Pitching to a VC is all about YOU. An investor is investing in you, as much as your idea and business concept.
Thinking startup? David S. Rose’s rapid-fire TED U talk on pitching to a venture capitalist tells you the 10 things you need to know about yourself — and prove to a VC — before you fire up your slideshow.
David Rose is a serial investor and a serial entrepreneur. Here’s his list of what is important in convincing an investor that you are the right choice.
And of course, it needs to be presented with an infectious enthusiasm!
On presentation techniques, and powerpoint, David says:
“Without question I’ve seen many presentations (both with and without PowerPoint) that are Too Slick, and to me they are at least as much of a turnoff (perhaps even more) than is one that is Too Rough. HOWEVER, that’s not the only choice one has. The slickness is *not* just a function of the slides; it has much more to do with how over-rehearsed, or patronizing, or ‘un-real’ the presenter is. I see hundreds (perhaps even thousands) of presentations each year, including many dozens at conferences like TED, where presentation is often elevated to a high art. And while great presentations are far from common…they do happen.
There’s a wonderful word, first used by Castiglione in 1528, that nails the concept. “Sprezzatura” is “a certain nonchalance, so as to conceal all art and make whatever one does or says appear to be without effort and almost without any thought about it.” That is to say, it is the ability of the courtier to display “an easy facility in accomplishing difficult actions which hides the conscious effort that went into them.”
If you watch the very best presenters at their very best, people like Larry Lessig and Rives and Steve Jobs and Seth Godin et al, there is absolutely NO feeling that they are Too Slick. But all of these guys spend absolutely enormous amounts of time preparing their slides, rehearsing their presentations and mastering the technology…so that the result comes off as “without effort…and thought”. ”
Guy Kawasaki is the Managing Director of Garage Technology Ventures, and has two separate stints at Apple under his belt. He is highly regarded in the Venture Capital and entrepreneurial communities.
Here are his ten (and a bonus) points for creating a successful company. This is not (specifically) about how to raise capital. It IS about how to create a great company which is all part of the journey. No punches are pulled.
1. Make Meaning. Change people’s lives. Apparently it’s not all about money. Meaning makes money.
2. Make a mantra. Have a mission statement that people understand, not one that Dilbert would create.
3. Get into action. An average plan acted on outperforms a great plan on the shelf. Don’t put up with incremental improvements. Jump the curve. Don’t try to appeal to everyone. Polarise. Find people to help on your journey.
4. Define your business model. Be specific about where dollars come from. Keep it simple.
5. Know your milestones. Know your assumptions. Know your tasks.
6. Get niched.
7. 10/20/30. 10 slides in your pitch. 20 minutes. 30 point font. Keep it simple. Don’t read your slides. These stop Guy getting ringing in his ears from BS presentations.
8. Hire infected people. They must love your product. Ignore the other stuff. Hire people better than you.
9. Lower barriers to adoption. Make it easy to do business with you. Flatten the learning curve. Don’t ask customers to do more than you would do. Embrace the evangelists.
10. Take the money. If the wrong people buy your product, let them. Allow a test drive. Find influencers, even if this is the soccer mums.
11. Don’t let the bozos grind you down. Especially the smart ones because you might believe them.
Enjoy the video and let it inspire you to create an incredible business.
If you enjoyed this, check out his VC Aptitude Test for a slightly tongue in cheek look at what makes you successful in business.
You hear the terms ‘Small Business’ and ‘SME’ (small and medium size enterprise) all the time. In some contexts they refer to very small business – a husband and wife team, or a sole business operator. Others would refer to these businesses as micro-businesses. There’s significant differences between what people think they are, and what investors label these companies. If there is confusion, it is compounded by the fact that everyone wants to look bigger than they are, so a business that has grown to a few million dollars in revenue will feel compelled to begin calling itself a medium size business.
There’s also international variations in these terms. In Australia “small business” seems to mean owner operated companies up to thirty or fifty staff. Beyond that, they start to call themselves a medium size company. In the US by contrast, anything less than about $100m in turnover is considered small, and our Australian version of small would be considered “microbusiness” or a cottage industry. The factors seem to be related to size and ownership, but are non definitive.
By way of example, in “Small Giants” by Bo Burlingham http://www.smallgiantsbook.com/ there is a “small” brewing company used as an example which has a turnover of a few hundred million dollars. This is probably small compared to the brewing giants, but it is still a significant company. (In this context it was labelled small because of its structure and because it was still run by its founder).
There are similar confusions over what businesses call themselves at various stages of development. For example… “Startup” for some implies a concept of a company – similar to the companies that popped up overnight in the dotcom boom with almost no plans, just a domain name and a few people with a desire to sell petfood over the internet. For others, “startup” might mean a five year old company that has a reasonable trading history, but has a new strategy that requires funding to get new momentum.
Investment terms are also used somewhat freely, and without a lot of accuracy – private equity, venture capital, angel investment. Sometimes these terms are clear cut and sometimes a deal might come together that is somewhere in the middle. What one person calls venture capital finance another will call private equity. Even investments vary. Even within a given investment, the cash might be contributed as equity or as debt. Or it might start out as debt but be converted to equity. The overarching terms of venture capital and private equity fit all these scenarios.
The lesson from all this is: definitions are less important than actual business plans and people, and actual dollars. What IS important is how you convey your opportunity to a prospective investor with clarity on your market, the opportunity you have, what you want from them, and what they get out of it. The actual terms used are less important than the deal itself.
AUSTRALIAN PRIVATE EQUITY AND VENTURE CAPITAL ASSOCIATION LIMITED (AVCAL) AVCAL was established in 1992 as a forum for participants in the private equity and venture capital industry. AVCAL is the central voice of the Australian industry and its membership includes almost all the domestic, regional and global private equity and venture capital firms active in Australia.
This is the report of 2009 as prepared by Ernst & Young – The survey results are based on the FY2009 activities of 63 Venture Capital and Private Equity firms, representing $24.5b in funds under management.
AVCAL (Australian Private Equity and Venture Capital Assoc) today called on the Federal government to urgently develop legislation to restore international investor confidence in Australia.
AVCAL’s comments follow the release of draft rulings/determinations from the Australian Tax Office. [TD2009/D17 Income tax: treaty shopping... and TD2009/D18 Income tax: can a private equity entity make an income gain...] The release of these draft rulings /determinations provides an opportunity for the Government to clarify tax policy in relation to these issues.
Business owners looking to raise venture capital for business, that DON’T live and die by numbers – and it is more often than you would think – will be marginalised by investors.
No matter how powerful your vision, or appealing your product, if you are unable to present accurately and effectively the current position of your company, you can say goodbye to the funds from investors.
Here are a few tips that you should consider about your business financials when looking at raising capital:
1) If you, the business owner, are not comfortable with the numbers, then you need to recruit someone who is.
2) Even with a good numbers guy, the numbers need to be presented effectively, clearly, concisely, and without “noise” (=too much detail) ie summarise, as well as have the detail handy just in case required.
3) It goes without saying, your proposition must make lots of money for yourself and the potential venture capitalist. For example – venture capitalists require at least a compound 30% return but depending on the risk may go up to 100% or more.
4) Have an effective framework in place to regularly and accurately demonstrate to your stakeholders (your investors, board, employees, banks etc) that you are on top of your numbers.
Remember trying to attract venture capital investors is all about providing an expectation of a return for a given set of risks. If you can’t demonstrate how you are going to manage the return (that includes producing it) then you simply wont attract an investor.
