Pitch Meeting Observations

Josh asked about the subtle side of the VC pitch meeting.  So here is part 1 in my list of things I have picked up in doing many many VC pitches that I didn't know in my first...

Looking for reasons to say NO: VC folks are listening to your presentation for a reason to say no.  Almost all the time, a VC will not invest in a company, and most of the time they won't do anything past that first pitch meeting with a company.  All you need to give them is one good reason to say NO.

TRAP Questions: Lots of VC will ask you questions in a very leading way to try and elicit an agreement from you, when in fact if you agree with them they will end up rejecting you.  Part of this is based on them wanting to know if you really believe what you are presenting to them or if you are going to say anything to get them to invest in your company.  Sometimes they will even argue with you on these points.   They also want to try and determine very quickly if you are someone they would actually want to be sitting in a boardroom with.  I have found that what VCs want is intelligent, collegial conversation, not being argumentative and not simply going along with what they think as gospel.  With this in mind, don't think disagreeing with them is going to disqualify you.

Derailing the Presentation: Some VC like to derail presentations very quickly and turn the meeting into a long conversation, while others pepper relevant questions throughout the meeting but basically let you run things.  I usually feel good about meetings when it has turned conversational, but unless you can make most of the points in your presentation throughout that conversation, you may have had an interesting hour but are unlikely to have convinced them that you have a business they want to invest it.  Keep it on track and when appropriate segue back into your presentation or just keep mental notes of covering the necessary points.

Lack of Criticism != Expression of Interest: Some investors are genuinely nice people.  These are the minority.  I had some nice guy meetings in some of my first pitches, and I thought when I walked out of the meeting that it had just gone great - he had nothing but nice things to say about us!  Well, the fact is that the nice guy investors don't say YES to any more % of companies than the rude guys.  One of the things I have learned in making lots of pitches is that the lack of criticism is not an expression of interest.

Know the Portfolio: VC are apt to know a small set of companies very well - companies they have invested in, worked at, or come very very close to investing in.  You should study the portfolio page of anyone you are going to pitch at and know everything public about any company remotely adjacent to what you do, since that is the mindset from which the VC will be viewing your opportunity.  You may always get tripped up here by some stealth mode or unannounced investment - I always ask early on in the pitch if there are other companies in our space they are invested in to find this out and nobody has been offended by that question yet.  A key here is to not get too defensive about how you compare to those other companies, usually questioning there is pretty innocent.  On the other hand, if you ARE potentially competitive to another portfolio company, watch out and expect whatever you say and especially hand over to them to end up at the other company.  Probably 90% of VCs would never even consider handing over confidential information to their own portfolio, but I have personally received competitive pitches and full business plans from friendly investors, so it definitely happens.  If you are going to pitch to someone who is invested in someone who is potentially competitive (if it is direct competition, I'd just drop it, but there is a big gray area) I would be very careful in giving out any materials in the first meeting.   Asking for a NDA is a sign of an amateur entrepreneur, and probably will just get rejected, and even if it is signed as a small company you have no way to enforce it, so forget it.

Comments

[MD]

Thanks. Its useful and someday I would pay your fee too.

[Justin Sullivan]

The feedback that I've received from most VCs is that companies focus too much time on defining their market, and their whiz-bang technology, and not enough time explaining how exactly they will take their product to market.

CEOs need to have a better understanding of the sales process, the buying habits of their target audience, and a well-defined way of breaking through all the noise in the marketplace.

Would you agree with this assessment?

[entrepreneur]

VCs will never sign NDAs. Also, it's more like 90% of VCs *will* share your info with portofolio companies so just assume they all will and proceed accordingly.