How To Pitch To A Venture Capitalist (From The Trenches)
By Anna Khan (Investor, Bessemer Venture Partners)
I’ve had a lot of female entrepreneurs ask me the secret to successfully pitch a venture capitalist. Male entrepreneurs (in part through trial and error, and in part by better access to resources) appear to do a better job convincing investors. In reality, there is no secret ingredient for a successful pitch. Instead, there are a number of factors at play.
As a female investor who has seen a number of pitches, I hope to give female entrepreneurs access to this same knowledge. I have synthesized these factors into five key points below.
Network is everything in the technology investing world.
A first impression goes a long way – venture capitalists (VCs) get hundreds of emails a day. Some are from investors sharing deals and others are cold emails from early startups looking to score a meeting.
There is one subset of email that gets the most attention: an introduction from someone you trust. If you know someone that has direct access to a firm you respect, ask them to make an introduction.
Tell them what you want to convey about your company (in 100 words or less) and have a few data points that will get the VCs attention. A majority of the time, the VC will take the meeting, even if the idea doesn’t seem appealing, only to ensure their network is sustained. After such an introduction is made, make sure you are quick to respond with available dates and times. I’ve had too many introductions where the entrepreneur disappears off the map. It is not a good first sign.
It’s all in the data – more numbers, less problems.
Don’t let data scare you. Often, female entrepreneurs think data has to mean revenue. Revenue is great but VCs know that early startups are in their pre-revenue stage. When you do not have dollar signs to vet your idea, have other data at hand.
This can include any number of the following: it costs me x dollars to acquire a customer; customer life-time value (LTV) is x dollars; average revenue per user (ARPU) is expected to be x; I am using three different marketing channels to test which options works best; my users have grown x% month over month. Data impresses VC. It shows you are prepared.
Know your market and leave no stone unturned.
Market data is different from internal data but equally important. When I meet entrepreneurs who know less about their market than I do, I get worried. As entrepreneurs, you live and breathe one market; you should know it cold.
This includes: market size, knowing all your competitors inside out, and understanding what particular value proposition you bring to the market. For e.g., if you are another flash sales e-commerce website, you should know everything about GILT, what they do well, what they don’t do well, and why you will do it better.
Be ready to have a back and forth exchange with the VC about what is exciting and challenging about your market. Even if the VC chooses not to invest in your current company, he/she will remember you as a smart entrepreneur. Careers are long and reputations are heavy, referrals go a long way.
Practice the schmooze.
This is the least tangible piece of advice I have but having seen a number of pitches, I have come to understand its value. Firstly, know your presentation extremely well. Rehearse it many times, both in front of optimistic friends (who will be encouraging) and in front of cynical friends (who will poke holes.) It is better to hear the most critical feedback before an important VC meeting, than after one.
Preparation is important but being too formal can actually work against you. I have seen many women walk into pitch meetings serious, prepared, and ready to get down to business. This comes off as mechanical. Men are intentionally more casual, which gives off the vibe that they have done this before (whether that is true or not.)
Men go through the necessary niceties to lighten the mood. It serves little purpose other than augmenting a likeability index, but this index goes a long way. It projects experience. Be forceful but not stubborn, and clear but not robotic. One of the best pitches I ever saw was given by a first-time entrepreneur who charmed the entire room with both his knowledge of the market and his incredible sense of humor. It seemed like he had been an entrepreneur his whole life. In short, remember the following adage: “people can forget what you say, but they will never forget how you made them feel.”
A lot of women-led startups decline to meet with investors early. Their motive is sincere: “I don’t want to go to investors until I have data to support my idea.” They want to wait till the market validates their idea. This is spot on and correlates directly with point 2 (you must have data to support your claim.)
However, I have seen many men work the VC circuit well before they have any data. It has a bit to do with having the right connections and more to do with confidence. Women would never sit in front of a VC to “talk shop.” It is just not what they do. This needs to change.
Women should take a page out of the male playbook and schedule quick coffee catch-ups with the investors they know. Aligning calendars takes time but once a VC knows your idea and knows you by face – when you need that seed or Series A, you’re already in the funnel.
Women 2.0 readers: What are your tips and tricks for pitching to venture capitalists? Let us know in the comments!
About the guest blogger: Anna Khan is an Investor at Bessemer Venture Partners. Prior to Bessemer, Anna was a Business Associate to the CEO/Chief of Staff at 4INFO, a mobile advertising platform. She co-founded and served as Director of Strategy and Corporate Development at Palindrome Advisors, a non-profit advisory firm focused on board matching, startup mentorship and nonprofit education for executives. Anna holds a B.A. with honors in Political Science, English Literature, and Science, Technology, and Society from Stanford University. Follow her on Twitter at @annarchyy.