After sitting through 20+ pitches as a “VC” and having given 10 times that from the "sell-side" of the table, I figure it’s time to throw my hat in the ring along with all those offering advice to entrepreneurs pitching VCs. In B-school, we had a thing for "top 10" lists, so please forgive the following format:
10. Get someone you know to introduce you. Everyone knows this, but it's worth repeating. I've seen a lot of CEOs/CFOs with lists of VC funds they are pitching and the status of each (a sort of "fundraising pipeline"). But I've yet to see one of these spreadsheets with the most important two columns: (a) who's going to introduce us to this fund and (b) what's their relationship to the fund, i.e. how does the fund view them. Ideally the person making the intro is someone who’s made money for the fund in one capacity or another. Do yourself a favor and add these columns to your spreadsheet.
9. Don't bring the whole company. Who and how many folks to bring obviously depends upon circumstances, but ideally it's the CEO and one other key executive (e.g. founder, VP Sales, CTO, etc.). Any more than that you're fighting for air time or looking like moss on a rock, neither of which help the cause. The best pitch I’ve seen so far was given by the CEO alone (to a group of more than a dozen).
8. Arrive early and set up your stuff. Every shop has a different A/V setup. Great entrepreneurs come prepared…wireless modem, memory stick, Ethernet cable, hard copy screen shots… Woe to the entrepreneur who starts off the meeting with a bunch of VCs sitting around and yelling "press function-F7!"
7. Introduce yourself by describing how you've made money for shareholders. Less than 5% of the management teams I've seen have figured this one out. The best intros are ones where multiple people on the management team can say, “I was CXO of Lightning-in-a-Bottle, Inc. for 3 years and we raised umpteen million returning numberteen-X to investors.” That’s what VCs call an “A-team.” Every exec worth their salt should be able to come up with some version of this such as, “I was VP whatever at Blue Chip, Inc. and generated a 5X return on capital with my insert project name” although too many of the later on the team will get a “B” label from savvy investors. At all costs, entrepreneurs should avoid what 95% of us do and launch into an intro with, “I worked at…” and then proceed to name drop 5 companies that are successful but which everyone knows probably had little to do with said executive.
6. Tailor the pitch to the audience. When the VCs are introducing themselves, great entrepreneurs are doing more than just listening; they are qualifying the prospect. Entrepreneurs should take the VC intro part of the meeting to ask a few questions with the goal of understanding the VC’s perspective…how much do they know about my market, my company, competitors, etc.? Armed with this, the team can tailor the presentation to the audience.
5. The slide presentation should be at maximum 10 slides. Do the math: 10 minutes for introductions, 3 minutes per slide (30 minutes) for the presentation, 10 minutes for a demo and 10 minutes for Q&A...that's your meeting. Bring all the slides you want, but a great presentation only needs 10. Guy Kawasaki has a great book called Art of the Start which talks more about this (and gives a description of what a 10-slider looks like). A lot of folks send 40-page drafts to me with the caveat that they “are working on cutting it down.” I recommend starting the other way around. Start with 3 slides: what’s the market, what’s the solution and how does it work. Then add slides to fill in the holes until the magic number of 10 is reached.
4. When a potential investor asks a question, answer it. It’s rare that the response, “Good question! If you could just hold that thought until slide 36, I’ll address that point.” The trick to understanding why is to realize that, when asking questions, smart investors are really trying to get a feel for what the CEO is like, how they think on their feet, perform under pressure, listen, relate to investors and what it would be like to work with the entrepreneur in question. So every time a VC asks a question, the entrepreneur should think to themselves, “oh, she just asked me what it’s like to work with me” and then respond.
3. Don’t hide bad news. Entrepreneurs are by definition optimists, but there is a well known fine line between genius and insanity. I’ve seen a lot of entrepreneurs, including myself, paint themselves into a corner instead of proactively defining holes or unknowns in their business plan as manageable risks. Savvy investors bucket these folks as “first-timers” or “green.”
2. Be concise.
1. Practice, practice, practice! I've heard many CEOs say, "gee, that's the first time I've seen that slide...John (VP of whatever) do you want to walk us through this one?" It sounds silly, but for those of us not gifted with Bill Clinton-like stage presence, we should practice the full pitch at least 50 times, ideally in front of a video camera and a live crowd. A lot of entrepreneurs “practice” with their first 10, 20 or more VC pitches, but that is really a disservice to all involved. If a CEO can develop a total comfort with the presentation (slides and delivery) then that comfort level shows through and they have a chance of really connecting with their potential partner/investor.