How To Vet A List Of VCs For A Fundraising Outreach: Key Validation Steps

Venture Capital (VC) activity ratios are, as reported by AngelList, at historical lows – even worse than during a pandemic in 2020. However, a lot of founders will be required to raise funds in 2024-2025, at least if we refer to a survey from Pilot indicated back in November 2023 that 57% of VC-backed startups had a runway of less than 18 months. Now this cohort could be 12 months short, which means that they would need to hunt for money in the next 6 months. If you need to raise funds during tough periods, you may want to be better prepared and generate more warm leads to our investor funnel.

Consider the following tips on forming the outreach list, which came from my 10+ investment experience and communicating with 2,000+ founders.

Make a longlist. No, even longer longlist

We will talk about warm intros later, but you must know that fundraising is a numbers game. A typical successful fundraiser is accompanied by a list of over 100 selected target VCs, sometimes even more. The first piece of advice is to make it double its size and bigger these days. 

However, it is not about scrapping the entire database, it is about doing your homework. Firstly, select those who invest at the stage, then those in the vertical, and lastly those in the geography your startup is in.

Try to get information if a VC fund has the money to deploy. There are a lot of zombie funds, that are working on portfolio management, but not deploying money into new deals. Angels? Check their recent posts – are they announcing new investments or have an “open to work” LinkedIn status?

Last but not least, making an Excel spreadsheet is not enough. A proper fundraising strategy must be built. Very basic advice, but very few follow it! So we have to repeat.

Where to get information? Here are some sources to fuel an initial list:

• Basic resources – Crunchbase and Pitchbook;
• Parsed resources like privateequitylist.com or OpenVC;
• A Google Sheet with a list of early-stage funds up to $200 million that have recently closed fundraising from Shai Goldman (Brex);
• A curated VC database by Mercury;
• A list of 350+ Pre-Seed angel groups in the US (you can request for free from Meet Capital);
• A list of 20 lists of VCs and angels by Eva Dobrzanska;
• The VC list of VC lists – 50 databases listed by OpenVC – if you don’t have time, feel free to use only this resource;
• Making very tailored lists is possible in Ship Shape;
• Signal, a social network from NFX could even help to find an intro path.

A typical successful fundraising list includes 150-200 verified names, which could be split into two groups: One group with those you would want a warm intro to, and a second group with the others. Group one could be named as a wishlist of top-of-the-top investors that you want. Not exactly top names, but those that have the best fit for you at your stage, vertical, type of business, etc. 

You’d better have at least 20-30 of those wanted investors, but don’t assign an entire list to this group, limited to 50 max – you won’t be able to carefully work on this list if it is too big. Think of allocating 25-30% of your funnel to this group, with the remaining 70-75% for cold outreach.

Find proper introducers for the most wanted VCs

Form a wishlist of top of the top investors that you want. Not exactly top names, but those that have the best fit for you at your stage, vertical, type of business, etc. You’d better have at least 20-30 of those wanted investors, but don’t assign an entire list to this group, limited to 50 max – you won’t be able to carefully work on this list if it is too big.

You would want to have warm intros to the VCs from the list. Seek for intros in the mutual connections, ask in business clubs, ask your friends, etc. Who could be the best introducer for you? There are tiers:

• Tier 1: entrepreneurs from the VCs portfolio. These guys as the most respected, don’t have a conflict of interest, and could be also an ideal source of diligence on a prospective VC;
• Tier 2: VCs who are investing in this round. You don’t have these if you just started, but if you have investors who are deploying money into your current round, use their network to source co-investors;
• Tier 3: entrepreneurs from outside the VC’s portfolio. Frankly, founder intros are always better than investor intros, because there is no conflict of interest, nobody asks whether you are investing or not.
• Tier 4: corporates. A client, a partner of yours, or simply a friend. A reference from Nvidia, Intel, or Google as a current/prospective client, or at least just an interested person, is a very high-quality intro.
• Tier 5: VCs who are not investing, but for a reason – it is not their focus. If a SaaS founder is referred to another VC by a biotech investor, it is easy to explain why the latter is not investing – it is not a focus. However, the founder could be referenced from a previous experience perspective, which could work.
• Tier 6: Placement agents and bankers. You may face some VCs who are not talking to agents, only to founders, but this is not a massive practice. Generally investment bankers are the guys with huge networks, people are always open to talk to them since they are always bringing a variety of deals. So it is a good way to have attention, hence the strength of a reference could be perceived as quite weak especially if the banker is getting commission from a startup;
• Tier 7: VCs who are not investing, but for no reason. Be careful e.g. when you ask a VC who refuses to introduce you to some other folks, even a cold outreach could sometimes be better. Only in case you absolutely know that the one who is referring is on your side. It could be a zombie VC and nobody wants to be recognized as it, so he could create random reasons why they are not investing, which would ruin your first impression with a new prospective investor
• Tier 8: Others. You could think of many types of people who could be an introducer. A guy whose kids are going to the same school as your prospective investor’s kids. Use every possible option to get introduced, but try to limit such relatively low-profile intro paths. 

To sum up, you could try and find a close enough connection of yours who can introduce you to your target investor. But bear timing in mind. Set a limited timeframe within which you will look for someone who can introduce you to the respective investor. Try to find the right intro within a certain time, and if it doesn’t work, make a competent cold outreach to the investor.  

How to check on introduction power effectively

People often ask me questions like “Recommend me investors who invest in (insert your option)” – let’s say, in biotechnology. This is called “spontaneous knowledge, a term often used in sociology, and the key is not to rely on that.

My counterparty expects that I will immediately remember an investor who specializes in the sector that I don’t focus on. Very low probability that you will compile a reliable list from word of mouth. 

Alternatively, founders could do the following:

1. Make a list of close acquaintances from whom you can ask for an intro (entrepreneurs who have raised investments; angels; venture investors or investment bankers – see tiers above) – let’s assume you have 15 people you can ask a reference from;
2. Make a wishlist of 5-10 potential investors you want to talk to (there can be more, but it’s better to release requests in portions – if your target list consists of 30 people, you can split it into 3 portions);
3. Review the social network profiles of 30 target VCs and compare them with the list of 15 potential introducers (you can even correct the target list based on this review – maybe you’ll find other, no less attractive investors among their friends). Note that in addition to LinkedIn or Facebook, be sure to review X’s profiles (top resource especially for the US-based VCs), and Signal NFX. The latter is a special social network for fundraising, which will show the depth of the connection between entrepreneurs and investors in points, where 10 is a direct connection;
4. Come up with a suitable introduction blurb – think of reasons why this introduction could be interesting and valuable to both parties, not only you. Make this blurb for every 30 investors from a wishlist;
5. Approach the person from the list of 15 introducers with approximately the following: “Do you know John Smith from Sequoia well enough to make an intro on him? I think it could be mutually interesting because…”
6. If you get a negative answer, nothing prevents you from continuing the conversation with an open question: “Do you know anyone who might be interested in our project?”. This is not a perfect tactic, but brings you a tail of VCs you did not think about, and closes the loop of the conversation quite nicely.
7. If you have a positive response, you’ve done our job very well at this point. The likelihood of a response from an investor from a wishlist is significantly higher. But don’t expect a 100% response rate anyway.

This could help founders build a solid pipeline of VCs and increase chances of raising a round. A lot depends on the execution of the outreach, but having a vetted list is having a solid foundation.

Written by Denis Efremov, Principal @ R136 Ventures

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