Dear SaaStr: Why Are VCs So Adamant About Warm Intros?
I’ve learned that 90% of warm intros are the biggest waste of time of all, unless they are “double qualified”.
Some startups I funded on a cold email:
Talkdesk, worth $10B Today
Algolia, worth $2.25B Today
Salesloft, Vista at $2.3B
Pipedrive, acquired for $1.5BLook, worry less and just send the email folks
— Jason ✨👾SaaStr.AI Sept 10-12✨ Lemkin (@jasonlk) August 22, 2022
Why? Well who makes warm intros?
- Founders you know that just want to help other founders get funded. This sounds great except many founders have no idea what makes for a good venture investment. Really, no idea at all.
- VCs that want to get you to fund the next round. OK, but often times, it’s their mediocre / B+ investments. They don’t send you their crappy investments, but their very best investments — already have term sheets. These founders don’t need any help from their earlier VCs.
- Industry People. Lawyers, bankers, consultants, etc. Same as point one. They know the companies they like, but often don’t know how to filter it.
Then it gets even worse. Not only are these never great (often good, but never great) start-ups, these unqualified or semi-qualified warm intros … but then you have a social obligation. It’s someone you know that made the intro. If you take the meeting, you have to explain why No, you get follow-up emails, it’s too much. It’s me, not you.
So my learned rule is “double qualified.”
What do I mean?
I mean the intro isn’t enough, even if the source quality is high. The source has to go further.
If:
- Founder I know is GREAT says this Founder is GREAT, and WHY, then meet.
- VC I know and trust says this is the best investment they’ve made in past 12 months, then meet.
- If attorney, banker, etc. says this is the Hottest Company in their portfolio, then meet.
- If any of the previous 3 aren’t met, BUT, the cold email is amazing, and the founder got someone very high-quality to make the intro, that counts as Double Qualified. Then meet. Shows founder is aggressive and knows how to penetrate and get sh*t done.
The last 4 are often Great. > 33% of time. But without Double Qualification, a warm intro is often worse that a cold email. At least a cold email, you can ignore or meet and then politely say No, and that’s it.
As a founder, I got every single company I intro’d to VCs funded. 100%. The key was making the case, both for the company and the match, logically. Why this would be an amazing Unicorn, why the founders would kill it, and why it was a match for their target investments.
Then … easy-peasy.
Now this only partly answers the questions. Why do so many want only warm intros?
- First, the best founders do source other great founders. And the very best founders do know who is even better than them.
- Second, the best seed funds are top lead sources for the Series A funds. And the Series A funds are the top lead sources for Series B funds, and so on. Every VC wants an early look at the top startups at the top funds a stage earlier.
- A great warm intro — one that meets the above criteria — is often a far easier deal to find than doing it yourself. Warm intros are easier.
Still, even the very best VCs take cold emails, especially in the earlier stages.
Everyone from Aileen Lee to Keith Rabois to David Sacks to Christoph Janz take cold emails. Just make them … great. More on that here:
Which VCs Open Cold Emails? Keith Rabois. Aileen Lee. David Sacks. Satya Patel. And More.
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Jason Lemkin, Khareem Sudlow
