Crafting Your Startup Pitch

I participated in a session today during Boulder Startup Week hosted by Jason Mendelson, a Partner in Foundry Group.  The audience was a group of entrepreneurs in various stages of fund raising activity.  Jason had some great advice for the group as a long-time Venture Capitalist who sees over 1,000 pitches per year.  Of the 1,000 he sees, 500 of them are immediately discarded to to bad grammar.  Really?  Of the remaining 500, 300 have an ineffective or even no “Elevator Pitch” – which Jason claims is the most important thing an entrepreneur has to get right to get initial investor attention.

So there you have it, you can be in the top 20% of deals he sees just by 1) mastering the English language and 2) having a concise, well-articulated Elevator Pitch.

What comprises an effective Elevator Pitch?

  1. Proof of a massive problem. What problem are you solving and how big is it?  This should be easy to nail quickly.
  2. How your business solves the massive problem.  What unique solution has been developed or conceived?
  3. Why YOU rock! (as an individual and how you are different than everyone else).  VC’s invest in people, first and foremost, so don’t be shy about why you are the best at what you do and what gives you a special advantage to outlast everyone else.

And all of this communicated before the elevator gets to the 4th floor!

So now that you are in the top 20%, here’s the next set of deliverables to win your prospective VC’s heart and cash.

  1. 5-7 page Executive Summary in written form.  The days of 70-page business plans went out with 8-Track tapes and Betamax.
  2. Product demo or prototype.  Showing your product is ALWAYS the most effective way to get attention.  It shows passion, commitment and enables an investor to share your vision for solving big problems.  It does not, however, eliminate the need for the Executive Summary.
  3. Personal connection.  I thought this was a really interesting and refreshing insight.  In order for Jason to invest, he must build a relationship with the entrepreneur and he expects incredible energy from that relationship, energy that first emanates from the entrepreneur and that increases with each visit as trust is built.  Why?  Because when times get tough, the personal relationship is what gets you through it.  The trust is the fallback for difficult conversations and wrenching decisions.  Personally, I want my VC to act this way, I was super-impressed by this investment philosophy.

Where do most entrepreneurs fall short in their pitches?

  1. Inadequately evaluating or addressing the competitive threat.  Even if there is no one on the planet that is doing exactly the same thing you are doing to solve a particular problem, for you to obtain customers there has to be a compelling reason for them to allocate time to you v. whatever else they could be doing.  Literally, the Internet is your competition in this case.  Don’t ever tell a VC you have no competitors, its the Kiss of Death.
  2. Inadequate attention to Business Model – Both Revenue and Expenses.  The one fundamental truth about Revenue projections?  They are always wrong.  100% of the time they never come true, the business will learn, iterate, pivot and generate revenue in ways that weren’t originally contemplated.  But its OK.  They key is to understand the drivers of revenue – # customers, page views, $/customer – those things that if you can scale, even a few of them, it drives revenue.  Expenses, by contrast, better always be right.  They are controllable and need to be well-thought out.

Finally, how does the entrepreneur find investors and get their attention, particularly VC investors?

Jason’s advice, as someone who is regularly spammed by entrepreneurs who blast out wildly to VC “lists” having done little to no research on the VC’s investment criteria –  do your research in a targeted way and wrestle ONE VC to the ground first.  Get personal, find common ground, ensure they invest in your sector, follow the directions above and generate interest and dialogue.  Once you have one that is responsive, cross-reference what other firms your one firm has co-invested with in the past, which are in the same sector or stage of development from an investment standpoint and create some competition for your stock.  Just don’t delay a deal by trying to create an auction!

And my favorite quote of the day.  Asked how long an entrepreneur should expect funding to take, from “first date to wedding”.  Jason’s answer?  “It depends how hot you are”.  Quick on his feet, very quick.

The Founder Conference

I attended The Founder Conference this week in Mountain View, CA.  I don’t really attend many conferences, but every once in a while I’ll go to an event if there are a few speakers I’d like to see.  This one had two and it was a decent event, with about 500 entrepreneurs in attendance to hear some startup luminaries like Guy Kawasaki and Naval Ravikant speak about startup funding and delighting your initial customers.  Additionally, Phil Libin, CEO of Evernote, gave a killer talk about the success and growth of his company and how he did it.

I intended on summarizing some of the key points, but there’s someone else who did a stellar job, even shooting video of the event.  See Dan Odio’s Founder Conference Blog Page for a re-cap and great video.

For the highlights, I suggest the following:

  • If you are interested in raising money for your startup or understanding what is happening in the VC/Angel marketplace right now, definitely watch Guy & Naval’s talks.  Guy Kawasaki is a serial entrepreneur, former Chief Evangelist for Apple and author of Enchantment.  And he’s a great, engaging speaker.  Naval Ravikant is also a serial entrepreneur and recent founder of AngelList that brings together founders with Angel investors – about 1900 of them!  He knows a thing or two about what’s happening in the marketplace for startup funding.
  • If you want to hear a great startup success story and be awed by how to really track performance and understand your customer’s needs and behavior, then watch Phil’s talk on Evernote.

These 3 presentations I thought were the best, most useful of the day.  Enjoy!

My Favorite Tech Startup Blogs

There are lots of interesting and insightful tech industry blogs out there, many of which are highly trafficked and very well known.  Such properties like Techcrunch, VentureBeat, OnStartups, ReadWriteWeb, Mashable are all great blog and news feeds, but I’d like to share a few of my personal favorites that are popular, but not as mainstream as some of these news sites.  Here goes:

Both Sides of the Table.  This blog is written by Mark Suster, a leading Los Angeles VC and entrepreneur.  Mark interviews entrepreneurs as well as shares his experience as an investor.  Not news based, rather techniques and insights for helping entrepreneurs succeed.  One of the most active bloggers out there.  Follow Mark on Twitter @msuster.

Feld Thoughts.  Written by Boulder-based VC Brad Feld, also an entrepreneur and now partner in Foundry Group and co-founder of TechStars.  He blogs daily about his experiences, investments and personal use of technology.  I’ve met Brad and really enjoy his daily posts.  Follow Brad on Twitter @bfeld.

A VC.  Written by now legendary VC Fred Wilson, he also posts daily with common sense advice and techniques for entrepreneurs trying to navigate fundraising, selling and operating their businesses.  He also blogs about his personal use of technology and investments being made by his firm Union Square Ventures.  Follow Fred on Twitter @fredwilson.

Tim Ferriss Blog.  Tim is the best-selling author of “The 4-Hour Workweek” and “The 4-Hour Body”, both #1 NYTimes Bestsellers.  This blog is incredibly insightful and full of non-intuitive, practical advice for entrepreneurs.  I saw Tim speak in Los Angeles, pretty amazing guy.  Follow Tim on Twitter @tferriss.

Jason Calacanis Newsletter.  Jason is a serial entrepreneur and is into everything startup.  Currently the Founder of Mahalo and LAUNCH Conference, Jason puts out a periodic newsletter to subscribers.  Go to his website and enter your email in the upper right box under “Jason Nation Newsletter”.  Follow Jason on Twitter @jason.

While there are about 30 more on my list, these are my daily favs.

I’ll follow up this post with my favorite Twitter follows (a much longer list).

What are some other great startup blogs out there?

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