Finding the right deeptech VCs to pitch

This is the first guide in a series on how to find VCs, how to set a valuation, which pitch materials you should prepare, and what makes some VCs more useful than others.

Much more so than software startups, deeptech companies struggle to identify the VCs that invest in their esoteric niche. Because, while most software VCs invest in the majority of SaaS, many deeptech VCs only invest in a few deeptech sectors. And it can be unclear from the funds' websites which they are.

That's why Deep Checks was created. We solve the founder-to-VC matching problem, allowing founders to quickly reach thesis-fit investors for free. 

But there’s a lot more you can do beyond applying to Deep Checks.

Step one is going to VC Sheet to find every relevant deeptech fund and placing them into a spreadsheet. Further, VC fund portfolio webpages reveal the types of companies a fund invests in. Use this data to determine whether they're likely a fit for your startup. 

Next, email everyone in your network who knows investors and ask them to indicate in the spreadsheet which VCs they can intro you to. Also ask which VCs you missed. That's how you triangulate intros to funds through your network: Make a list of funds from VC Sheet, then figure out who has intros.

How much do warm intros matter?

Warm intros make a material difference. You’ll significantly increase response rates if someone who the investor respects makes the intro glowingly, e.g. “You have to talk to this team.”

However, warm intros are absolutely not necessary to successfully complete a fundraise. We've invested in multiple companies who emailed us cold. So if you don’t have anyone to make warm intros for you, just start emailing cold and don’t think twice about it.

At Julian Capital, we look at every cold inbound pitch (including on our website—please share with us there) because our job as investors is to find diamonds in the rough. We badly want to find the next great deal, and we recognize we must remain extraordinarily open-minded to what a good deal is. Most good small deeptech funds operate like this as well—usually much more so than larger funds who are inundated with deal flow.

You can try to assess if a fund is “small” by checking how many people work there via their company’s LinkedIn page. If it’s fewer than 6, we consider it small. (Or just submit to Deep Checks and get in front of dozens of small—and large—funds in one shot.)

However, most cold deals are not compelling. So VCs are generally skeptical when going through them. So you must understand how to stand out. That's what this guide and the ones that follow cover in-depth. (Spoiler: A killer pitch concisely and convincingly explains why your success is inevitable in the face of competition. We'll explain how to construct this argument shortly.)

Which pitch materials should I share?

Email outreach should include your deck upfront. (It's worth paying a designer a few hundred dollars on Fiverr to make it look good so that VCs don’t reflexively ignore it as un-serious. This happens a lot.) Don’t make VCs respond to get the deck. They usually won’t because that forces a conversation that they may not want to have in case the startup isn’t a fit for them. This is something founders often get wrong: give VCs as much material as you're comfortable with upfront so they can quietly decide if you interest them. Give them too little and they simply won't bother asking for more because they are trying to avoid likely low-ROI conversations with founders.

In fact, you can't really share too much. Just don't make the email body itself too long (1-2 paragraphs, 3-4 bullet points), but absolutely feel free to write up a full memo alongside the deck and link to it. Sometimes narrative nuances can only be captured sufficiently in memos—not decks. A memo, to be clear, is a longform expansion on the key points you’re making in the deck. It also shows investors how thoroughly you’ve thought through your idea and how well you storytell. VCs also really like FAQs in memos with all the questions asked collectively by other investors. This helps a lot, especially when investors don’t quite understand your space.

That said, the point of a cold email is not to convince someone to invest—it's to convince someone to take a first meeting. So it should be relatively succinct and highlight the top attributes of your company that would get you a meeting (e.g. traction, market size, team background—topics we cover in the next guide). You can drop a few cliffhangers that don't get resolved until they hear it directly from you on a call.

As for personalizing your outreach, it’s obvious when personalization is AI-driven and insincere. In contrast, a sincere personalized email is one that shows you’ve read or watched their blog posts and YouTube interviews and that something in that content showed that the investor is a fit for your startup.

Finally, you don’t need a website when pitching. But a deck or a memo is mandatory.

Setting a valuation

Setting a valuation is an artistic triangulation of:

1. How much money you need to accomplish your next set of milestones.
2. Investors' appetite for what you’re building.
3. The level of de-risking you’ve achieved to give investors confidence in your likelihood of success.

