“You made things a lot easier for me,” Jim said to me, shaking my hand. My co-founder and VP Engineering, Jeroen, and I had flown to Boston to pitch Jim and his partners, and Jim’s reaction indicated the meeting went well.
“That’s great to hear,” I said, smiling.
“I don’t think you got singed too badly by my partners,” Jim said. “I’ll let you know what the follow up questions are in a couple of days.”
Then we shook hands, and Jeroen and I left for the airport to fly back to San Francisco. Jim emailed us the follow up questions from his partners the next day.
The questions were straightforward to answer. The following Monday, Jim emailed me his term sheet.
Each partnership you pitch will be a little bit different.
I’ve pitched hundreds of VCs in my life (it kinda helps when 63 VCs pass on your initial funding to build up the numbers :-)). I was also an entrepreneur in residence at a San Francisco based VC fund, so I’ve also watched a lot of CEOs pitch VC funds too.
Every fund treats partner meetings a little differently. For example, Crosslink Capital, the fund I was an EIR at, would have companies come at various stages of the fund raising process to meet with full partnership. Many of these companies never received term sheets from us.
However, it was clear to me every time I pitched all the partners in a fund that this was for all the marbles. It was also clear to me, like in the example with Jim above, that everything was in set up for us to win.
If I did my job, and I didn’t massively screw, then we were going to get a term sheet. Indeed, I’ve received a term sheet every partner pitch I’ve ever done.
That doesn’t mean I wasn’t nervous. Of course I was nervous. However, I was also confident that we’d do a good job and get the money.
Part of the reason of I was so confident is my team and I were very prepared for every investor meeting we had. I am not a natural salesperson (you’re in sales when you’re raising money), so I compensated by rehearsing, so that I could be fast on my feet.
Only bring one or two key executives at most when you pitch investors.
Jereon, who went to just about every pitch meeting we had, and I knew the questions investors would have for us. And like any good team, we knew who would answer what question, so we looked like a team to investors.
It’s important to remember that, especially as your company progresses, investors are investing in you and your team. The better you interact with investors, the better your chances of raising money.
That’s why, even though it might seem counterintuitive, you should only bring executives that will add value during the meeting. Usually, that’s one or two executives at most.
For example, I brought Jeroen, our VP Engineering, to every pitch meeting, so he could answer any technical questions investors had. However, I never brought my other co-founder and VP Marketing, Adolfo, because I could answer the marketing questions.
Use the rule of four you pitch investors.
What’s the rule of four? Easy. You should stand up if you are presenting to more than four people.
I saw a CEO pitch the partnership when I was an EIR, and the CEO was stuck in his chair, like a plant to the ground. It seemed odd. In fact, it was the only time I saw a CEO not stand up during a partnership presentation.
That’s why you should stand up. You need to get everyone’s attention.
Follow the guidance of your sponsor partner.
Back to my meeting with Jim’s partners. Jim told us the concerns his partners had about the investment. He was giving us a heads up, so we could be prepared to answer the inevitable questions that came.
You want to listen carefully to any guidance or advice your sponsor partner gives you before meeting with investors. One way to look at this is you ignore a sponsor’s advice at your own risk.
You want to be able to answer as many questions as you can in the partner meeting.
Listening to the advice you get, along with your careful preparation and rehearsal, will allow you to anticipate the questions you’re going to get from the partnership. Then you can answer their questions right when you’re in front of them.
This is huge because you keep the momentum going by answering questions immediately,. Conversely, you never, ever, want to mislead or lie about a question you don’t know the answer to.
Instead, just say you don’t know the answer, and you’ll get back to them. But, really make sure you get back to the partner in 24 hours!
Never tell an investor they’re wrong.
Years ago I took a course in improvisation. It was purely for fun, so little did I know how much it would help me when I was raising money.
One of the greatest things I ever learned was the technique of “Yes, and..” Here’s how this technique works when you’re meeting with investors.
Let’s say an investor says something that you know is wrong about your company. Instead of saying to the investor, “You’re wrong,” you say, “Yes, and here’s another way think about our company…”
Many investors have substantial egos. Learning how to tell the truth and not offend an investor is a skill you need to master. The “Yes, and…” technique is a great way to pivot a conversation to where you want it to go without getting into a fight that could cost you your funding.