‘No Thanks’ is the most common result of venture capital meetings
Sucks but it’s true. VCs are a lot like pro sports clubs. It costs them little to check out schools (incubators), sports camps (tech conferences), and the old fashioned newspaper. It’s in their interest to keep as many prospects on the radar scope as possible. But they will commit financially to an extremely lean percentage.
So if you’ve got a startup and you’ve met an investor and she hears your 15-second pitch and says “Sounds great, let’s meet and take a look at your pitch deck” — good right?
Well, it’s better than “Sorry, not interested.” But it doesn’t mean a lot 99% of the time.
Startups in the early stage — pre-revenue, bootstrap, with some friends and family or angel capital — can benefit from some great advice from David Ehrenberg, Founder and CEO of Early Growth Financial Services, excerpted here:
You have done all of your homework. You researched the investor you are pitching. You properly prepared your financials. You practiced and perfected your presentation. Most importantly, you landed a coveted meeting with your target investor. After the meeting is over, the investor passes on your idea. What do you do?
I work with founders and entrepreneurs regularly to prepare them for fundraising. It’s not just about putting together a good elevator pitch. When it comes time for a meeting, founders should make sure their pitch deck is clear and succinct. They need to have the proper financial statements assembled. And finally, they need to speak competently and confidently about the future of their business.
But even with proper preparations and a killer presentation, you may not be able to convince your target to buy in. Read more at forbes.com.
But while this is a nice article for the post-‘No’ letdown and ‘Win or Learn’ set (where a loss is a learning moment, not a bad thing) — what about before the meeting? Did you really prep for it? How many rejections can your startup afford before the burn rate closes in and shuts you down?
Are there some things you can do to go in to an investor meet with a stronger fighting chance? Here are a few things to consider:
The Pitch Deck
1. Unless you are in Series A or later (~$2.5M+), keep it short. 10 content slides and a cover.
2. Google “investor pitch deck template.” Grab a few free blanks, example templates, real world decks like AirBnB’s. Read and examine them carefully. Then throw them in the garbage can.
3. From your research, construct a slide outline not exceeding 12 slides.
4. Work the narrative. Find market data. Work your vision statement or Big Idea. Make bold projections. Cite and support them as much as possible. Talk about your founding team. Talk about what they’ve done in the real world. What they will do in your startup in a projected simulation of the future — no one cares.
5. Hire a designer if you have a couple of few grand to spend. If you have $500, do the work yourself and take the team out for a strategy dinner instead.
6. Allow plenty of travel time. Arrive early. Keep the rhetorical chit chat to a minimum. (The writer of this post sucks at this.)
7. In advance of the meet, rehearse your pitch (using the deck as a guide, not a script) in front of your founding team and advisors.
8. Rehearse your pitch in front of friends and family.
9. Rehearse your pitch in front of 3 people who don’t like you and whom you don’t like. Our enemies teach us more than our friends.
10. Rehearse your pitch in front of 5 perfect strangers. Airports are perfect. You are allowed to buy drinks for persuasion but don’t give away equity points.
11. Dress well. If you wear shineable shoes, shine them. Or better yet have them shined. Do not forget to dress the edges.
12. Do your tech diligence. It’s better to show with nicely printed and bound decks than to waste precious minutes fracking about with laptops and overhead projection. Be cool. Be confident. Pursue an air of inevitability. Check your watch at the end. (You have another meeting scheduled). At the appointed time, leave at once.
13. Read Pitch Anything by Oren Klaff.
14. There are legions of other startup books out there. Read them. Learn to treat your startup as a business, not a charity, from the outset. Do good with your coveted capital.
You are the new stock market. Get out there and save the world with your genius. The cure for global warming will be a startup. The space race is all startups all the way up. Drinking water for the Third World. Startups. You get the picture.
✍ Erik Johnson is the founder and director of Launch Module Media based in New York City.
Featured image via Shutterstock and select article content courtesy of forbes.com.