What is the most effective way to build relationships with SaaS founders as a deal sourcer?

We at @CornerstoneVentures believe in Founder's Vision & Investor's imagination. Our approach is that the SaaS Founder’s know their domain and solution better than we do. In our initial interactions, we strive to learn from the founders rather than imposing our presumptions of what we think should be done by the founders. Trying to understand and align with their vision, and not to have "we know it all" kind of approach. We believe, this builds trust and confidence in our relationship and improves openness in approach and sharing of information. As the relationship grows deeper, the founders start seeing investors not as supervisors but partners in progress and in the process the mutual respect grows.

It would be best to research, research, and test, test, test to arrive at your real Serviceable Opportunity Market. Even with this calculation, you need to start at the most advantageous aspect of this sector based on their business characteristics, adoption of your type of offering, what they do today to accomplish whatever your product/service provides. In addition, their ability to pay and what exactly is the value your customer will receive. Be prepared to offer a trial, freemium, or based on payment for value created initially.

It's imperative to not just know your target market, but to deeply understand the nuances of the SaaS industry. This encompasses being up-to-date with emerging technologies, understanding the competitive landscape, and recognizing the unique challenges and opportunities SaaS founders face. This knowledge not only refines your deal sourcing strategy but also positions you as an informed and credible partner in the eyes of SaaS founders. Engage in continuous learning and market analysis to stay ahead of industry trends and shifts.

One thing I've found helpful is that an investor must provide more value than just financial capital. Factors such as strategic value, network and resources, domain expertise, long-term partnerships, and cultural alignment are essential.

It all starts with knowing your addressable market, its size, the driving forces for the demand, and the competitive landscape. From there, you can start defining what your USP (unique selling proposition is).

In the world of venture capital, differentiation is key. When reaching out to SaaS founders, it's critical to articulate a clear and compelling value proposition that distinguishes you from other investors. This might include your track record of supporting SaaS companies, your network of industry contacts, or your ability to provide strategic guidance on scaling their business. Your outreach should communicate how partnering with you can uniquely benefit their company's growth trajectory.

What is important is to show value to the founders. Good founders and good startups need to see value beyond capital and need to feel and see the strategic synergy. Showing a clear growth plan that outlines value for the founder and the investor is key and provide insights on key strategic decisions is also important. Founders need a sounding board and investor can play that role to build a relationship that is built on trust

The most effective way to reach out is through a warm introduction from people who really know and trust you. - Use LinkedIn to uncover mutual contacts from your list - Send a short note to your friend explaining who you want to reach and why, followed by an example (written in their voice) of intro to send. - Something like: "Hey Vicky! I was chatting with my friend Sally Moneybags. She's investing in the space mining sector, and I know you are taking off like a rocket ship. I think you should talk. May I introduce you?" - If your friend makes they intro make sure to follow up to let them know how it went. - Otherwise, you can follow up with your friend *once* if you don't hear back.

Arabella, the shrewd business shark, knew the art of personalized outreach. When hunting for SaaS connections, she didn't just send a school of generic emails. She dived deep, researching each founder, their product, and their journey. Her messages were like a perfectly aimed shark fin cutting through the ocean - sharp, tailored, and impossible to ignore. She'd reference a founder's recent achievement or an intriguing aspect of their product, followed by a clear value proposition. It wasn't just about making a splash; it was about making it count. Her approach? Be specific, and show you're not just another fish in the sea. Arabella proves that in the sea of business, the bait of personalization hooks the best deals. #gabenfreude.

In the venture capital landscape, personalized outreach is paramount. As a financial analyst, I've seen that understanding a SaaS founder's unique challenges and milestones is crucial for establishing a meaningful connection. Highlighting specific aspects of their business that align with your investment thesis can demonstrate genuine interest and set the stage for a mutually beneficial relationship. Offer clear insights or resources that can help them scale, and be explicit about your intentions to foster a transparent dialogue from the outset.

The first step in networking between founders and investors is to engage in friendly communication with prospective founders and try to identify the best startups before they become widely known. Once you have discovered some hidden gems, such as potential unicorn SaaS startups, before others do, you can begin promoting them through introductions, social media, and other channels. The goal is to help these startups realize their full potential by leveraging your connections with various service providers, such as startup incubators, to stay abreast of industry trends and continuously improve.

Building relationships with SaaS founders isn't solely about the direct interaction between you and them; it's also about how you can connect them with other founders, mentors, and industry experts. Organizing and participating in roundtable discussions, workshops, and networking events can provide a platform for knowledge exchange and foster a sense of community. Such initiatives not only aid in relationship building but also enhance your reputation as a value-added investor.

When reaching out to SaaS founders as a deal sourcing, personalising your outreach is critical. Tailor your messages to demonstrate your understanding of their company and needs. Mention specific details that show you've done your homework, be clear about how you can add value to their business, and always strive to build a genuine connection based on mutual benefit.

Helpful is key - as a VC you can help in many ways beyond money. Being generous with introductions is one of the best ways to show what you have to offer. It also helps to see how well you can work together. Getting a VC is like getting married so testing your compatibility is important!

Arabella, the business shark, swam the SaaS seas with respect and helpfulness. Unlike her peers who rushed their prey, she approached founders with patience and grace. Aware of their busy currents, she never bombarded them with incessant messages. Instead, she provided value - sharing insights like pearls from the depths of her experience. Her follow-ups were timely, never intrusive, akin to a gentle nudge in the right direction. Arabella's strategy was clear: be a beacon, not a barracuda. Her respectful demeanor and genuine support made her not just a connector but a cherished ally in the SaaS ocean. Spread Shark Love #divineintervention #gabenfreude.

