I get two different stories from different crowds on this issue.
From many VCs and angels themselves - at least the ones that get their articles upvoted on this site - I get the impression that they dislike being bullshitted at. They hate people who are disingenuous. They don't care too much about projections or future plans. They just want to see how good your team is.
From everyone else in the industry (those looking for investment, those who have found investment, executives in large companies, etc.) I hear a completely different story. Tell them the world. Make projections bigger than you think is realistic. Talk yourself up. Show interest in things that the VCs are interested in - even if you aren't. Create a story of the future that will please the investors. This is not always exactly the same story you really want to go with.
Now I really prefer doing the former to the latter. I just don't know how effective it really is and I hear different stories about how to behave when searching for investment. VCs and angels aren't mind-readers, they aren't super-human, and they have the same failings as everyone else. If you can get away with the latter without appearing dishonest, you might have a better chance at bagging the investment deal.
I think you're supposed to be ingenuously hypomanic. You're supposed to talk yourself up, promise the world, etc., but it's important that you sincerely believe it and are not just a bullshit artist. This requires you to be a little crazy.
Recently on a date with a non-tech person I described my company as "not likely to be a billion dollar company, but a good one nonetheless." She was shocked that I would even mention the b-word. I need to get out more. :-)
Not to burst your bubble, but from the standpoint of pure probability it's not likely to be a million dollar idea either. However, I don't know anything about you or your company so maybe you've beaten the odds and your company is on track to having an arms-length valuation greater than a million dollars already.
I know what you mean. In my limited experience ones who raise funds are the ones who know how to bullshit. Maybe VC's are exposed to soo much bullshitting they do not know what honesty is anymore?
Avoid the future tense – If you looked at 100 presentations, which would really stand out? The ones that stand out are from teams that have accomplished a lot and have a clear path to making money, not groups that are still figuring it out. You obviously want to talk about the future, but the future is fluff so more substance is better.
Avoid overusing buzz words – Buzz words are commonly filler for teams that don’t know what they are doing. I’m sure that if you had a real product making money and a clear path to success you could still get funded using buzz words, but you wouldn’t want to use them because you would have more important things to talk about.
Understand the mechanics of your business – You should be an expert on your business and have thought of all the options and can explain the pluses and minuses of each option. If you are starting a grocery store (obviously not a VC fundable business, but stay with me), you would need be able to explain why you choose the Trader Joes style over the Wholefoods style or over the Walmart style and be able to explain each of those businesses and why one can be more or less profitable than the others.
Pitch me your team – There is a lot more written about this other places.
Target the right business – He says in the first line, be better than everyone else in your market, and I think that is a requirement. No one wants to fund a product or business that has no edge whatsoever.
VCs have unique personalities, strengths, and needs like everybody else. For example, you can see this in the descriptions of the five mentioned. DM is all about execution; PM is into the vision- sell the vision and convince him you can carry it out; LL is all about strategy; VL is wants a good "general"- he's about how you are going to lead the troops. MH isn't so clear from the information presented, somewhere between strategy and execution I would suspect.
Disclaimer: I know none of them, I am just pointing out how their descriptions vary. The descriptions are surely inadequate to classify these particular people so consider it for illustrative purposes only.
There's a fine line between bullshitting and using the right jargon. A good analogy is your resume. If you don't use the words that the recruiters look for in a resume - even if you are very good at what you do, you won't get past the automatic software screeners. Similarly if you don't use the correct jargon with the VCs, it's very unlikely that you'll get past their initial screen test. You don't have to bullshit about your plan, your team or your future goals - but you need to use the right words and language to describe them.
One would think that any VC's absolute core, essential, vital skill would be "read between the lines", "see through", "smell the stuff"? So they can pick the best investments regardless of the pitch. Like having a sixth sense. If you can't do that, what good are you investing?
But no. Sometimes I feel that even YC is become pitching contest, not startup contest. Countless on stories here on how to act, say things, what to wear, what to do etc. Is it really come to that, that even PG picks best pitches, not best idea/teams. If yes, why do you bother to apply? If no, why do you bother to polish the pitches?
I have hired lot of people to work for my small businesses througt the years. I have always read between the CV lines, thrashed the "best" ones and picked "worst" ones, they all turned out great workers. So?
