Fundraising in the COVID era: Methods change, but fundamentals remain the same
Webinar highlights new tactics for robotics founders to navigate the VC ecosystem
By Keith Shaw
While the COVID-19 pandemic has greatly reduced traditional methods of networking between venture capitalists and founders, the fundamentals of relationship building remain a key area for both groups, a panel of experts said recently in a webinar discussing the current state of fundraising.
Zoom meetings, emails, and phone calls have largely replaced networking at trade conferences, pitch events, or mixers, but founders should worry less about that than making sure they are staying focused on the core message of their company story.
“Execution and staying focused is key,” said Çetin Meriçli, the CEO and co-founder of Locomation, a panelist in the webinar “Fundraising in the Age of COVID-19”, sponsored by the Pittsburgh Robotics Network and Innovation Works. “I’m not going to say this is a numbers game, but you have to have the grit and you have to keep pounding, hammering, and you have to keep talking to the right people, not try to convince the wrong people,” said Meriçli. Locomation, a Pittsburgh-based autonomous trucking startup, recently completed its first on-road pilot transporting commercial freight in a driverless convoy on a 420-mile stretch between Portland, Oregon, to Nampa, Idaho.
Before COVID, Mericili said he would spend about 10 days per month in the Bay Area to roam around, meet with new people and investors, and attend events to build relationships related to fundraising. Meriçli said COVID changed a lot of that, particularly physical demonstrations related to semi-tractor-trailer trucks. “The way we cut through the noise was through execution,” said Meriçli. “We put our systems on the public roads and hauled commercial cargo in the middle of a pandemic. That eliminated some of the questions and offered further proof that we could deliver.”
“The cost of a mistake right now is much higher, and what ultimately drives the decision to invest is that someone really cares about you and your company,” said panelist Chris Moehle, managing partner of Coal Hill Ventures and the Robotics Hub. “The more you focus on human ties, communication, good business fundamentals, and actually building relationships, the better off you are. That’s true now, it will be true two years from now.”
Another panelist, Melissa Withers, managing partner at RevUp Capital, said the key thing for founders is to make sure they continue to have a strong story. “What you really need to do is get your s*** together,” said Withers. “You’ve got to be honest with yourself about where you are, what your fundability is, what your assets are, and what your story is.”
With fewer opportunities for face-to-face meetings, many of the panelists said it was important for founders to have references and contacts that can “vouch for you” when looking to build a new relationship. “Let’s say you’re trying to connect to a specific person or group,” said Homan Yuen, a partner at Fusion Fund. “Having someone vouch for you to that group is super powerful, especially in these days where maybe someone can’t meet you, it’s just another angle or flavor of how someone can get a gauge of your personality, your background, and true work ethic.”
Yuen said the virtual environment for meetings has opened up and helped founders outside of Silicon Valley to meet with Silicon Valley investors because they no longer have to travel there to meet with them. “Whether you’re in Pittsburgh or you’re in San Francisco or Sunnyvale, there’s no difference to me anymore,” he said. “But if you don’t have a strong referral or connection that can help vouch for you, that could be an issue – all of these things together round out your ability to connect with a person that you’re trying to meet.
Another digital opportunity includes working social media networks, such as LinkedIn and Twitter. “If you’re in robotics, I would hope that you are connected with other people in the robotics space,” said Jonathan Ellis, managing director of Sandalphon Capital. “If I’m interested in the robotics space, you will overlap with my network. If you reach out to me and we have zero mutual LinkedIn connections, I’m wondering if you’re a fake person.”
Withers said most investors want to hear the answer to three big questions: why now, why this, and why you. “I think the ‘Why now?’ and the ‘Why you?’ right now are really, really important,” she said. “Timing has historically been one of the leading factors in why a company succeeds or not, it’s not how much money they raise, it’s was it the right time for the intervention. We tend to focus on the ‘Why this?’ and focus a lot on products, what we do, how it works, and we kind of ignore the ‘Why now?” and the ‘Why you?’ [questions.]”
Several panelists agreed that investors would also need to work harder on meeting founders in the COVID era – the burden is not just on founders. “I think it’s really a two-way street,” said Withers. “I think we need more platforms for investors and founders to just talk to each other about how we’re going to continue to make connections when we can’t visit the same town and have a cup of coffee together.”
Moehle added the cost of mistakes were also high for VC funds during this time. “I’ve known a couple of other, 3rd party, funds that started slapping out predatory term sheets and not really being fair to people trying to raise money from them,” he said. “I’m not going to magically forget that in six months when this goes back to normal and it’s a good environment. … Know what’s fair to you, and if people aren’t doing that, move on.”
Ellis said one of the best practices for networking is to show up and be helpful to people. “If you’re just showing up and you’re genuinely interested in people and being helpful to them, they will be helpful to you,” he said.
Withers offered one final piece of advice to founders looking to make a good impression during the Zoom call era: “Buy yourself a ring light so you don’t look like you just came from the zombie apocalypse.”
The webinar was moderated by Afshan Khan, portfolio executive at Innovation Works, and introduced by Joel Reed, director of the Pittsburgh Robotics Network. You can view the entire webinar below.
Keith Shaw is a freelance technology journalist and former editor-in-chief at Robotics Business Review. He has covered robotics and the technology industry for more than 20 years.