Founders will forever remember people who are respectful & compassionate to them as a person (& those that weren't). Building a company involves pain and sacrifice, even when things are going well. Offer them food, get them a coffee, suggest a walk rather than a conference room. If you are at an in-person event like a conference, bring them water and nice snack or take them to a sit down meal. Check in personally, be a real authentic person who cares about other people.

The best relationships are those where the value exchange is mutual. Approaching interactions with SaaS founders with a consultative mindset—where you seek to understand their vision, challenges, and strategic objectives—can lead to more meaningful engagements. Offer your insights, resources, and guidance without the immediate expectation of a transaction. This long-term approach often leads to stronger, trust-based relationships and positions you as a go-to resource when they're ready to seek funding.

Being patient is a crucial aspect of building relationships, not only with founders, but with anyone in the business world. Few consider emphasizing on the importance of patience, in any of these evolving scenarios, and I want to touch and address an important factor, which is: the respect for time. We need to recognize that everyone involved in a business, often have busy schedules and various priorities. Always have in mind that any commercial decision and transaction, evolves in cycles, which many can prove to be lengthy. While persistence is important, it's equally crucial not to pressure or rush founders into decisions, thus my main point besides the “learn and listen”, is “have patience”.

GPT In the deep blue world of SaaS deal sourcing, Arabella, the astute business shark, mastered the art of learning and listening. She didn't just swim around founders; she immersed herself in their waters. With each founder she met, she opened her ears wide, letting their aspirations and challenges echo in her mind. Her questions were like sonar pulses, revealing the depths of their visions. Arabella never interrupted the flow, she rode it - taking mental notes that transformed into a treasure map of insights. Her summaries weren't just recaps; they were lighthouses guiding the way to mutual success. Arabella's approach teaches us: in the ocean of business, the best sharks aren't the ones who bite, but those who listen. #gabenfreude

Listening carefully the story of SaaS founders is the first step in building the lasting relationship with your clients. Not only SaaS founders but other breed of founders as well are of the opinion that they weren't given a proper hearing. For a subscription model is complex, and more complex is the model of making money out of it. If a SaaS founder is not heard patiently then the very first step will be absent in the process. Showing interest and empathy is more vital than the due diligence in the entire process.

Add real value… Share information that investors don’t typically proactively share. A few examples include: -data on current valuations ranges -capital formation strategy that enables at least 3x setup in next round (VC’s are thinking this but don’t say it) -if an LLC recommend not using PIU’s…instead use vesting for common…typically 4 years with one year cliff…otherwise the transition to C Corp can be painful with topping off -ask lots of questions and listen -ask why 5 times to help get to the core of what really matters whether it relates to messaging, positioning, ICP, GTM strategy, business model, etc -introduce them to another investor -introduce them to a customer -introduce them to a potential partner

Staying in touch with SaaS founders requires a systematic approach to ensure you're providing timely and relevant communications without being overwhelming. Utilizing CRM tools to track interactions, interests, and key milestones of SaaS companies can help you personalize your follow-ups. Additionally, leveraging data analytics to gain insights into their business performance and industry trends can provide you with valuable talking points and engagement opportunities.

Staying in touch is key. Don't be pushy, just help them when you can. Keep them informed about relevant industry updates, market trends, and opportunities. By staying in touch, you can nurture the relationship, build trust, and ensure that you are top of mind when they are ready to raise funds or move forward with the deal process.

Arabella, the discerning business shark, knew that staying in touch with SaaS founders was crucial. She didn't just circle them during fundraising seasons; she swam alongside them consistently. Her updates were like timely currents, bringing news of her fund's movements and opportunities. She kept her word, sending resources and introductions like valuable pearls. Arabella also celebrated their milestones, her genuine enthusiasm shining like sunlight through the water. This continuous engagement built deep trust and rapport, positioning her not just as an investor but as a steadfast ally in their journey. Arabella's strategy shows: in the sea of business, the bond that endures is the one that evolves. #divineintervention #gabenfreude

I would say stay in touch and provide constant feedback is much desirable on the part of VC than just fund the SaaS venture. Every SaaS founder approaches a VC with a hope to get - his model will be heard, his questions will be answered, he will get a detailed feedback, and he will get the funding, and above all he will get the constant support. The last one becomes so important in the ever competitive space of SaaS business.

Sharing stories of your investment journey—successes, failures, and lessons learned—can be incredibly powerful. These narratives not only humanize you but also provide tangible examples of how you've navigated challenges and contributed to the growth of other SaaS companies. Such transparency fosters trust and can be instrumental in building rapport with founders. Moreover, it's an opportunity to reflect on your investment philosophy and how it has evolved, providing founders with a deeper understanding of your approach and alignment with their goals.

VCs build relationships with Founders by running in the right circles - specifically, through being involved in the relevant communities. For example, if you are a fintech VC, join a fintech group and contribute to the conversation by speaking on panels, participating in discussion on Slack, or engaging with other members. Build up your reputation as someone who is there to add value and you'll naturally connect with Founders looking for funding.

Based on my experience, trust is the most important factor in establishing a stable relationship between the investor and investee. Cultural fit, a sense of commitment to a long-term partnership, and the investor's flexibility and patience play important roles. Additionally, having supportive and reasonable terms in your agreement or contract is crucial.

As an associate at a fund specializing in SaaS companies, we've found that positioning ourselves as a product-focused fund is the key to attracting top-notch SaaS founders. Once we established this identity in the market and made investments in promising founders and startups, those initial founders began referring other exceptional up-and-coming entrepreneurs to us.

The best way to relate and build rapport is if you were a founder yourself. As a deal sourcer vs a founder, if you have never walked the path before it's very hard to understand the life of a founder period. You need to have walked in their shoes to get their respect and build rapport quickly because they know you've been through the grind before.