There’s a lot written about what investors want to hear from entrepreneurs when they are on the hunt for investment. But what about the flip side To provide a different look I’m going to explain how not to pitch to a VC.
The route to successful entrepreneurship is far from simple. Even when you’ve cracked perhaps the most difficult problem of all a compelling proposition, tackling a major disconnect in a huge and fast growing global market in which you have direct and relevant experience you are immediately posed with the question of how to bring it to fruition.
Perhaps you’ve laboured for months without salary getting an MVP into the market, begging and borrowing advice from all and sundry, interrogating early trial customers. Perhaps you’ve spent some of your own hard earned cash buying customers on Facebook and Google. Perhaps the KPIs are starting to improve, and your confidence in the original thesis, although inevitably amended, is growing daily.
What now” You need to resource the business with people, equipment, and resources to deliver customers in ever greater numbers. Your business needs the oxygen of capital to survive, and a VC can provide you with this means to achieve your ambition. So how do you maximise your chances of making this happen” Well the first thing is to secure your first pitch and to nail it properly without falling for many of the common pitfalls that can stall your progress.
This article details ten things to avoid in your pitch to a VC, arranged in three sections: (1) Getting to your first pitch, (2) Delivering your first pitch, and (3) The content of your first pitch.
What to avoid in getting to your first pitch
(1) Assuming that a partner is best
Everyone will tell you that it is best not to approach a VC cold introductions through trusted networks, meeting investors at events, or somehow creating a relationship with your target investor are obviously more preferable and more likely to yield results.
VC funds often see thousands of potential deals every year, and will usually only invest in a handful. The funnel is harsh for the majority of submissions. This article has more tips of how to develop relationships and get to your first pitch meeting.
But if you have a truly compelling business idea which you think will make it through the triage process, it is best not to assume that emailing it to a partner is undoubtedly the best choice.
Most firms will have an established triage process for inbound enquiries, most often handled by associates and principals. A cold approach to a partner with whom you have no relationship is most likely to end up in the standard triage process anyway, just with an added layer of conversion.
(2) Broadcasting to every member of a firm
Again in the case that you are approaching a firm with a cold enquiry, it will not multiply your chance of securing that initial meeting if you email multiple members of the firm. More likely it will cause minor irritation, and provide an easy excuse for rejecting your approach.
(3) Choosing detail over brevity
The aim of a pitch document sent to a VC is to secure a first meeting. VC firms see thousands of deals, and simply have no time to read a long deck, or worse, read through a prose based business plan. Your pitch should every time rank brevity and impact over depth don’t you want to leave the VC with questions he/she cannot answer in order that they invite you to pitch more fully?
Detail is of course critical to a deal completion. But deal completion is several steps down the chain from getting to that first pitch, or indeed from the first pitch itself. Balance your content at the start and encourage a continued dialogue by leaving some questions for the VC.