Getting Warm Referral Is A “Test” For Budding Entrepreneurs: Marc Andreessen

Venture Capitalists evaluate thousands of companies every year, and they need to make thousands of decisions on whether to invest in a company or not. And they seem to use every little interaction they have with entrepreneurs to help make up their minds.

Legendary tech investor Marc Andreessen has said that getting a warm referral to a VC is the first “test” for entrepreneurs looking to raise money. A warm referral, in VC terms, is someone the VC already knows and trusts speaking highly of an entrepreneur while introducing them. Andreessen says whether an entrepreneur is able to get a warm referral is a sign whether they’d succeed in their startup or not.

“The way the top-end venture capitalist firms work is they’ll basically take you seriously if you come in introduced by somebody they’ve worked with before, and they won’t take you seriously if you don’t,” he said at a talk with Y Combinator’s startup school.

Andreessen says that managing to get a warm referral is an indicator of the abilities of the entrepreneur. ““It’s the first test of your ability to network your way to the investor. If you can’t figure out a way to network your way to a VC firm— which of course is in the business of meeting founders — then you’re unlikely to be able to network your way into hiring a great team or selling your product to customers,” he said.

Andreessen hinted that getting a warm referral wasn’t exclusionary against founders who weren’t as networked and connected as others, but a good first test for VCs. “The role of the warm referral is misinterpreted. I think you just need to view it as the first test, and it’s a test that you just want to pass,” he says.