I’ll never forget how nervous I was before my presenting to a VC for the first time. I was an EIR (Entrepreneur in Residence) at a VC fund based in San Francisco, and we were going to give a dry-run presentation to Dave and Alain, the two VC partners I was working with.
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We were driving up from the peninsula to the fund’s office in the Embarcadero in San Francisco. It’s about a one-hour drive from my house, give or take, depending upon traffic.
We were about halfway through the drive when I realized that I had left my computer (with the presentation on it) at home.
“Do you have a backup of the presentation on a stick?” I asked “John”, my co-founder.
Fortunately, John had the backup I had given him, so we continued on to San Francisco.
I told Dave and Alain that I had forgotten the pitch. Alain looked at me, smiled and said, “It’s just us, Brett.”
Yes this was a practice presentation, and yes I got lucky. But this event brings up Tip Number One when you are pitching to investors:
Tip Number 1: Always have multiple backups.
Obeying the multiple backup rule has saved me more than once. Sometimes you forget to bring your pitch because you’re nervous like I was. And sometimes there’s an equipment failure.
Cathal, my business partner, and I were involved in an M&A deal with a private equity fund in New York. We had a copy of the presentation on both of our computers, and we had printed hard copies for everyone just in case there was a problem.
For whatever reason, the private equity fund’s flat-screens wouldn’t work with either of our computers. But we had the backup presentation printed copies.
Everyone followed along using old-fashioned paper. A week later we got the deal done.
Tip Number 2: Rehearse, rehearse, and then rehearse some more.
I’ve pitched investors hundreds of times. And I’ve sat through lots of investor pitches as well.
One of the biggest mistakes I’ve seen entrepreneurs make is not rehearsing their pitches. You have to practice a lot if you want to be a great presenter. And you’re going to need to be a great presenter if you’re going to get funded.
Let’s say you were a sprinter, and you want to run the 100-meter dash in the next Olympics. Would you just show up and run?
Of course you wouldn’t.
You would train incredibly hard in order to be at your best like Usain Bolt does. Bolt does 90 minute workouts training various areas of his body. Bolt’s diet is controlled to get his body in the best condition too.
You need to train and diet as well for your investor meetings.
Your training is figuring out your go to market strategy, your development plan, and your competition. Your diet is developing your financial plan.
You’re going to need all of these components and more to successful pitch your company to investors.
Tip Number 3: Get your first slide right.
I was just talking with an entrepreneur yesterday about his company. I asked him to tell me about how his company was unique.
Instead, I got a long-winded explanation of the technology.
I asked him what his break-even revenue was. Instead, I got an explanation about how his revenue worked. Investors would have likely passed if he were pitching them.
You have so little time to win over investors, so you have to get to the point. You are dealing with extremely busy people with short attention spans.
You and your company must quickly stand out. So you need to instantly tell your potential investors three things:
- What does your product or business do?
- Why are you 10X to 100X better than your competitors?
- How big is the market opportunity you are addressing?
Pro tip: Begin your pitch with a short, less than one minute, origin story of why you decided to start your company.
Tip Number 4: Time your presentation.
Let’s say you have a one-hour time slot with a potential investor. Does that mean that your presentation should be one hour?
Of course, the answer is no. You will not likely have the complete hour to go through your presentation.
You need to plan time for questions. And what happens if the investor is late to your meeting?
An easy rule of thumb is to divide the amount of time you have by two. So, if you have a one-hour time slot, make sure you can go through your pitch, unrushed, in 30 minutes.
Typically it takes two minutes per slide, so your pitch should be 15 slides or less for a one-hour meeting.
Tip Number 5: Only bring team members that are going to add value to a meeting.
I had four co-founders. However, I usually only brought Jeroen, our VP Engineering, to our meetings with investors.
The reason was simply because Jeroen added significant value from the investors perspective. And that’s why you need to look at who you bring to meetings through your investors eyes, not yours.
Meetings with investors are not about satisfying the ego of your co-founders. Meetings with investors are about the serious business of raising money. You can’t afford to screw up your chances of raising money by bringing someone that distracts from your message.
Tip Number 6: Know your numbers inside and out.
Back to this fellow I was talking to yesterday….
As I said, I asked him what his break-even revenue number was, and I got a story instead. Don’t let that be you!
You need to be crisp and to the point when you answer questions, especially numbers-related questions:
- Don’t give a long answer about your revenue model, but…
- Do just state that your break-even revenue is $5 million/year.
Just say the number. No stories, just the number please.
By the way, you should know at a minimum:
- Your year-one, year-two, and year-three revenue, and…
- Your break-even revenue number, and…
- The cash required to get to break even, and…
- How many employees you will have year-one, year-two, year-three, and at break-even
Tip Number 7: Be ready with your own questions.
The meeting with you and the investor is going really well. You can tell the investor is really excited about what you are up to.
The investor turns to you and asks, “Do you have any questions for me?”
And you answer, “No.”
Does your lack of questions mean you will not get an investment? No. But you’ve lost an opportunity to learn more about this potential investor.
Do your research before the meeting and ask questions to learn more.
Don’t ask questions just to ask questions. Instead you should ask questions that help you learn more about the investor and build empathy with the investor.
Bonus tip: Think of your meetings with investors as conversations.
I’m not saying that you should go into an investor meeting that you’re going to casually going to discuss the possibility of an investment. I am saying that, by thinking of your meetings with investors as conversations, you can have more interaction with your potential investors.
Remember that people want to work with people that they like. Liking you isn’t going to make up for a bad business. However, liking you does push the scales in your favor.