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We talk to a lot of entrepreneurs and hear them tell us first hand what it feels like to be turned down by a potential investor. And it’s always the same story. The founder thought they had it in the bag, their product was the next big thing, it was going to change so many lives. “Who wouldn’t want to invest?” they would think.
These types of first time entrepreneurs are everywhere. They’re at every local meetup, reading TechCrunch blog posts and chatting up their own comfortable, social circles. “Did you hear about company @*&^*# in Silicon Valley just raise $4mm in seed funding?” they say. The funding environment is hot and the money is all theirs for the taking!
It’s all too familiar. We have studied how these types of entrepreneurs articulate their value propositions, mission statements and reasons why they are business. In fact, we’ve hosted a free Pitch Clinic every month for the last two years to help wrap our head around the thought process. But there is still a disconnect! Why aren’t our entrepreneurs being given the pitching knowledge they need to succeed? That’s our mission, to simplify finance and help guide entrepreneurs along this journey.
I recently had the opportunity to interview Jeremy Banon over at Interplay Ventures based in New York City. Interplay has been involved in deals ranging from Coinbase to Warby Parker. They’re a fairly new firm and have a strong management team behind their fund. I asked Jeremy a handful of questions all around “pitching VC’s” and he delivered some very insightful information every entrepreneur ought to digest.
Lets begin where the entrepreneur typically starts.
Getting The Meeting
VC’s hear hundreds if not thousands of pitches a year. If you’re not getting a warm intro, it can be difficult to get their attention. For starters, when asked how to get a meeting with an investor, Jeremy said it can come in various ways, including the most valued, which is an intro from a portfolio founder. But there is also a much harder way. For instance, Jeremy says he “almost never takes cold calls from entrepreneurs, my first response will almost always be to send over a plan. As important time is to entrepreneurs, it’s just as valuable to a VC.” Entrepreneurs need to get to the point quickly, learn to articulate their message properly and master the art of brevity.
Do Your Homework
It’s easy to jump right into the game and start reaching out to every single person you think has money. However, that’s surely a quick way to fail. Jeremy gets pitched often from entrepreneurs who are eager to get funded. He says he has been pitched by just about anyone from Alaska to Vietnam and a large majority of these founders haven’t done their research into his firm’s investment strategy. A key point here is to do your homework and own due diligence on firms you’re approaching. Make sure you understand their investment philosophy and past investments. A good place to start is a portfolio section on their website or Crunchbase.
Do you watch the 60-90 second explainer videos entrepreneurs create?
“Almost always – for some reason, entrepreneurs seem to be better at getting to the point that away. Moreover, if the entrepreneur is featured in the video, it can give great insight into who he/she is as a person.”
Photo courtesy of INPIVIC
Among one of the most important elements of a good pitch for Jeremy is ‘Clarity.’ “If if it takes me more than 5 minutes to figuring out what you’re pitching, you’ve failed with your deck and probably lost me.”
When delivering any type of presentation, a good storyteller will captivate an audience or in this case, the investors. How important is storytelling to you? “Not initially – to pass the eye test you must be delivering something that people already have/want but doing so easier and better. But before an investment is made or partnership solidified, I will definitely want to hear “the story”.
Does emotion play a factor?
“If I feel strongly about a certain vertical, I will be more inclined to move forward. If it’s a “enterprise collaboration platform” or a “big data/analytics service” or some of the other overkilled spaces, I will be less inclined to move forward.”
The Path to Funding
To make your pitch go from good to great. It’s important to have an experienced team that is driving the venture forward. Since ideas change frequently, many investors will make a bet on the jockey and not the horse. If you’re the founder of the venture, you need to be prepared to speak on behalf of your team at all times. This will take practice, but understanding your business and being able to articulate your vision will help you move the needle. In fact, Jeremy rarely listens to pitches that aren’t from a founder. “It’s certainly not the norm, as early stage companies are generally bootstrapped and doing most business functions themselves. In that way, it can give rise to suspicion as there are many individuals who attempt to do equity for fundraising help swaps. These are people we generally advise people to stay away from.”
At the end of the day, the founder needs to be ready to run a process while in fundraising mode. With all the moving parts from above & trying to run the business at the same time, fundraising can be tough. Be prepared and learn from what VC’s like Jeremy have to say. After all, it’s in everyone’s best interest to get a deal done with a promising startup.