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in this episode we talked about how we cease find the best deals but founders need to know about pitching to VCS and what's the best way to reach out to venture capitalists learn more about the do's and don'ts in venture capital welcome to episode 2 of this podcast series venture capital deep dive in this podcast we talk about everything a first-time founder needs to know about the why of a venture capital investor this podcast is brought to you by b2v ventures a switzerland-based venture capital fund established in 2000 and focused on early-stage startup investing in I am Cedric a host of this podcast and the founder of global tech box.com a video platform focused on insightful interviews with experts around startups tech and innovation make sure to check them both out alexandros circle is a partner at b2b since 2012 board members since 2014 and is actively seeking the best entrepreneurs and most promising startups you can reach him over LinkedIn an email and today we want to talk about deals deal flow deals sourcing and maybe first let's start off just about how do you find the best deals an ombré of sources you have generic deal flow as a VC which is based on your reputation performance track record in the market so this is deal flow that comes to you automatically through your website through email etc etc then you have D flow which is sent to you deliberately by business angels people from your network people you trust so this is endorsed deal flow if you will and then you have actively scouted tear flow so you as a VC you identify a certain topic that you find interesting say robotics and you start analyzing the market looking at let's say events for example universities focusing on that same topic and then getting in touch with them and seeing if you can find interesting investment opportunities there now when you look at let's say you put folio and it's say even let's say the most successful exits and IPOs when you look back do you have any statistics and like where do you would say it's best for an entrepreneur to get in touch with you for b2b it we are serious investors so January's if you're approaching the series a level then see if your company fits into our investment strategy so we are focusing on digital technologies and just really technology if your company has a business model that fits into these two areas and please don't hesitate to contact us having said this we always are open to other investment opportunities on the side which is based on our structure as I mentioned in the last episode we are also a business angel network so we do opportunistic investments in other industries in other stages etc just based on the individual case one of the things that I've hear heard all the time is how important in network is in general as a venture capitalist how would you say like I mean we know it's important but maybe explain the why the network is important in all aspects of your investment process it helps you in terms of origination by sending interesting new investment opportunities to us give you an example a number of our best investments that turned out to be the most successful investments were brought to us by members of the b2v private investor Network because these entrepreneurs themselves have a big reputation out there in the market they get approached by founders and the founders say can you have any visitors on that and would you be interested invest my company and then all members forward these cases to us at p2v and say look I find this team very interesting I met with them in person I think I'm going to invest two hundred fifty five hundred would you be interested to ride along and then we hop on this train and and invest in this company so in terms of origination network is of the utmost important secondly in terms of selection and evaluation so as a VC you're looking at a broad variety of cases coming from different technologies different markets that are really hard to assess and evaluate so you appreciate as VC the opportunity to share this investment opportunity with somebody from the particular industry and get his thoughts on the team on the quality of the product etc etc and this is the second most important thing I think in terms of selecting the most promising investment targets and then thirdly helping the companies throughout the investment phase as an active investor we would like to somehow contribute positively to the growth of a given startup and our network enables us to draw on people's individual networks and and introduce our founders to let's say top executives from big industrial conglomerates maybe interesting strategic partners alliances etc sometimes also candidates for the team then this would be in my eyes the third most important part on very rare occasions it's also in terms of exit so sometimes the network can bring you in touch with a company or individual who at the end of the day takes over the startup you invested in but I think the first three are even more important than I am now again from work from an entrepreneurial perspective I'm an entrepreneur who is like thinking of like reaching out to you is this a good idea like should they send an email straight out cold to you or is that something that you would recommend not to do my recommendation would be to think of it as a process so what I would do is first I would go on the internet and research different possible investors for my startup and you can do that by there's a number of search engines so I can find investors and then sort them sort them ing to industry focus stage focus a region where they're investing in etc etc so generate a long list based on these search engines then look at the individual VCS or other corporate VCS for example and that are potential investors in your startup and just see which other ones that fit best to your company and also come up with some sort of top 10 list let's say and then start approaching the first 3 get feedback from them then maybe the next 3 get feedback from them build this feedback into your pitch optimize your pitch make it more convincing and stronger and then