How Does a VC Find Their Investments?

Within less than a year at Tomahawk.VC, we’ve seen around 1300 different startup ideas and pitches. The question is: how do we find the deals that we actually end up investing in? What are the main criteria? In this episode, I’ll share some insights on how to 10x your chances of getting an investment from us.

Video Transcript

Hey, the question that I recently discussed with another VC was how do we find the deals that we actually end up investing in? So for us, at Tomahawk, this year alone, we’ve seen, I think, around 1200 to 1300 different startup ideas and pitches already. For a small team of just two or three people, that’s a lot of pitches to go through. And so one of the crucial questions that we ask ourselves is: which ones do we actually end up investing in? And of course, there’s lots of variables and parameters that affect our final decision to invest. We thought about what are some of the channels that we’re more likely to pay more attention to and also, which channel should we practically pay more attention to stay are more likely to lead to a deal that we’re actually going to invest in?

Because out of the roughly 1200 cases that we’ve looked at this year, we’ve only ended up investing in three of them. And I want to share this with you, so that if you’re a founder sitting on the other side, and you’re asking yourself: how can I best get in touch with Cedric and pitch my idea? Consider these, and then think about how you potentially set yourself up for better success, rather than just applying with us via cold email.

The number one thing learning that we’ve made is that if the connection happens through a mutual friend, a mutual person that we know, be the founder or another investor, that increases the likelihood of us investing by at least 10X. Why is that? It’s not because we don’t pay attention if you apply via videoask on our website, if you send me a cold email, if you send me a LinkedIn message, I do actually check all these channels, and I try to get back to every single one of you. But if there’s a mutual connection, that immediately establishes certain culture fit and trust, and that’s very important because I know that a founder that I already worked with, that I know really well, if they make the intro, they will already pre-filter, they will not intro you, if you’re just at the wrong stage, we only do early stage. So if you’re raising your series B, you might have had an amazing company, but we’re not going to invest.

That’s not what Tomahawk.VC does. Same for sector. If you are building a MedTech company, that’s great. And I’m super passionate about all the products that come out. And I think it’s great to see how far we’ve come within the last 10 years only in that field. But it’s not what I know, it’s not where I can contribute a lot of value. And that’s fine, we’re not going to invest. And so all these criterias are super important for both of us to understand early on so that we can filter and spend our time on what’s important, and mutual connections will often take care of that filter and not only that but also I mentioned the culture fit. It’s so important that we work well together.

Being invested together, it’s almost like a marriage, it’s gonna last for 5 to 15 years until we’re gonna part journeys again. And so it’s extremely important that we do get along and that we shared the same mindset. For example, I’m someone that’s very bad at saying things in a politically correct way. I like to be outspoken, direct, honest, upfront. I think it’s what’s most efficient for both of us. And you might disagree, but it might create challenges for us if we don’t get along. And so having a mutual connection that knows both you as well as myself, they will often have a very good idea already, if and how we will get along. So to quickly summarize, the channels that we spent the most time on because they lead to the most success in terms of investments that we actually make, not only look at, is mutual connections. It’s our network.

It means connecting with founders that we already work with, with co-investors, and just with friends that work in interesting companies that might know you either as a friend or they work with you or they have worked with you in the past. And so the learning for you, if you do want to increase your chances of us making an investment into you, your team, and your company, first figure out if there’s someone in our network that we both know. That’s gonna 10X increase your chances that we’ll spend a lot of time looking at this. And it will also increase your chances of not spending any time interacting with us, that’s not valuable for you because we’re going to be in the wrong space or have the wrong mindset for you anyway.

So in very short, if you want to get to know us, if you want us to invest, find a mutual connection and tell them to intro us after you’ve spoken to them, and explained your idea to them.

I hope you’re having a beautiful day. Stay curious and I’ll talk to you soon.