What is Venture Market Fit and Why Does it Matter?
As a startup founder, you know that finding product-market fit (PMF) is crucial for your success. PMF means that your product solves a real and urgent problem for a large and growing market. But before you can achieve PMF, you need another fit: venture-market fit (VMF) - a term coined by our recent podcast guest Jens Neuse in his LinkedIn Post.
VMF is the match between your startup and the venture capital (VC) market. It means that you have a compelling story, a clear vision, and a strong team that can attract the attention and confidence of the right investors for your stage and sector.
Why is VMF important?
Because without it, you will spend a lot of time and energy pitching to VCs who are not interested, not qualified, or not aligned with your goals. You will also miss out on the opportunities to connect with VCs who are your ideal customer profile (ICP) and can provide valuable feedback, guidance, and support.
How can you achieve VMF?
- Focus on VCs that understand you. Nothing is more difficult than selling a product to someone who doesn't understand it. If a VC cannot understand your value immediately, then it is unlikely a match. There are plenty of VCs that will appreciate your product - it is a question of finding them. Platforms such as Thunder are very useful for finding VCs and Angels that can understand you.
- Don't focus too much on your pitch deck. Your deck is just a tool to communicate your story, not the story itself. Focus on crafting a clear and compelling narrative that explains who you are, what you do, why you do it, and how you do it differently.
- Don't rely solely on cold outreach to VCs. Instead, generate signals that showcase your traction, your vision, and your uniqueness. Be visible on platforms like HackerNews, Twitter, LinkedIn, etc. Create hype and FOMO around your product and your market. VCs will reach out to you when they see the opportunity.
- Don't try to convince VCs the hard way. Instead, try to find a partner. You don't need to pitch to every VC that contacts you. You need to filter for your ICP VCs who understand your product, your market, and your team. Don't oversell yourself, but be confident and authentic. Don't be pushy, but be proactive and responsive.
- Don't settle for any VC. Instead, look for the best fit. You need to find a VC who shares your vision, values, and goals. You need to find a VC who can provide you with more than just money, but also expertise, network, and mentorship. You need to find a VC who can be a long-term partner for your journey.
Achieving VMF is just as difficult as PMF. In the same way, you need PMF to attract customers; you need VMF to attract VCs. It requires knowing yourself, knowing your market, and knowing your investors. It is about building relationships, not transactions with VCs.
To learn more, listen to our latest podcast.
Fundraising Demystified Episode #9 is Live!
In this week's episode, we are joined by Jens Neuse, co-founder of Wundergraph, a next-generation framework to optimize frontend, backend, & full-stack developer workflow.
They've recently raised a $3MM Seed round. We talk about how founders need to understand the VC game, why cold emails won’t work & why founders should focus on building a brand instead, & why he thinks the pitch deck isn’t as important as most think it should be.
Here's what we discussed:
- The journey of Wundergraph, from a self-taught software engineer to starting a successful company.
- The challenges faced during the fundraising process and the importance of finding the right partners.
- Understanding Venture Market Fit (VMF) and how it can help founders attract the attention of venture capitalists.
- The significance of building a strong brand, being accessible to VCs and strategically timing funding announcements.
- Insights on the fundraising journey, including the role of cold outreach, the true value of a pitch deck, and the importance of showcasing a strong team and traction.
Key Takeaways:
- Building a business that aligns with venture capitalists' interests is crucial for fundraising success.
- Focus on developing a strong brand and being accessible to VCs, rather than solely relying on cold emails.
- Instead of obsessing over the perfect pitch deck, prioritize demonstrating traction and a proven business model.
- Timing and strategically leveraging funding announcements can be an effective marketing and client acquisition tool.
- Consider if venture capital is the right path for your business, and explore alternative funding methods if needed. Listen Here
Jason has already roasted 20+ decks during this weekly event. We have received incredible feedback from founders who had their decks roasted or just came to watch.
Click the link below to submit your deck to receive feedback on how a VC would look at it. This is a RARE opportunity, so don't miss your chance! RSVP Here
What the Experts Have to Say
Is Your Startup a Good Fit for Venture Capital?
Excellent list of 5 criteria VCs look for before considering investing. Knowing what VCs look for will help you create the VMF. Read More
How To Make Your Startup Look VC-Worthy
Building to appeal to VCs is difficult and this post is great to help identify ways to make your startup more VC-ready. Read More
10 Tips To Make Your Product Startup More Attractive To Venture Capitalists
A great list of items to keep in mind when thinking about ways to improve your startup to sell to VCs. Read More
If you're ready to raise capital, let us know and upgrade to Premium to unlock your targeted investor list of who will have a higher probability of investing. All premium clients receive a complementary consulting session with Jason Kirby, Managing Partner at Thunder. Upgrade Here
Let's stay in touch:
Written by Jason Kirby - https://www.linkedin.com/in/jasonrkirby
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