How Not to Pitch to a Startup
particletree.com
particletree.com
So I developed a system. Step one is to be clear with yourself about what you're looking for. We're not looking for funding and if we do, we will mine our own network for introductions to VC. We don't do partnerships unless the partner already has a customer who is asking specifically for us and who is willing to pay for any integration work. We never work with recruiters and haven't had any problems finding the people we need.
Step two, is to develop a script.
Here's an example, "I appreciate your call, but we don't work with recruiters and are happy with our current hiring practices. Pause. Have a nice day. Pause. Bye. Pause. Click."
If I only say nice things, then that leaves me in a good mood at the end of the call. My barber just hangs up on people without saying a word. But that doesn't work for me. Neither does yelling at them.
Fortunately, I've had a few "hero" associates who have dug down deep into my social network and found friends that we share, or read quite a few of my blog posts.
Either way, I've found that these associate calls are a complete waste of time. It can be hard enough getting taken seriously if you aren't brought in by the right partner, and getting funded off of an associate or analyst introduction is very unlikely, despite the fact that each and every one of them makes it sound like they are ready to cut a fat check on the spot.
I like the WuFoo folks and have been impressed with their approach and their application ever since I saw them at the first Office 2.0 conference, but one thing they may not appreciate is that their business stands as a beacon pointing at a large and profitable market, and their lack of desire to take funding means that some other team may be using them as a proof point. Naturally a VC firm will contact them before making an investment in a competitor. I am not suggesting that it's every call, but it's likely to be some of them.
From what I understand about VC psychology (all from PG essays and this site, not personal experience) this would drive them mad with desire. Plus you'd save a lot of time.
It's the right way for a founder to do due diligence, and it puts the relationship upside down with VCs. I'd love to be in that position. I got my share of calls from VC associates, but the real VCs I care about barely give me more than the time of day.
IMHO thats why they try to collect data on as many companies as possible and according to the article that happens without much coordination or without a clear goal. At least from the outside it seems like an effort to only cover their asses.
"Now, our funding situation is that..."
"Now, we understand that..."
I'm starting to get sensitized to this construct. The 'now' is like an 'um' -- i.e., filler -- except, it's an 'um' that says, "I am about to say something authoritatively."
Obama uses it a lot, too.
I'm starting to flag it as sort of poser-ish.
The content of the article was super high quality, and outweighed this nit.
But in written English it serves no purpose.
"Now, that being said, it begs the question of <whatever>" -- the sentence was tongue-in-cheek. I was illustrating, in a mocking way, the style I don't like.
Sorry for the troll.
The point of an intro call is that you tell them what you are up to and they tell you what their firm is about. If you aren't interested in hearing about their firm and and you don't want to explain to them what you are up to, then don't waste their time and yours with the phone call.
Wufoo is profitable and growing. And Wufoo is in the very fortunate position of having VCs sell them on the idea of taking money. So far, the VCs appear to be doing a piss poor job of it.
I suspect the author of the blog post could do more to change the situation into one that is mutually beneficial.
Why not just reply to the initial email with a link to a page that has answers to the common VC questions? Let them fill out their spreadsheets from that.
Unfortunately for Wufoo, they are losing the opportunity to have a productive conversation by allowing it to repeat itself over and over. If they "know" how the conversation is going to go, it's their responsibility to move it in a different direction.
But we are talking about something that has already been built. Something that is already popular enough to catch the eye of VCs. So obviously the team is good enough, if they arrived at that stage. If they didn't have a good team, they wouldn't have arrived at that stage to be hounded by VCs.
VC's obviously want a team that isn't simply capable of launching a site and get 10.000 users. They're looking for a team that can make it into a business that's worth millions.
Not many teams can do this. So yes, people matter, both in the very earliest stages, mature companies and everything in between. If you don't believe me look at Apple's stockprice every time there's a story on their CEO's bad health.
The team that built a site and got 10.000 users may not be capable of driving it forward to a real large-scale business. Maybe they just got lucky, maybe they don't really care for the money but just want to have fun, maybe they have no idea how to manage other people. The team in a companys earliest stages doesn't say a lot about how well they will perform in the setting of a larger company, which they will hopefully become.
I think there's the assumption that because raising a round can be tedious that actually getting in touch with VCs must be too. As it turns out, once you show up on the startup radar some VCs will want to get you in their tracking database so that they've already made a connection at which point you are trying to raise money.
The last one that we had contact us was doing only growth stage investments for companies doing $2mm in revenue per year ... and we're still in beta. It was pretty clear from the start (and we told them that before the call) that they weren't really looking to invest in us, but wanted to have us checked off a list.
Most VCs have a small set of partners and a larger group of associates / analysts. The latter are basically functioning as scouts but don't in general have the power to decide on investments. Getting noticed by them is nice, but it doesn't say a whole lot -- it's their job to be noticing things.
Brilliant! Applies to much more that just VC.