional summer slump. Why do you think investors are more active now?
Caitlin: So, I think it’s a few things:
- Folks are stuck at home and aren’t doing their normal summer activities.
- There has been a lot of uncertainty over the past several months and it feels like people, for better or for worse, are settling into the reality that we will likely be in this remote/virtual world for the foreseeable future.
- There is still a ton of capital in the market that investors need to deploy.
You add all this together and it’s an unprecedented environment, but also, there’s no better time to raise… particularly if you have a business that is experiencing COVID-19 tailwinds.
Sheel: There was a dry period in March-June when we were busy triaging our portfolio and less busy making new investments, but people were still starting companies during that time; it just didn’t make sense to fundraise at that time… so they are fundraising now and things are really crazy on our end. I’ve never had as busy a time as this past month.
The amount of time investors spent reading each deck in Q2 steadily declined, going below three minutes toward the end of the quarter. As an investor, has your process for evaluating decks changed since fundraising became more virtual?
Caitlin: It’s important to build a relationship with a set of investors before going out to pitch and going virtual has only further reinforced this. This is anecdotal, but the investor fatigue is real. We’re sitting at our computers all day long and it’s adversely impacted our attention span. People get distracted while they are looking at pitch decks because there is just more going on (notifications etc.) as everything has moved online. The other thing is that the deck is just one piece of the puzzle. I think investors are putting less weight on the deck itself, particularly in the case where they have no prior relationship to the founder/company.
Sheel: I think it’s a function of the above – more companies coming at us so we have less time to spend on each one. It also feels like there are 3-4 companies going after every niche opportunity in the market, so there are a lot of companies that we’ve seen before! The process for evaluating companies has changed, but how we evaluate decks hasn’t changed that much. I would say we rely on backchannel feedback more than we did before – it’s harder to get a sense for people without meeting them in person so we rely on other things.
What are you experiencing with the timeline of seeing a pitch and making an investment? Has this timeline been impacted by more fundraising happening over Zoom
Caitlin: On average the timeline has been drawn out, but the best deals are still highly competitive which means super-fast timelines despite the lack of in-person communication and relationship building. In one example, we went from speaking to the company for the first time to submitting a term sheet in under two weeks.
Sheel: It varies widely but I don’t think things have changed meaningfully because of Zoom… The market is hot right now and things are moving fast though, so our days are spent diligencing companies we’ve just met. We have moved as quickly as a few days between meeting a founder and offering terms, and sometimes it takes a couple of weeks to get there.
Building trust between founders and investors during the fundraising process is always important. How do you advise founders to build trust with potential investors in the current environment?
Caitlin: It’s about building the relationship well in advance of the target raise and continuing to strengthen the relationship over time. One low-lift way to do this is to provide updates to investors you’re close with via email. I’d also suggest doing this with existing investors, too—you want them to sing your praises to target investors you’d want to be involved in the next raise. VCs talk so if you can use that to your advantage, why not?
Sheel: Get to know them as much as possible before the investment, get people they know/trust on your side as much as you can.
What is an example of a successful pitch over Zoom that led you to make the investment and what can founders learn from it?
Caitlin: The best pitches are concise, interactive, and provide the investor with a solid understanding of the business in a short period of time. Big lessons:
- Build the relationship in advance.
- Don’t over-rely on a product or pitch deck. Sell the holistic vision and make the pitch a conversation rather than a one-sided presentation.
- Be your authentic self. Authenticity I think really shines through Zoom (some people may disagree, but you can tell 10x if a founder is/is not engaged).
- Make sure you have an environment that is well-suited to make the pitch e.g. low noise, non-crowded background, etc.
Sheel: Not much is different for us other than we don’t get to meet in person. The most recent investment we made is in a company called Capbase. We had several meetings with the founders, did some diligence on them from their other investors and past investors and got confidence in doing the deal.
Here’s our Q2 Pitch Deck Interest analysis
Recommended Reads
State of startups: Fundraising during a financial crisis
The team at Brex recently sat down with some of their partners to discuss the pros and cons of raising capital in an economic downturn, from the venture capital, legal, and fintech startup perspectives.
Read the full post on Brex’s blog.
Tips for Raising Capital Right Now
“If you’ve already raised investment, your best chance is to approach your existing investors for more funds. If you’re just beginning your fundraising journey, it’s going to be more challenging to develop relationships with investors, but not impossible.”
Read the full post by Neal Dempsey of Bay Partners.
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