Pitching to VCs
Ok don’t quote me on this. I’ve been doing this for a remarkably short time so I won’t go near the terms “experienced” or “seasoned”. A whole bunch of you who are about to embark on your entrepreneurial adventures have been hitting me up and asking what the VC scene is like in the Valley and how best to approach it tho so I’m going to pen my thoughts. If any lawsuits come my way connecting this article to any failure to secure funding, I’m responding with the standard “Me no speeka eengleesh”.
In any case, there is generally a great sophistication to most VCs you’ll meet in the Valley. For those of you traveling from other parts of the globe, you’ll have to ditch your assumption that “they generally won’t know” and you’ll have to ditch it fast. From commerce to technical, chances are the people you’re meeting would have done more than you have (and not only as a VC) so always keep that in mind. Having said that, there are a few things that *you* need to do:
1. Know your crap
This applies as broadly as you can possibly take it and it applies not just your specific niche but all the feelers around it that would impact the way you do business, the way you would plan your product development, how emerging events would shape your strategies, etc. Its going to be hard to take someone seriously if you don’t have at least a reasonable bearing on the pulse beat of the industry.
This applies quite specifically to some of you who are very technically or academically inclined. There’s really no shame to that and in spite of everything that’s been going on, I still consider myself a geek at heart. I spent hours yesterday on a Sunday afternoon writing a plugin to ***.com and generally swearing at their lack of elegant design in the context of their integration options (hence the ***) and I’ve never been happier.
No matter what your natural inclination tho, VCs invest in businesses and while they’re mostly highly intelligent and can figure it out, *YOU* need to have a good handle on things on how your project/company will be managed as a commercial entity so if that doesn’t sound like you, you’d better get someone in who can fill those shoes.
2. Don’t BS if you don’t know your crap
Its OK to say you don’t know. Attempting to spin your way around that isn’t a terribly good idea because if you’re caught, your credibility tends to go out the window. Moreover word gets around fairly quickly and the Valley isn’t really all that big so its definitely not the kind of PR you want to be saddled with. 2 things to note tho:
a. If you use this one too much, you’ll be violating rule #1
b. If you’re *that* confident of your abilities to spin and want to go ahead anyway, they’re in dire need of spin doctors back in Malaysia so that might be a better career alternative for you
3. Know who you’re pitching to
Find out about the VC (the actual people who are going to be there if you manage it) you’re going to be talking to. While you don’t necessarily change your story based who you’re meeting, its important to understand them, their portfolio and their general investment patterns. If your VC deals with public funds, I doubt you’ll get a lot of acceptance with your porn startup.
4. Don’t take rejection personally
Unless you’re remarkably lucky or a deity (or spiked their drinks and took blackmail pictures), you’re not going to get your home run on the first pitch (or second or third generally). The concept of being rejection proof is very salient in this context. That however does *not* mean that:
a. You brush them off: Take negative comments on board. You’re not duty bound to accept them piecemeal but do consider them in reasonable light before you shrug it off with an expletive.
b. You suck: There are a myriad of reasons why they decided to pass. What you’re doing might be out of their investment scope, they might not be looking at the space you want to play in, they might not believe in your model, etc. Those are all fine and are not a reflection on you or your organization. Keep going and eventually you’ll find a good match. (I apologize if this point sounds like an excerpt of Dear Abby)
c. Its the end of that opportunity: With the current financial situation, its understandable that a lot of investors are risk adversed. As far as your business is concerned, achievement of every milestone decreases the corresponding risk (or “knocking down risk gates”) so some of them just want to hang around and see if you can achieve your milestones before they take it any farther. With that in mind, its important to not mail-bomb them, keep them in touch and brag about your wins every once in a while.
There’s a bunch of other stuff and I’ll write more as we go down the line but these are some things that are important to keep in mind. At the end of the day, timing is crucial so if you believe in what you do, clamp down like a dog with a bone and don’t let up until you get what you need. Oh and I’m writing this for me as much as I am for everyone who’s been hollering at me with questions 🙂
PS: I’m writing this article with the assumption that my readers are already aware of what they need to know/have before they start the entire VC engagement process. If you don’t know what an Elevator Pitch is or are not aware of what a good Business Plan looks like, you might want to make Google your best friend for the next few hours. Some of the stuff that I particularly liked when I was looking a few months ago are:
- From Istanbul to San Hill road
- Perfecting your pitch
- How to not make a food of yourself
- How to pitch to a VC