The Door is Open to Venture Capital, Why are We Told We Need an Intro?

Very common advice in startup communities: that the way to get connected to investors is with a warm introduction. Not a week goes by that I don’t hear it, read it, or am part of such a discussion on a panel. Prompting this article, was being asked to answer on Quora, ‘ Why are VCs so adamant about warm intros?

And it struck me that the notion is not only misleading, it’s actually a practice that some have (expecting intros) that needs to end.

As I’ve slept on my reply on my reply that that specific question, I found I was getting more and more angry, given the fact that expecting an introduction means someone must have that network that can introduce. Access. And it’s that access that severely burdens people of color, women, younger entrepreneurs, first time founders, and even immigrant entrepreneurs, who are less likely connected to some intermediary who will bless that you can have a conversation with a venture capitalist.

The idea perpetuated that you need an introduction is toxic. And frankly, it’s misleading; the job of a Venture Capitalist is to foster entrepreneurs to the point that they are fundable — most I know have an open door.

A mindset that you might hold as an entrepreneur or artist raising capital? “ Warm intros to don’t matter. If they do, that’s not an investor I want.

And frankly, warm intros don’t matter.

It’s said that they do because most time spent as an investor is time wading through things inappropriate to venture capital. The phrase is a filter.

It’s important to appreciate that “Venture Capital” is in fact not appropriate to most new businesses and startups — only about 1% of all new ventures raise venture capital; with overwhelmingly most capital coming from friends & family, bootstraps, loans, grants, and customers.

The notion that one can benefit from an introduction is a result of a filter needing to exist to help ease the calendars of inundated investors; but an introduction is absolutely NOT something needed — that Venture Capitalist is there to help you determine IF that path is relevant to what you’re doing.

And their door is open. At least, it should be; and you can expect it to be.

What we might appreciate is that it isn’t founders’ fault such a filter is needed; it’s investors’ fault.

Overwhelmingly, most founders think of funding as something they’re owed or that’s available. That, funding is merely a matter of getting it.

And that is founders’ fault, but bear with me, only sort-of founders’ fault because someone is misleading them.

Founders may not think this about what they’re doing, nor explicitly say it, but they certainly act as though they’re due. Some examples:

  • Founders ask for a mere intro to a VC because it’s someone their connection knows
  • Founders reach out with the “if you know anyone who might be interested…” email
  • Founders ask a peer if they know anyone at [given firm]

Easily, 90% of inquires about funding come through one of those contexts.

I probably get 40 such emails a day.

And what they’re all saying, essentially, is, “I’ve done the work and we’re fundable. Now you do the work because this will be good for you to facilitate a good investment; I’m due and someone will want to give us money.”

Follow? There is nothing personal about such communications, no intel, no research, no insight to the investment, no indication of ROI. “Do YOU know anyone who would invest in MY company?”

  • Just because I know someone doesn’t mean I have any sense for if they care about what you’re doing.
  • I have no idea who might be interested in your thing; I’m focused on my thing, and maybe their thing, but all you’ve given me to work with is a cold inquiry and maybe a pitch deck.
  • If you can’t tell if I know someone at [given firm], you’re not fundable (because knowing that is running-a-company-101). This is the easiest thing in the world to figure out; see LinkedIn, AngelList, and FounderSuite. Do **I** know someone? — I don’t know, do I?

What logically manifests in environments where everyone is inundating inboxes with presumptions and expectation?

Advice and replies devolve into a friendly way in which to say, “no…. because you aren’t doing the minimum work expected of you to raise capital. You’re asking me to do it for you.”

Translated nicely (but misleadingly) that becomes, “you’d do better with a warm intro.”

Instead of making that connection wherein the intermediary is poorly prepared to make it, the feedback generally manifests as, “you probably know someone who can best/better help. Get that warm intro.”

What people are really saying is, “I can’t help, good luck.”

And that interaction transpires because founders aren’t doing the work to determine who might be interested in what they’re doing and they led to believe the door isn’t open to a conversation.

And society, in time, concludes the intro is how it works. And we perpetuate a vicious cycle of the insiders having access and the outsiders not… so vicious is that cycle that organizations and brokers exist which will charge you money just so you can talk to “their” investors; making matters worse for everyone.

Because you don’t need an intro.

The intro isn’t a way to better secure funding.

The intro is how the world is trying to filter a process that otherwise works inefficiently.

VCs WANT to invest. It’s their job. It’s their passion.

You need to be relevant and meaningful.

Your job as a founder (who needs and wants funding) is to build a company that is fundable.

And what would be one of the FIRST indicators that a company is fundable?

That investors are aware of it.

Are they?

If they aren’t, you need an intro; don’t you? (No, you don’t! It just seems like you do because you don’t know any of them because they don’t know you!).

Why aren’t they aware of you?

I’ll let you in on a little secret, Marketing is as pertinent to your funding as it is to your plans, growth, and customers.

And most founders don’t do it well in either case ( Marketing, that is); let alone Marketing for funding.