Start by asking yourself how much capital you need to hit the milestones required for your next round of funding. It's typical to give yourself at least 18-24 months of runway to achieve them—or whatever your situation calls for—and a bit of cushion in case things don’t go to plan. One rough formula goes like this:

1. How long you think it'll take to hit your next major milestones, plus
2. A cushion that depends on how certain you are in your timeline—the less certain, the more cushion you need, plus
3. A 3 to 5 month buffer for how long it takes to execute the next fundraise itself

To set a valuation, a common rule of thumb is to divide the capital needed by 0.2-0.25 to get your lowest target valuation. (The VC market has informally standardized this level of per-raise dilution, which helps you estimate how much founder ownership you’ll retain over many future rounds.) So if you need $2.5M, you’re probably raising at a $12.5M post valuation or higher (typically on a document called a SAFE). 

If you pitch well enough and VCs want to invest badly enough, you can leverage the demand to take less dilution and raise at an even higher valuation than $12.5M. It's worth it if you can so that you retain more ownership as a founder. However, it's safest to start with a modest valuation then let VC interest drive the valuation up. Because if you set a valuation that's unrealistically high, it turns off VCs who are valuation sensitive and it makes you look bad when you later lower your valuation because you couldn’t successfully raise. That’s a red flag for most VCs we know.

To repeat, let your investor conversations and incoming offers drive the valuation higher—after starting modestly. Factors that generally drive up VCs’ valuation tolerance include: the pedigree and experience of founders, the market tailwinds, product novelty, customer traction, and the hotness of the sector.

You might be wondering what it means to drive a valuation "up". We're referring to the concept of tranching. Many founders don’t realize they can "tranche" valuations on SAFE notes. What that means is that you can take your initial check at say $10M post then after $1M is invested you can increase the valuation to say $15M post and take another million at that valuation, and so on. This incentivizes VCs to move faster to get in at lower valuations, and it lets you decrease dilution with each additional chunk raised.

It will not make you look bad to do this. VCs are adults and won't be offended if you navigate this thoughtfully. Do what’s best for you. Just be transparent with VCs about how much you’ve raised and at what tranches when they ask. And recognize that if you tranche up too much or too high, VCs can get annoyed and walk.

How to schedule and prioritize VC meetings

When VCs respond wanting to meet, try clustering your initial meetings into a two week window. You want momentum from VCs to motivate other VCs to move faster, and that’s best achieved by getting investors to commit checks within a compressed window. 

The way to do this is to make sure you’re speaking with a number of funds who can lead your round. The easiest way to get to the bottom of this is to ask for standard check sizes and whether funds lead. 

When selecting leads, there's an advantage to pursuing larger funds: they generally reserve more capital for your future fundraising rounds. If they want to keep investing in you because they're excited by your progress over time, their earmarked funds are an advantage, becoming quickly accessible capital when you hit milestones. Small funds often don’t follow-on into future rounds, or if they do it's not with much. That doesn't mean they aren't useful though: Small seed funds generally care far more about the success of each startup in their portfolio because they have fewer and aren't trying to take as many shots on goal to just see which ones break out. This isn't universally true but is generally true.

That said, pitching non-leads such as angel investors first helps you to hone your pitch so that you don’t blow first impressions with leads (which matter existentially when pitching VCs). So if you don’t have experience pitching successfully, then pitch smaller checks first. Once you've dialed it in, switch to funds that can lead because collecting tons of angel checks is not a meaningful signal to VCs, and it isn't the best use of time if it drags on for months. Lead VCs rarely care about checks from lesser sophisticated investors. They're simply not high signal relative to a VC fund that sees 1,000+ pitches per year and has better and more stringent pattern matching.

A warning on selecting VCs to work with

When a VC wants to invest, consider doing diligence on them too. The most thoughtful founders backchannel with a couple founders a VC has already backed to see if the VCs are in fact a well-behaving, supportive firm.

You may wind up working with your investors for a decade or more. Make sure you like them as people, and how they interact with you. 

Do they stress you out? Do they suggest terrible ideas very strongly? Don’t assume that’ll get better. Over time, they may secure more power through a board seat, and the repercussions can get worse.

Meanwhile, the fact is most VCs are not very useful. Their pitches to founders cluster around “recruiting help” and “company-building advice.” But you can get this help elsewhere from more experienced operators, including from advisors who’ll be easy to come by. So don't stress too much over picking which VCs will help you, and focus more on which you'd like to be around and whose advice resonates the most.

