What VCs look for in startup pitches
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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.
http://www.fastcompany.com/magazine/160/bill-nguyen-startups
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.
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.
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?
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.
Disclaimer: I'm a mentor at Golden Gate Ventures, and Vinnie is a big reason why I agreed to join the team.
Perhaps he should look for a new associate or two.
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.
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."