Pitching ideas to venture capitalists is a frequent topic of discussion here on ReadWriteStart and in the greater startup community itself, and a few weeks ago we wrangled up the pitch advice of six VCs and shared that information here. The impetus for that post was that I had seen some entrepreneurs struggle to nail down exactly what was the most important part of their pitch, and more specifically, what form their initial communications with VCs should take. Naval Ravikant of Venture Hacks wrote this past weekend about this very issue, and brought up some interesting points.
Naval’s post, Who has time for meetings?, explains how an entrepreneur should go about making first contact with a venture capitalist. In most cases, an introduction through a common contact is how the two parties will initially speak, and Naval provides some lessons in tact around email introductions. But the part that interested me most about this post came when Naval described how the entrepreneur should initially present his or her company to the VC after first contact is made.
“Once you have a response / interest, send something written for them to look over and offer a phone call, webex, or meeting as next steps. Written always beats a video or screencast, since most intelligent people can read a lot faster than they can listen. A webex demo is a crutch – if your product has to be explained, it probably isn’t ready for the average consumer,” he writes.
I couldn’t agree more, but at the same time I can see the other side of this argument as well. I, like Naval, think that if your company has to go to great lengths to explain its concept with a video, screencast or some other sort of demo, then you need to rethink your concept, or find a better, simpler way to explain it.
Others, however, may argue that having a complex idea does not rule out the potential to secure customers. They may also say that some of the greatest ideas and innovations we use everyday were likely complex ideas not easily understood at first glance, and this is fair. But Naval’s point about giving VCs something to read rather than something to watch is a good one.
I think that by getting your idea down on paper expresses to the investors that you are smart enough and clever enough to be able to present a complex issue in written form and in an easily understood way. It shows them that you’ve really thought through your concept to a point where you understand it so well that you could teach a 3rd grader how it works. The funny thing about Naval’s comment on paper versus videos and web conferences is that it was just a side point on the way to a larger, more important point, in his eyes.
“People who insist on a webex demo or in-person meeting at the outset are forcing the target to make a high-cost decision, and are subtly signaling that they don’t value their own time, and certainly don’t value the targets’ time,” writes Naval. “They might think that they are demonstrating persistence, but one wants to see persistence in chasing the product, not in chasing dead-ends.”
This point goes back to the idea of making first contact and insisting on having a meeting with an investor before they’ve heard anything about your idea. That’s where the written information comes in. So before you start scheduling time-consuming meetings with busy VCs, think about how you approach them and what you approach them with, and both sides may end up much happier in the end.