This bugs me too. I really don't want to subject myself, the team or my company to such arbitrary judgements. I wouldn't want the money, suggestions or control of an investor who liked the company because of what I wear or the buzz words I threw. I'd rather work on the idea/company to get it to the point that it automatically attracts the right investors.
Is it just me or does Vincent Lauria stand out as the one guy in the bunch that I wouldn't want to pitch (or have a beer with).
I've noticed this trend with VC's I've met. The bigger the VC name, the more respectful they are of entrepreneurs and what they go through.
I know there are lots of people who pitch bad ideas, but that is what having good deal flow is about. Getting your schedule so packed with good people/businesses that their is no room for the ones that wouldn't make it.
IMHO, Vinnie is exactly the guy you want to pitch (and have a beer with). Seek out the investors that will tell it like it is instead of simply telling you what you want to hear.
Disclaimer: I'm a mentor at Golden Gate Ventures, and Vinnie is a big reason why I agreed to join the team.
What didn't you like about him? He seemed keen on a solid business principles and that's great. Only thing I didn't like is the desire for a 2+ person team, because ownership is everything, but that's hardly an unfair request - there's far greater risk investing in one person.
I actually just went back to the post, and they've edited the original article. He initially had a long list of things which included (something like) #2 don't pitch me another group buying site, #4 seriously, don't pitch me another group buying site.
It wasn't the his content was wrong, he should say how he feels. But it had a very negative and condescending tone to it.
The edited article is much... smoother.
Also if you compare the other VCs in the article, much of it is about what they want, rather than what they don't.
I have nothing personally against Vinnie, I've never met him, never heard of him before.
But in the first version of the article he really stood out against the others in what I thought was a negative light.
I mean that's great and everything. I love it. But. If the past and the present was so great, I wouldn't need money. I think Mark Hsu's paragraph on "Avoid overusing buzzwords" was pretty good; I think the avoid "Netflix for Pandas" thing is commonsense now but the notion that should actually use specific numbers when making your pitches can't be shouted enough.
If the past and the present was so great, I wouldn't need money.
Not to put words in anybody's mouth, but given that one can reasonably deliver a production-quality software product for hard costs lower than a college student has in their checking account these days and also pound the pavement selling it and/or have customer acquisition channels proved viable in microscale, you don't necessarily have to be rolling in it to a) have numbers which demonstrate traction while b) not having nearly enough to make the next big steps like bringing on multiple people at market salaries.
I'm only a mentor at 500Startups and don't have decisionmaking authority, but I'd predict that if you had a story like "We built a $WIDGET for doctors offices, cold called 100 people, got 10 meetings, and sold two systems for $1k a month each. To take this to $1 million a year we need a) a customer acquisition specialist, b) two engineers to firm up the feature set, and c) money to play with more scalable channels. That costs holy-OMG more than $2k a month." the answer would be "That is intriguing and we want to hear more."
Yep. The problem becomes more acute if you have more typical numbers like a customer lifetime value at, say, $3k over 2 years and a cost of acquisition at $1k. That's a very worthwhile business but going cashflow negative for the first ~8 months of the relationship can get very unfun.
If you were actually at $10 CACA and $10 monthly revenue you'd give a phone call to either a) Bank of America credit card customer service (ask for a $25k++ credit limit) or b) your advertising channel (and ask for Net 30 payment terms).
From many VCs and angels themselves - at least the ones that get their articles upvoted on this site - I get the impression that they dislike being bullshitted at. They hate people who are disingenuous. They don't care too much about projections or future plans. They just want to see how good your team is.
From everyone else in the industry (those looking for investment, those who have found investment, executives in large companies, etc.) I hear a completely different story. Tell them the world. Make projections bigger than you think is realistic. Talk yourself up. Show interest in things that the VCs are interested in - even if you aren't. Create a story of the future that will please the investors. This is not always exactly the same story you really want to go with.
Now I really prefer doing the former to the latter. I just don't know how effective it really is and I hear different stories about how to behave when searching for investment. VCs and angels aren't mind-readers, they aren't super-human, and they have the same failings as everyone else. If you can get away with the latter without appearing dishonest, you might have a better chance at bagging the investment deal.