Hey guys, Donovan here…
As a biz student at the Schidler College of Business, I’ve listened to A LOT of guest speakers: from Richard Parsons dissecting the causes of the recession to Jay Shidler reliving his entrepreneurial career. Many of these guest speakers were entrepreneurs who told a story of living and dying by the merciless sword of the Venture Capitalist.
I recently found this article in Entrepreneur Mag in which Carol Tice interviews 3 venture capitalists (Alex Ferrara of Bessemer Venture Partners, Maneesh Sagar of CT Innovations and Jon Elton of iNovia Capital) and asks them what are some specific signs they look for in a possible investment. With VC funds running parallel to the economy, investment deals dropping from 1,200 (worth $6.8B) in 2008 to 2,000 deals ($15.2B) in 2009. Therefore, it’s even more imperative that you tighten up your VC pitch. While this article discuses some of the more fundamental rules of pitching, I found it insightful because, while basic, they are tips are often the most overlooked. Here are some of the top tips I took away from the article:
- Experience, Experience, Experience. No one wants to look like a fool and VCs are no exception. They increase their chance of return by investing in experience. “Good judgment in business comes from experience. I want to see people who’ve already made their mistakes and struggled,” says Sager.
- We spent how much on marketing?!#% “One of the most important figures to know: customer acquisition cost. How much does your company spend on marketing, on average, to bring in a new customer?” The reason this number is so essential is because a large percentage of the VC funds acquired by the entrepreneur is used to acquire new customers through various marketing channels.
- Are you selling your product already? I’ve already emphasized how difficult it is to find substantial funding in the current state of the economy. If you want to be one step ahead of the VC fund-ee competition, having a legitimate customer base or list is one of the “most concrete signs of success you can offer a VC.”
- Show me, Don’t tell me. “Jump into the demo,” says Elton, “rather than showing me a screen shot of something. I find that not very helpful.” A demo that excites the VC is better than the most compelling PowerPoint.
For the rest of the ‘insider’ tips, check out the full Entrepreneur Mag article at: http://bit.ly/1bMZp2