March 2, 2023

Breaking down the VC Investment Committee

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If you haven’t been through a successful fundraising process before, it can be an extremely daunting experience.

Especially as you reach the final stages with firms and there is still a bit of a black box around what will get the fund you are pitching to say YES. 

We have broken down what founders should expect (more generally and from Concept Process) when approaching an investment committee meeting and how they can best prepare for this. 

What are investment committees? 

An investment committee in VC is a group of individuals responsible for making investment decisions on behalf of the venture capital firm. This committee typically includes the managing partners or general partners of the firm, and may also include other investment professionals such as analysts or associates. 

The investment committee is responsible for evaluating potential investments, conducting due diligence, and making decisions on whether to invest in a particular startup or not. They also monitor the performance of their portfolio companies and make decisions about when to exit their investments

How best to prepare for a final investment committee meeting as a founder?

If you have managed to get to a final investment committee meeting congrats! Not many founders do and it’s likely that you have spoken to a lot of investors to get to this point = huge distraction to your business. Nailing this final meeting should be a top priority. We’ve outlined some tips below on how best to prepare for this meeting… 

  1. Understand the key decision-makers: Research the members of the investment committee and understand their background, investment preferences, and priorities.
  2. Be clear and concise: Be prepared to clearly and concisely explain your business model, competitive landscape, and growth plans.
  3. Have a solid financial plan: Be prepared to discuss your financial projections and have a solid plan in place for how you will use the investment capital.
  4. Have a clear ask: Know the specific amount of funding you are seeking and be prepared to justify that amount.
  5. Be prepared to answer questions: Be prepared to answer questions about your team, industry, and competition. Be transparent about any challenges or risks your business may face.
  6. Show traction: Provide concrete examples of traction your business has achieved, such as revenue growth, customer acquisition or partnerships. If its the case where you do not have revenue, be sure to show traction in other ways through customer discovery calls and validation on the problem you wish to tackle. 
  7. Be ready for negotiation: Be prepared to negotiate the terms of the investment and be ready to compromise if necessary.
  8. Follow up: Send a thank-you note after the meeting, and follow up with the committee as appropriate.
  9. Speak to founders who have been through the process successfully and ask them what their experience was like.

What to expect? 

During a final meeting, the investment committee will review the information provided by the founder and make a decision on whether to invest in the company. The meeting typically follows a rigorous due diligence process and will include a presentation by the founder, followed by a Q&A session.

Here are some of the things you can expect during the final investment committee meeting:

  1. The founder(s) will give a presentation that highlights the key aspects of the business, including the team, market opportunity, competitive landscape, financial projections and the use of proceeds of the investment.
  2. The investment committee will ask questions about the business and may request additional information or clarification on certain points.
  3. The committee will discuss the investment opportunity and consider factors such as the size of the market, the strength of the team, the company's competitive position, and the potential returns on investment.
  4. The committee will vote on whether to invest in the company and if so, at what terms and conditions.
  5. If the investment is approved, the committee will work with the founder to finalise the investment terms and close the deal.

It is important to note that the process and outcome of the final investment committee meeting can vary depending on the venture capital firm, but the key is to be prepared and have a clear understanding of what the committee is looking for in a potential investment.

How is it done at Concept Ventures?

For information on our investment process, please see our investment process section on the website here

In terms of how we structure our meetings, we typically will block out a minimum of 1h 30 mins whether this is done in person or via zoom. We’ve outlined below the structure for our final investment committee meeting and what to expect.  

The first 15 mins of our IC is spent going through introductions and a short overview from the founders presenting the opportunity. We ask this not to be a formal pitch presentation but if founders wish to present some slides this is at their discretion. 

Once the founders are done discussing their backgrounds and the opportunity in greater detail, we outline a structure around an overview of topics and questions we may ask. This can sometimes lead to divergence as individuals on the committee have questions to come out of the general discussion. 

The Q&A can last anything from 45 mins - 1h 30 mins depending on the number of questions that are asked. 

At the end of the call / meeting we outline the next steps and will get back to the founders with a response on decision within 24 hours.  

To recap: 

  1. 15 mins of intro and founders high level pitch 
  2. 45+ mins of Q&A, we will send specific areas of questioning we may want to explore further
  3. Wrap up and next steps 

Thinking of raising? Here are some useful resources to best prepare: 

There are several online resources that can help you set up a data room, financials and pitch materials for venture capital due diligence:

  1. Mattermark: This website provides a wealth of information on venture capital and startup fundraising, including best practices for creating a data room and pitch materials.
  2. YC Blog / YC Youtube: Y Combinator is a global investor in early stage ideas. They run cohort based programs for founders over 12-weeks and support on all aspects of business development and bettering ideas founders have. 
  3. First Round Capital: First Round Capital is an investor in earlystage startups in various domains within software. The fund has been an active investor for 20+ years and has invested in notable startups from idea to IPO. 
  4. Startup Stash: Startupstash is a resource and directory for different tools and resources startups can take advantage of. 
  5. The VC Factory: A resource for entrepreneurs on Venture Capital fundraising 
  6. OpenVC: Open VC is a directory of funds startups can filter and reach out to based on criteria. They host a number of resources for startups to take advantage of in preparation of fundraising. 
  7. AVC (Fred Wilson) / Venture Deals: Fred Wilson, a venture capitalist and blogger, has written extensively on the venture capital industry and fundraising process. His blog, AVC, offers a wealth of information and insights on creating a data room and pitch materials for venture capital due diligence.

These resources can provide a good starting point for creating your data room, financials and pitch materials in preparation for pitching to VCs and going through fundraising process, but it is also recommended to consult with the VC you are engaging with as to what they would expect as well as other founders who have been through the process and discussed it with them internally. The resources also house general advise on how to best approach building a startup and what you as a founder should be thinking of.