How to Impress Venture Capitalists when going after Funding…
In some cases, businesses need financial backing. However, it’s not an end-all be-all. Out of the 10 companies that I have built, I only needed financing for one. I generally have the Steve Job’s methodology, which is, “Go get customers to create revenue.” That said, if you do need financing, there can really be no underestimating the value of acing your venture capitalist presentation.
There’s all kinds of hilarious stories circulating out there about the lengths to which entrepreneurs will go to strengthen the effect of their pitches. After all, venture capitalists who are regularly hit up for investment funding tend to remember people that try a bit too hard to make an impression, such as dressing in head-to-toe green when making a presentation for an ‘avocado’ based product. That kind of bravado doesn’t always go over well (it didn’t in this case!)
Often when making presentations, excited and nervous entrepreneurs forget to impress with the basics, such as the practical market size for their products (yes, you think your product or service is the best thing in the world, but your market might actually be five guys in a basement somewhere), and whether or not their financial projections are conservative.
For now let’s assume you’ve done your research and are ready for a pitch. Here are the best tips I’ve found over the years for nailing your business pitch to a VC:
~Don’t downplay your experience. While you don’t want to put on airs, telling the story of your expertise in a particular field builds confidence that you will not squander money. Remember, just as much as you are pitching your business idea, you are pitching yourself. What do you bring to the table as an asset worth investing in? If they are investing in your company, they are also investing in you. They want to know you are in it to win it!
~Keep it simple. Stay focused and show that you offer a solution to a problem, as opposed to whether the science and technology works perfectly. Talk in benefits and results. Kylie Sachs, a partner at Ascend Venture Group LLC, says to “Explain it like you would explain it to your mother.”
~Respect the numbers. In other words, don’t overestimate your revenue opportunities. In fact, some analysts say you shouldn’t even address valuation in your initial pitch. First, you need to be able to differentiate between market size and the realistic market for your idea. If you’re throwing lofty numbers around without justification, it’s confusing, unprofessional, and could come back to haunt you.
~Build a relationship from the start. No one wants to feel like they are being sold to. Start a conversation, be real, relax the energy in the room, then get started with your rockstar presentation!
~Follow-up and stay in touch. Can’t stress this one enough. Even if the initial answer to your pitch is “no,” entrepreneurs should always stay in touch with investors, especially ones that show an interest in their companies. Prominent venture capitalists are hounded by entrepreneurs on a daily basis. Just because they don’t immediately do handstands over your pitch doesn’t mean they aren’t interested. Following up and cultivating relationships is important in both business and life. Triumph comes to the persistent ones. How much does your dream mean to you?
Now go out there and make it happen. The only thing standing in the way of your dream is you. There is no business idea too big. Find people that can get behind your mission and vision and be as excited as you are to get it out into the world. Start now….