That said, there are VCs that are of real value. Namely, very technical ones who are experts in your field. Or, true top 0.1% operator-advisors who really understand how to build a company. This gets back to our opening paragraph: it's valuable for you to backchannel an investor to see if they really help like they say they do. Reach out to a few founders in the investor's portfolio listed on their website. Or ask the investors directly for references.

To wrap all this into a framework:

1. Your top priority when fundraising is to fill your round with non-jerks.
2. Your next priority is to fill it up with people you really want to work with.
3. Now, assuming you have an excess of interest, start getting more selective: What do you want help with? Is it technical guidance? Hiring support? Company building advice? GTM advice? Connections to later stage investors? Customer connections? Accordingly, prioritize funds by the value they claim—then verify it with their portfolio founders.
4. Throughout this process, consider incentivizing speed by tranching up if there’s excess demand at each tranche. 

Now it's time to get to the next guide in this content series: How to pitch deeptech VCs well. It's the most valuable guide we've written, and it explains the non-obvious reasons why VCs quietly pass on founders.

But, first, let's list some funds we think are great—in case you want to reach out to a few directly. We'll start with ourselves, if we may: Julian Capital, which is the fund that built Deep Checks and is writing this guide. When we invest, we help co-run your growth until your Series A—to help you build an engine to acquire customers and build a great growth team. We can do this because our team has run growth for several unicorns—from seed. And as part of our hands-on growth work, we’ve also made the websites for nearly all of our portfolio companies, e.g. Aalo.com, Extropic.ai, GreenLIB.com, AstroMecha.co, and ReflexRobotics.com. Beautiful sites help with recruiting, sales, and generally being taken more seriously.

Because we also run DeepChecks.vc, we have the largest network of deeptech VCs—who know and trust us—and we use that for unrivaled fundraising support for our companies. When we email other investors that this is the best deal we’ve seen in the space, they generally listen.

Other great VCs include smaller deeptech funds with serious domain and technical expertise. Many defense-focused funds, bio funds, and climate funds fall into this category. Some are ex-founders who’ve navigated thorny regulatory problems—like FDA approvals.

You get to meet all these people by submitting your deck to Deep Checks in under a minute. Deep Checks investors pay close attention to the deals we send them because we have such a good track record of sending them high quality deals for over two years now.

After running Deep Checks for a while, we've found plenty of funds that we've seen founders love. Here are a few of them:

UndeterredCapital.com: Joe Wilson helps founders commercialize scientific and technological breakthroughs in applied robotics and biological platforms. Before starting Undeterred, Joe co-founded Multiply Labs, a cell and gene therapy robotics company that was spun out of MIT in 2016 and today is the market leader in the sector. Joe works closely with founders as they de-risk their tech and scale-up commercially. Of the firm’s first 30 investments, 23 were at the pre-seed stage and, in more than half of their investments, Undeterred met the entrepreneur prior to the company’s incorporation.

HumbaVentures.com: Humba is an early stage fund focused on deep tech and American Dynamism startups. They are a true generalist investor, and open to investing in any company in those areas as long as it's making something hard, valuable, and high impact. They've backed everything from nuclear reactors to next gen saw mills to organoids for drug testing. The fund is run by Leo and Anna, who have unusual investor backgrounds. Leo was the second engineering hire at LinkedIn, then worked at Google and co-founded Susa Ventures (~$1b AUM seed fund) in 2013. Anna spent time at Founders Fund and 8VC, and has been writing popular deep tech publications for the past few years (one and two).

AlsoCapital.com: Mike Annunziata is anything but conventional, which is what makes him effective for novel deeptech companies. He founded a company that developed the first new thermal processing technology since the microwave, deployed over a billion dollars as an allocator at an Ivy League endowment, and built a compounding network through close ties with SpaceX veterans. Founders often call him the most helpful investor on their cap table, thanks to the time he spends solving problems and placing senior engineering, business, and government leaders into portfolio companies.

VersionOne.vc: Angela and Boris from Version One built their reputation on a promise: being the first call founders make, with responses in minutes, not days. They've developed a unique approach that balances proximity with autonomy: close enough to understand the nuances of each business, distant enough to let founders build. Rather than prescribing solutions, they've mastered the art of asking the right questions at precisely the right moments. As a result, founders consistently describe them as their most reliable advisor board member, particularly when crisis hits, knowing they'll drop everything to help navigate rough waters.

And many other great funds. Apply to Deep Checks to meet them.

—Julian, Jacob, and John from the Julian Capital team