(Editor’s note: Shawn Parr is CEO of Bulldog Drummond. He submitted this story to VentureBeat.)
Pitching your business to potential investors is like dating. It’s time draining, incredibly stressful and an emotional roller coaster. And like dating, the overall process seems to be in desperate need of an overhaul.
There’s not much we can do to change the dating world, but if you’re about to meet with potential investors, here are five slightly off-kilter tips to consider:
Find at partner with value – Try to identify potential venture partners who match your value-system, have deep domain experience in your sector, and can help you fill in your management experience gaps. Money these days is indeed a commodity. What you’d much prefer is a partnership with a venture team who can, and are willing to, truly help you realize your potential.
Start the process by carefully researching the companies you want to invite in to talk about your business. Develop a list of criteria for selecting them, look at their portfolio and investment themes and make sure you understand who you’re going to be sharing your opportunity with. Specifically, make a point of understanding the value they might bring to your venture in terms of the following:
- How do they describe their values as a partnership?
- What do they look for in partnering with start-up or early-stage companies?
- What experience and expertise do the partners you might work with have in your business sector or industry?
- Have they themselves actually run a startup company? A venture backed startup?
- What is their track record of success with other companies in your space?
Speak with the CEOs of their portfolio companies to determine if the investor practices what they preach. Ask specific questions about how the VCs conducted themselves when circumstances were going off the rails. Difficult events tend to reveal the true character and capabilities of people – and this is where you want a real partner.
Get your head in the right gear – Make no mistake: this dance is highly nuanced and you need to be mentally prepared for the emotional ups and downs. Don’t lose faith in your idea and your vision. You (should) know this business better than anyone else on the planet and be absolutely resolute in the market’s need for it. Don’t let anyone take the wind out of your sails with their critique or disinterest. Have thick skin and a questioning mind.
Listen and ask lots of questions – For the most part, you’ll be speaking with very smart, sometimes hardnosed, professional investors who see hundreds of opportunities each year. Listen closely to what they have to say, even (or perhaps especially) if their comments are negative. They may see holes in your strategy that you’re too close to the problem to see. Take it all in and make sure you process it correctly. You’re likely to get 100 opinions that are different. Listen to them all, but take heed of the patterns.
Substance over style – Save everyone time by developing your prospective business plans, presentation decks and financials as an integrated set of materials. Ensure you review your story from the perspective of someone who has no idea what you do, what your product is or the credentials you have. Look at it with the lens of simplicity and substance when you develop the actual content.
If you can clearly articulate your opportunity in less than two minutes, you’re ready to take a meeting. Refine and practice your presentation. You’ll be amazed at how difficult it can sometimes be to really define what it is that you’re doing.
Make your story simple to follow and straightforward in flow using these tips:
- Be specific and get straight to the point.
- Secret sauce sells, so be clear and compelling about your competitive points of difference, patented technologies, team and your point of differentiation.
- Choose your content strategically. Everything you include needs to make a very clear point and not be there to fill space.
- Tell a very clear and concise story that is both visually and verbally commanding.
- Be very clear on the execution plan to get to market, including what resources and estimated time to market.
Size does matter – VCs like big markets with cheap (that’s a relevant term) and quickly scalable products. If you’re not addressing a $1 billion market, forget getting top tier venture money. Make sure you have supporting data to reflect the size of the opportunity and how quickly you think you can get there.
Above all, be able to clearly explain why the market needs and will buy your product. Additionally, be realistic in calculating the size of the investment you’re looking for before you start the conversations and understand just how much of the company you are likely to trade for the investment. Don’t take more than you need, but, by all means, don’t take less.