eventually go to your dream investor that you find most suitable for your individual digital startup and and try to convince him as I said before as well in the other episode do your due diligence on the investors so look at similar case they invested in in the past if you can reach out to the founders get information on how this VC behaves with with entrepreneurs they are backing meet them in person for sure and and then really try to come up with who would be the best investor for your startup you gave me off again like the segue to the next question is that when you when you look at that say these these entrepreneurs and and they send you their pitch like what is it it makes them look credible what makes it look let's say interesting for you as a VC interesting thing is that I was very happy to find a study conducted by a PhD candidate from the University of Harvard and she did a study on success rate of pitches towards professional investors of VCS and she found that in fact the passion is overrated or that the entertainment factor is overrated so many people out there in the market will tell you that your presentation should not only be convincing on paper it should also be delivered in a manner that is convincing and entertaining and then sometimes will recommend to you go to some sort of pitch training and she found that this is not necessary because professional investors have the capacity and and and the skill to look behind the curtain and even a presentation that is delivered medially if you will or not so not so strongly will receive interest from investors I think that's that's very important focus on a lean presentation that captures whatever you're trying to achieve in this and this venture of yours make sure that people understand the two or three most important aspects about this startup and do not spend too much time on fine-tuning your abilities to deliver an outstanding presentations obviously it doesn't harm to to be able to sell whatever you're doing if you happen to be a very techy guy and an engineer not too outgoing don't shy away from from presenting your company and many of us speaking for the VC community have the ability to understand what you're doing and then look behind the curtain and it's not important that you are necessarily the biggest stage guy ever and so I think take some comfort in that sure and again like from M from an entrepreneurial perspective would you recommend if he had the option to go direct or via an introduction and is there a preference to to ask for an introduction to it yes he always introduction so there are some of our competitors out there in the market who don't even have but you need to contact them through the website or don't publish their emails so you can only get in touch with them if you are recommended endorsed by somebody else effectively this has proven to be very positive for b2b as well as so many of our most successful investments came from people from our network and were introduced by them and based on their reputation and this pre-filtering if you will we find those opportunities most interesting amongst the big deal flow that we're seeing in general however we also invest in companies that get pitch to us directly so don't hesitate to approach us if you find us start their startup conference and that's also true for the other VCS out there in the market and like when you look at let's say the introductions and what LO you're looking for let's say you get an introduction does it matter whom it's coming from or as long as it's like someone within the VC community obviously ad it should be somebody who I know and trust to a certain degree I mean still it doesn't do harm if let's say I give guest lectures from time to time at universities and then sometimes after the lecture one of the students introduces another case to me and and maybe that's not the strongest link if you will but I so appreciate there's this introduction because it tells me that this guy has has seen me he has a basic understanding of what we do at b2v and he finds if we could be good investors for this sort of so that's something that I find really good and positive and nice so I'm always more likely to look into this case and and see what he means and what why he finds it interesting or she finds it interesting so therefore if I know the source better and then if you know the source has some experience in venture capital it's even more positive but even if the source is not the closest source to me and and has only some understanding of venture capital it's still more positive than just cold calling and and emailing whatever you have to these-- in my eyes I mean the last question for this episode I mean when I'm here let's say I'm base let's say in Zurich does it make a difference whether I pitch someone within Switzerland or can I easily go to Silicon Valley or Berlin or this location matters to event Capital Fund the standard answer would be you can do whatever you feel most comfortable with and if you have an international startup feel free to reach out to investors from Silicon Valley as well I personally think that early-stage venture capital tends to be more regional because the investors would like to be close enough to the startup meet with the founders be able to maybe introduce candidates to the startup or open doors for them to interesting strategic partners so you will find that many VC's sort of stick to their region and area and and do not deviate very much from that at the end of the day it's up to you and if you do your investor selection properly and you look at the website you will find that the investors will really tell you where they invest so there will be something like we are European venture capital firm investing in European startups or we are a silicon-based investor investing in some Silicon Valley just do your investor selection properly and you should be on a good track thank you so much for this episode in the next episode we talk about what a founder can expect during the due diligence process how a founder can do a due diligence on a venture capital fund and what pitfalls to avoid see you there you [Music]