5 ms·

What VCs look for in startup pitches

47 points by jackyyappp 14y ago

dinkumthinkum 14y ago
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.
- patio11 14y ago
  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."
- deleted 14y ago
  [deleted]
  - patio11 14y ago
    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).
fragsworth 14y ago
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.
- drumdance 14y ago
  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. :-)
  - dm8 14y ago
    In tech (especially SF bubble) we forget billion dollars is lot of money.
  - biot 14y ago
    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.
    - 14y ago
pedalpete 14y ago
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.
- daegloe 14y ago
  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.
- Heinleinian 14y ago
  Apparently Vincent hasn't figured out how to pre-filter people before he gives up 30 minutes to meet with them... Perhaps he should look for a new associate or two.
- lusr 14y ago
  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.
  - pedalpete 14y ago
    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.
nagarch 14y ago
same as ? http://web2asia.blognhanh.com/2012/07/a-must-read-before-making-any-venture_24.html http://web2asia.blognhanh.com/2012/07/a-must-read-before-mak...
- jackyyappp 14y ago
  yes if you scroll down the article you mentioned it links back to the original post at e27
atirip 14y ago
Help me out here please. 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?
- borplk 14y ago
  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.
deleted 14y ago
[deleted]

47 points by jackyyappp 14y ago

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.

patio11 14y ago
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."
deleted 14y ago
[deleted]
- patio11 14y ago
  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).

fragsworth 14y ago

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.

drumdance 14y ago
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. :-)
- dm8 14y ago
  In tech (especially SF bubble) we forget billion dollars is lot of money.
- biot 14y ago
  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.
  - 14y ago

pedalpete 14y ago

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.

daegloe 14y ago
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.
Heinleinian 14y ago
Apparently Vincent hasn't figured out how to pre-filter people before he gives up 30 minutes to meet with them... Perhaps he should look for a new associate or two.
lusr 14y ago
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.
- pedalpete 14y ago
  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.

nagarch 14y ago

same as ? http://web2asia.blognhanh.com/2012/07/a-must-read-before-making-any-venture_24.html http://web2asia.blognhanh.com/2012/07/a-must-read-before-mak...

jackyyappp 14y ago
yes if you scroll down the article you mentioned it links back to the original post at e27

atirip 14y ago

Help me out here please. 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?

borplk 14y ago
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.

deleted 14y ago

[deleted]