Jeff Clavier, managing partner at SoftTechVC, has his hands in many startups. He’s closed 114 deals.
He’s invested in the likes of NetVibes, Mint, and SocialMedia, and five of his startups have been acquired by major companies like Yahoo, Intuit, and AOL.
We talked to him about what entrepreneurs need to keep in mind when pitching him.
Business Insider: What do you look for?
Jeff Clavier: It’s really important to understand how you get in front of people. We only meet with 15 to 20 per cent of the teams that talk to us.
The first step is make sure you get the meeting. The entrepreneur has to do a lot of homework of targeting investors. You need to figure that out using Crunchbase, LinkedIn, and Google. Who are the guys investing at your stage and the industry you’re part of? People come to us with a deep infrastructure, but we never touch those things.
Then figure out who’s in your network. Who can introduce you to the desired investor? Say you want to pitch me in consumer Internet or mobile. Say I’m one of your targets. Figure out who you know who knows me. Reach out to me by email. Then, you the entrepreneur should craft an email, so it’s easier for the person who is sending the introduction email.
If you look at our history, having seen 10,000 opportunities — and I’m making that up based on how many meetings I take — of the 114 deals I’ve closed, exactly zero reached out to me in a cold email.
There are thousands of companies being founded. There’s a sea of opportunity. [It’s my way of] putting on filters on to focus on more interesting opportunities.
BI: What happens once they land a meeting with you?
JC: Now you are in front of us, you are already part of the top 15 to 20 per cent of the opportunities. We’d rather meet face-to-face. I often start my meetings, if I don’t know the entrepreneur, by asking about their story and what they’ve done in the past.
Why are they so passionate about that idea that they will spend 5 to 10 years of their lives trying to build a company? Some people will walk through walls. Some people come to us with an idea because they want to be an entrepreneur. Absolute persistent determination is something we want to try to feel.
BI: So what happens in a meeting?
JC: You’ll be here for an hour. This is what we expect to see in the slides.
Look at the demo of the application of the service. Because it’s so cheap to start a company, we expect people to build the initial prototype and have initial users. It could be like 20 or 50 users. You can validate quite a few things by doing simple advertising, using Facebook ads for small budgets for $500 to $1,000.
BI: What are looking for?
JC: When we were getting a daily deal every couple of days for a year, [the companies] were small revisions, around Groupon. Now there’s only Groupon and LivingSocial surviving.
Something that is radical is something that will rank highly for us. We are in the business of taking risk. So we are looking [for something] that’s bold and different.
BI: What’s it like meeting with so many people?
JC: The goal of the first meeting is to get to the second meeting. After the first meeting, we will give a call to references. After about 10 days to 2 weeks, we make up our mind if this is an interesting opportunity. We get 20 business plans a day, so 2,000 a year. We meet with 15 per cent who send us emails. We work on 10 companies a month. We dig deep into 5 of them. And we do 2 deals. We say no 99.5 per cent of the time. When I started 4 years ago, I said we would do 20 deals a year. People said no way.
BI: I heard you are more hands-on than traditional VCs. You work with the entrepreneurs. Tell me more about that.
JC: If you think about a rocket going in space, we are the guys who help booster the company. Once our job is done, we hand over keys to traditional VCs.