I’ll bet, my saying that is foreign to most people reading this. “Marketing for funding?! Why would I use Marketing to raise money??”

Profiling customers (investors). Knowing partners (related firms or resources). Being present in their channels. Creating awareness and influencing attention on what you’re doing. Creating a business and product that is appealing to that segment of your market.

You do that and investors will know about YOU.

That starts not with a PITCH, email, nor LinkedIn connection, it starts with a story.

“All VCs respond to a good story. If you can weave a tale, VCs will respond. Someone you know is more likely to introduce you to someone they know if you have a compelling story.

How will you know your story is compelling? When the 30-minute meeting stretches past an hour.

A good story is why a startup is able to raise new capital year over year in exponential amounts. A good story is why Uber and Lyft and Airbnb had an average of 136 investors each.

It is a smart business person who recognizes their story does not resonate. Be willing to accept defeat and move on to your next idea.

Trust me when I say, the world loves a good story.”

- Joseph Aaron Economic Futurism; Founder of Third Round Capital Analytics

Joseph’s advice struck me to my core as it’s the “ birthday” of the book from one of our favorite startup mentors, Lyn Graft (LG), who has helped distinguish that the story matters more than anything else. Founder of Storytelling for Entrepreneurs and author of Start With Story, “Your ‘why’ matters when it comes to telling your startup story. In fact, knowing your ‘why’ is one of the secrets to great entrepreneurial storytelling. One reason as Author and TEDx speaker, Simon Sinek, so eloquently said, ‘People don’t buy what you do, they buy why you do it.””

The coveted place to be in fundraising is on the side of the table where you can say “No” to investors rather than so many of them saying no to you.

Be that. Build that.

Investors WANT that and when you are that, they’ll be asking for an intro to you. If you’re not fundable (competitive and with an eye toward an exit), warm intros don’t matter.

They don’t care about a warm intro to them. Trust me, only insane investors and old boys clubs invest because a friend said they should. A venture capital firm has a diverse of Executives- and Entrepreneurs-in-Residence, Partners, Venture Partners, Principals, Associates, Interns, and Analyst; because, in fairness, with only 24 hours in a day, that Partner you have in mind can only manage so many meetings. But the door is open and it’s open by way of people who are involved so that you can share your story with the firm and learn what to do to meet their needs and expectations as a source of capital.

They do care that you and your venture are fundable; think of a warm intro as nothing more than it is in any other context, a way to break the ice.

And if you’re being diligent in your job of starting a venture, breaking that ice is something you should be doing every day, looking to Wikipedia, our wiki of investors, LinkedIn, AngelList, and FounderSuite to get to know WHY certain people will be drawn to consider investing in your story. The ice is best broken by you knowing what to do to appeal to the investors meaningful to your work.

This is the investors fault??

For all that encouragement and focus on how the founder thinks and works, why did I above say it’s only sort-of founders’ fault, and that they’re being misled??

Appreciate that something causes untold numbers of entrepreneurs to expect venture capital. Something causes all these startups to reach out with a generic email, get frustrated, and perpetuate this myth that intros matter.

What causes that?? Watch for…

  1. Misleading language in articles, guides, videos, etc. Words matter so when society refers to “venture capital” or “venture capitalists” as a source of funding, it’s natural that we all conclude it’s meant for and available to all. Venture capital is funding managed by a “Venture Capitalist” (a General Partner), focused on investing in ventures that *can* deliver a 10x return by way of an exit. If you’re not that, VC doesn’t apply; that’s not wrong of it, that’s just what it is.
  2. Funds and venture capitalists who aren’t explicit about their focus, expectations, and resources. There is nothing worse than a VC who, trying to be supportive, with the best of intentions, says something like, “we want to meet with everyone, we’re here to help.” If you know how Oil & Gas works, you probably have no idea how Video Game Development works and if you have $10MM or $300MM, HOW you can “help” is drastically different. Make sure people with whom you are talking about funding are explicit about exactly what they fund, with how much, and their experience.
  3. Resource providers or intermediaries acting as gatekeepers. A VC fund has to have a meaningful amount of capital so as to actually operate and capably invest, lose a lot (yes, venture capital firms invest in a lot of failures), and still find ROI (return on investment) in their investments that work out. Typically, that’s $100 Million in a fund (more or less). Less than that? Just be careful of what they say because they likely have to be more risk averse. And gatekeepers? Gatekeepers just suck. This is not an old boys club. It is not a pay to play scheme. You do not need to join anything to meet genuine venture capital investors. Avoid paying for things that promise access or funding; their business is literally built on, “a warm intro is better,” — which is why it’s heard so often. Just remember, no it’s not better and it’s certainly not worth paying for.

The door to venture capital is open. And we’re working to kick it open even further. Thanks to some great partners, such as Regions Bank, The Experience Firm, and Ecliptic Capital, and a host of Venture Capitalists and incredible startup programs getting together at Funded House in Austin, during SXSW, the door is open.

If you’re a startup seeking venture capital funding, register here.

If you’re an investor who’s door is open, join us here.

Originally published at on February 12, 2020.