10 things to know before you pitch a VC for

This article is a summary of TED video: David S. Rose: 10 things to know before you pitch a VC for. Most important thing VC is looking for while you are pitching the idea is you. The entire purpose of the pitch is to persuade investors you are THE entrepreneur they will invest money in and make a lot of money in return.

you have to convey 10 different characteristics

During duration of the pitch which can be anything from 15 to 30 minutes you have to convey 10 different characteristics.

  • integrity - make sure your pitch doesn't have missing parts, know the subject and be honest! Investors are smart and with years of practice will pick up those those things quickly.
  • passion - if you are not passionate about what you do, you will not be able to convince anyone to be passionate about it. Passion is followed by involvement. You have to do it full time.
  • experience - you need to prove that you can take something form the beginning to the end. That is why VC like to fund serial entrepreneurs. Even if you failed the first time you have learned the lessons that will help you to get it right next time. You are expected to have an experience in creating organization.
  • knowladge - you have to have a domain expertise. That means knowing market, knowing business environment, other players.
  • skills to get the company going. That includes: technical skills, marketing, sales, management. There are only few people who have the hole set of skills, that is why you are expected to be a leader.
  • leadership - you need to either have a team you developed or ability to do so with your management style, charisma, ability to get people to follow your lead, to inspire them to motivate them to be part of your team.
  • commitment - you need to convey your absolute commitment to the business. You are expected to be the one who can pull through bad or critical situations. You are expected to fight to the end.
  • vision - you need to believe you can solve the problem, change the industry.
  • realism - you are expected to be able to make rational projections, set realistic deadlines.
  • coachibility - you need to have an ability to listen and learn from VC experience.

So how to convey all of that in 10 minutes?

1. Grab their attention

You have 10 to 20 seconds to get VCs attention. You can tell the story, it can be emotional experience but you have to grab their emotional attention and make sure they are focused on you within that first few seconds.

2. Solid, steady upward path

Once you grabbed their attention you have to take them on a solid, steady, upward path right from the beginning to the end. During that time you have to keep reinforcing everything making it sound better and better reving it up to the very end.

3. Knock it out of the park

The goal is to get VC into an "emotional high". You need to make them want to write you a cheque before they leave.

Logical progression

  • What the market is?
  • Why are you going to do XYZ?
  • How you going to do it?
  • What it is that you going to do?
  • Make references to companies or products VCs can relate to.
  • Validate. Show it has been done and it works, you have an award, prototype, user feedback. Anything that validates your idea works here.
  • Make believable upside. Upside means promising and believable means realistic.
  • Never tell lies or don't say anything you are not sure about.
  • Make it clear. Don't use abbreviations or mental shortcuts. Anything that is unclear will throw VC out of the flow of the presentation. Take them on the journey step by step, like you would do with a 6-grader without patronizing.
  • Avoid inconsistencies. Numbers have to make sense.
  • Make sure there is no errors or typos in the presentation. If you can't do the presentation, how the heck can you run a company?

Presentation style

  • Super short bullet points are good
  • Headlines only are better
  • Images only are the best

Things to include in presentation

  • Company logo with 10s pitch to grab attention.
  • Business overview in 2 sentences to provide a presentation context.
  • Management team to show the experience.
  • Market - size of and why it is worth getting into. What is your target customer?
  • Product - in one sentence. Mo demo, no features.
  • Business model - how do you make money on it. What the business model per unit basis or per actual product you are selling. Who you selling to?
  • Strategic relationships - distribution, production, validation partnerships.
  • Competition - show exactly what your competition is.
  • Barriers to entry - How will you overcome those. how are you special?
  • Financial overview - last 3 years + 3 years projections.
  • Use of proceeds - how do you utilize investment money? How does it help you to meet your projections?
  • Capital & Valuation - how much you want to get at what valuation? Who has invested so far? What is capital structure up to this point?

Conclusion

Go back to your first slide showing just the logo and conclude the pitch. Make them want you and your product. Make them feel that if they don't sign the cheque they will miss an opportunity.

5 Presentation tips

(from less to the most important)

  • Always use presenter mode displaying your current and next slide to make sure you exactly know where you are.
  • Always use remote controller.
  • Handouts are not your presentation, it has to have a lot more information.
  • Don't read your pitch. Memorize it!
  • Never ever look at the projector screen. Make a connection with the audience.

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