Technology

Should You Be Introducing Your Start-Up Clients To VC's?

I am not sure how much value there is in a warm introduction to an investor from a lawyer.

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money investmentIt is still something of a mystery how small start-ups are able to work with Biglaw firms. But, one of the value adds that many Biglaw firms promise their clients is introductions to VCs. And, to be fair, I have heard many VCs on panels talk about the importance of entrepreneurs approaching them via a “warm introduction,” often through lawyers.

Plus, I am sure that many lawyers are capable of making those introductions and getting their clients that big meeting. In fact, on a recent trip to San Francisco, I twice sat drinking coffee, pretending to work on my laptop while eavesdropping on a pair of lawyers promising some wide eyed hipster that they were going to introduce him to investors.

So, I am sure that the temptation is great for junior and midlevel associates to try to go out and get their app-building friends to sign a letter of engagement by telling them they can make introductions to some of their firm’s VC clients.

Try to avoid that temptation.

When I discussed this topic last year with Austin based start-up lawyer Jose Ancer, I had a slightly different take on this issue, but over time I have reconsidered my position, not only because these “warm intros” are rife with conflict of interest, but because, quite frankly, I am not sure how much value there is in a warm intro from a lawyer. Paul Graham, one of the founders of Y Combinator, often says that start-ups think that getting in touch with VCs is difficult, when actually getting in touch is quite easy. Building traction with users and customers is the hard part.

It is true that VCs say they like warm intros, but while that term sounds generic, what VCs really mean by warm introductions is something very specific: an introduction from someone they know who has already invested in the company. Both introductions lead to a meeting, but only one will give your client a head start. An introduction to a VC from a lawyer is not worthless, it is just worth less.

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Zach Abramowitz is a former Biglaw associate and currently CEO and co-founder of ReplyAll. You can follow Zach on Twitter (@zachabramowitz) or reach him by email at zach@replyall.me.

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