I have a few different friends who are trying their hands at entrepreneurship; some have met with investors already, while others are closing in on their meeting date with anticipation and uncertainty. Based on hearing some of the things they were doing to prepare for their meeting, I thought it would be wise to roundup some of the best pitch advice I've come across not only for them but for the other first time entrepreneurs out there who may not know what typical VC pitches are like.
Pitches range in length from 5 quick minutes to a half hour or more, but what I have consistently seen while researching this topic is that no matter what length the pitch is, the key is to keep things simple and understandable while not patronizing the VC. But don't take my word for it, here is advice from six venture capitalists on various aspects of the all important pitch.
If you're looking for "Pitching VCs 101," then look no further than Rose's 2008 TED University presentation on how to give presentations (embedded below). Rose, who has raised and invested millions through pitches, leads Rose Tech Ventures which after educating prospects on the art of the pitch saw investment rates climb. "Our investment rate more than DOUBLED, and we have funded over $35 million into more than 50 companies during the past six years," writes Rose.
Highlights from Rose's speech include taking the VC on an emotional journey during your pitch by telling a story, and remember that they are there to evaluate you more than your idea.
Investor and entrepreneur Chris Dixon reiterated Rose's point last November that VCs are more interested in the quality of the team than the quality of the idea. Ideas are subject to change, but how people work and interact are pretty solid and unmovable, so remember to be self-aware, he says.
"What you should really be focused on when pitching your early stage startup is pitching yourself and your team," writes Dixon. "Of course a great way to show you can build stuff is to build a prototype of the product you are raising money for. This is why so many VCs tell entrepreneurs to 'come back when you have a demo.' They aren't wondering whether your product can be built - they are wondering whether you can build it."
Mark Suster, who has written extensively on pitching to VCs, brought up an interesting decision entrepreneurs need to make before their pitch: who is coming? Suster argues that for most situations just having the CEO is plenty, but that showing "the depth of your bench" can be beneficial too. However, there are several pitfalls he warns you to avoid when you start including more people in your pitch.
"If you bring the full team make sure that you construct the entire storyline in advance so everybody knows how you plan to have the meeting flow," writes Suster. Who is going to cover which slides, who is going to field which questions, how are you going to answer difficult questions (which you should write down in advance and practice). Definitely don't "wing it" - have practice sessions to see how each member performs. Honestly I would say a good 50% of team presentations that I see seem like they really haven't practiced the flow very well amongst team members."
Though originally posted in 2005, Kawasaki's rule of 10/20/30 in presentations still holds true. We've all seen those terrible presentations with way to many slides and way too much text that is way to small. The slideshow isn't supposed to do the talking for you, its merely a supplement to the wisdom that will come flowing from your voice.
"I am evangelizing the 10/20/30 Rule of PowerPoint. It's quite simple: a PowerPoint presentation should have ten slides, last no more than twenty minutes, and contain no font smaller than thirty points. While I'm in the venture capital business, this rule is applicable for any presentation to reach agreement: for example, raising capital, making a sale, forming a partnership, etc."
In another related post, Kawasaki points out this presentation as a great example of using visuals and text together with expert ability. It's not a great example of a VC pitch, but the presentation does a great job of conveying the message of the presenter. In other words, be more like Steve Jobs - that man knows how to pitch!
Enough about what to do right, lets talk about what not to do. Among Rainey's list of the top mistakes made by novice pitches is presenting terms to the VCs, being late to the meeting, or asking VCs to sign a non-disclosure agreement (NDA). But the number one issue Rainey sees all too often is when the entrepreneurs come to pitch a VC firm without any prior knowledge of the firm and its investments.
"One doesn't need be an expert on our history, track record or portfolio but a little knowledge can go a long way. Just a little awareness on our companies, professional background, and current boards, can drive efficiency for the person pitching an idea," writes Rainey. "If I've had three companies in Internet Advertising, for example, you can probably skip explaining simple concepts related to it. If one lacks that awareness, it wastes time AND undermines credibility. Plus, you look [like] someone who doesn't do what it takes to succeed because, in this instance, you haven't."
Sometimes your aren't the only company pitching to VCs in a single day. In the case of this week's Y Combinator Demo Day, 26 startups presented back-to-back with one intermission. This means that by the 26th presentation, which could be you, the VCs in attendance are likely itching to get out of their seat and go meet the other entrepreneurs, so how will you grab their attention? Bijan Sabet says humor can be a great ice-breaker and get your audience engaged with your pitch.
"A number of entrepreneurs used humor in their presentations in just the right amounts. Too little and the presentation can by dry. Too much and it's just, well, a joke. But the right amount is a wonderful way to engage your audience," writes Sabet. "It's obvious that Paul Graham, the founder of YC, plays a huge role in helping these (mostly) first time entrepreneurs find their way and put together their presentations. And it's also obvious that these founders practice their pitch over and over again so they can nail it in a room full of strangers."
So what have we learned? Remember that you are just as much if not more important than the idea you are pitching, figure out before the pitch who is coming in the room and who is saying what, make sure your slides aren't poorly designed, avoid common rookie errors, and don't be afraid to spice things up with a dab of humor. Of course, there are a countless number of lessons to be learned before pitching VCs, but hopefully this has covered the basic and most important ones.
If you need an example of a well designed pitch deck, Mint.com (which was eventually bought out for big bucks by Intuit) recently made an early deck of theirs available on slideshare. If you have other suggestions for first-time pitchers, leave your thoughts in the comments!
Photo by Flickr user Dawn Ashley.