Getting the VC to invest requires that the deal evaluation process maintain positive momentum. Maintaining momentum can be achieved by the periodic contact strategy described in my post: Creating Momentum. However, another important tactic should also be leveraged to maintain momentum – the creation of urgency.

The best way to create urgency is to have competitive interest in your deal. You should reinforce this urgency by creating a deadline based upon progress you are making with other venture capitalists. This can be achieved by tying your timetables to expected milestones with other VCs, such as termsheet timelines.

You should never lie about your other VC relationships. The venture community is very small and it is possible that VCs may speak to each other. Being caught in a lie could kill your credibility and, as a result, kill the deal.

The second best way to create urgency is through deadlines created by exogenous factors, such as a need for capital to continue executing against your plan. You can do by making the case for why you need the capital according to a specific schedule. Be sure that this date is reasonable for the VC – you don’t want them to feel that they shouldn’t evaluate your company because they won’t have sufficient time to complete their diligence. This suggests that you should carefully plan the timing of your fundraising process.

Regardless of the tactic that you use be sure that you create urgency, not desperation. Creating perceptions of financial and operating needs as a tactic to create momentum can backfire, by making the VC think that you are 1) not in a good negotiating position, 2) not operating a viable business or 3) not capable of managing your business well, since you mistimed your fundraising. Any such interpretation hurts you.