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Perfecting your pitch
Posted in Financing
By Brad Feld, Co-founder, Foundry Group
As a venture capitalist, I’m constantly on the receiving end of pitches from entrepreneurs looking for capital. Over time, I’ve found that these pitches fall into three categories: (1) The Introduction, (2) The First Shot, and (3) The Full Pitch. The same mistakes regularly appear in each category—following are some of the common ones and what you can do about them.
The Introduction
Don’t spam 157 VCs with a “Dear Sir” email. It’s bad enough to receive a generic email from someone; it’s even worse when they include all 157 recipients in the “To” line on the email. Remember to target your audience first and then personalize your emails to them. Oh—and if my name is “Brad,” please don’t send me an email that starts off “Dear Fred.”
Don’t forget to know your audience. I invest in early-stage software and Internet companies in the
Don’t send a 73-page business plan via the
Don’t forget to include all of your contact information. I can’t tell you the number of times that I’ve received an email from someone without any contact info. It’s hard to take jimbofishcakes@msn.com seriously when they are asking for $17 million for a fast-growth software company but don’t include a URL to a real website or even an address or telephone number. And don’t forget your Twitter handle.
The First Shot
Don’t ask the VC to sign an NDA. This is a stupid idea perpetuated by lawyers. No reputable VC will sign a non-disclosure agreement. All you are doing is putting up a barrier to getting the VC’s attention and demonstrating your naiveté.
Don’t use the wrong materials at the wrong stages. When you are raising money, you should have an arsenal of material ready to go. However, dumping it all on the VC with one big thud is rarely effective. Start off slow and spoon feed me. Give me access to a demo of whatever you are working on. Send me your PowerPoint presentation before we sit down to go through it so I have a chance to look at it and spend the time talking with you (if I want) instead of getting pitched.
Don’t name-drop other VCs. If I get interested in your company, I might ask you who else you are talking to, but don’t start off by name-dropping. It probably won’t have any positive benefit, and if I know the other folks you are talking to, I might reach out to them. If I hear they are lukewarm, or worse, have no idea who you are, you just blew it.
Don’t list 27 advisors but only one co-founder. Advisory boards, especially at the very early stages of a company, are generally useless. Mentioning a few key advisors who have deep domain knowledge or experience in your industry is great, but a long list of lightly engaged people who have well-known names but aren’t really helping you takes away from your credibility.
Don’t be obtuse or confusing. Often, I’ll read the first few paragraphs of an executive summary and say, “Huh?” At that point, I go into skim mode. At that point, you’ve done the opposite of “having me at hello.” Make it easy for me to understand what you do and why you think it is important.
The Full Pitch
Don’t think there are rules that apply to all situations. Each VC is different. Do your research and learn what you can beforehand so you can fine-tune your approach to each VC.
Don’t ramble. Showing up with a 57-page PowerPoint presentation and then trying to go through every slide is not good form. You should be able to tell your full story with no more than 15 slides. Keep it tight.
Don’t forget to leave time for questions. Some VCs (OK, most VCs) will interrupt you during your presentation to ask questions. However, some will sit still and wait until the end. In either case, make sure you know how much time you have (ask in advance) and then assume the questions and answers will take up 50% of the time you have. If you finish early, that’s OK, as the VCs all have plenty of email to respond to.
Don’t sell past the close. It’s usually obvious when the meeting is over. Let it be over. Don’t try to keep it going. Ask for the next steps, listen carefully, and then graciously say goodbye. If I’m interested, I’ll get back to you quickly. If you try to keep me in the room, I’m probably just going to get annoyed. And that’s not helpful to your mission.