There are a considerable number of coaching resources on how to make your pitch, whether to an individual or to a large group. The purpose of this post is to start a conversation on where to pitch.
One experienced VC commented to me at a recent large event: “anyone presenting here is probably over-shopped already and hasn’t been able to find money.” This particular person is not based in the city where this event was held, but he makes it his business to work the market and know what deals are coming available. Let me make it clear that I think he was referring to the Series A and later stage companies that are looking for VC-sized financings. Most such conferences have a day or two of scheduled formal presentations for such companies.
The story is different for the very early or start-up companies that have opportunities like Startup Riot, CapVenture, Capital Lounge, the Ritz Group, table-top displays at larger venues, etc. These may not have been shopped at all and are there either to make acquaintances for the future or to capture angel-sized investments where quicker decisions can be made.
So what are the risks of presenting your prized “first-born” to an investor group?
Your idea may be stolen. I hear this concern often. Most VC’s won’t sign NDA’s anyway, and when you’ve presented to just one your idea is already quasi-public. VC’s in smaller markets generally work together and often syndicate deals among their peers, so if they like you they’ll be more motivated to talk you up than to hoard you for themselves. By the same token, every reputable VC firm knows that its ability to see future deals would be nil if it became a conduit for idea theft. In a group setting you may well run across someone who’s already working on a similar idea, and if you do have competitors, they’re probably out there taking notes if it’s a big audience. I wouldn’t worry about theft, but you just have to weigh these other possibilities when you decide to open the proverbial kimono (as pictured above).
One bad apple can spoil the batch. I have observed this phenomenon many times, especially in what I call “séance” forums of about 10-50 people where a handful of presentations are followed by group discussion (sans the presenters). If there’s one person in there who knows your space really well and has had a bad experience in it, that person can easily dissuade the interest of others. “Gee, he must know what he’s talking about; must not be as pretty as it looks.” Or, worse yet, if one person has had a bad experience with you, you’re toast.
The format isn’t right for you. Some of the rapid-fire venues may allow so little time that you can’t explain your deal properly. At CapVenture, which was extremely well run, I found myself wondering about competition in some of the ideas presented, just to give me some comprehension of the scope of the markets begin addressed, but there was just too little time to include that data. If you have something that is too complicated to be grasped in a “sampler” format, you may not make the impact you should. This same issue applies to the Capital Lounge style mixers where you have to compete with other eager entrepreneurs in a completely unstructured setting accompanied by noise, food, booze, and occasional interruptions by the promoters (who deserve to get in a word).
You’ll be viewed in context. I recall attending one event where presenter A needed $5M to deliver a $50M revenue stream and presenter B wanted the same amount of capital to deliver a $1B revenue stream. Which would get your attention first? A big idea with a star quality management team already in place can diminish the luster of other presenters, who may just happen not to be that far along. The other presenters are reaching for the same wallets you are, and you need to be able to stand well against them in a group setting.
You’re no better than the odds of someone already knowing your space or knowing you in the audience. If your big idea is making ethanol out of kudzu, and everyone in the audience has only made money in software deals, you want be able to teach the chemistry no matter how much time is allotted. You will give them all a chance to catch up on their emails on their Blackberry’s. There’s been plenty of discussion on TechDrawl about Atlanta’s being more of a B2B, SaaS, and security town than a social media and consumer software town, so you’re better off pitching where people have warm feelings about past successes in your market area.
You may be awarded the stage by a helpful investor who doesn’t like your deal but wants to help you get some exposure on the chance someone else will step up. This is a form of “too light” rejection in the parlance of the current beer commercials. The investor may be well intended in putting you up for a presentation. He can hardly call his peers and say: “check out this deal I don’t like” – but there’s no harm in giving you a platform that might have some small chance of a positive result.
Ultimately you’re at the mercy of the event organizers. If they don’t get enough good quality deals and attract enough legitimate investors, you’re wasting your time. You want to be seen in the context of other quality offerings and not placed in the “over-shopped” bucket. You want an audience that has some capacity and some penchant for action, and preferably one that has demonstrated these in previous installments of the same event. It’s always hard to tally the results from any such gathering, given the many ways investors and entrepreneurs can connect and the many overlapping venues, but any tangible evidence of prior results is a good sign.
So, those are some of the risks. Stay tuned for a second installment where I talk about some practical ways to decide where to pitch. Please comment.
[Photo: tanakawho on Flickr]
