How Not to Pitch to a Startup(particletree.com)
particletree.com
How Not to Pitch to a Startup
http://particletree.com/features/how-not-to-pitch-to-a-startup/
14 comments
Same thing happens to us all the time, really annoying. I've had some associates have the balls to call us up, not do any research, and then try to lecture me on how we should be running our business.
Fortunately, I've had a few "hero" associates who have dug down deep into my social network and found friends that we share, or read quite a few of my blog posts.
Either way, I've found that these associate calls are a complete waste of time. It can be hard enough getting taken seriously if you aren't brought in by the right partner, and getting funded off of an associate or analyst introduction is very unlikely, despite the fact that each and every one of them makes it sound like they are ready to cut a fat check on the spot.
Fortunately, I've had a few "hero" associates who have dug down deep into my social network and found friends that we share, or read quite a few of my blog posts.
Either way, I've found that these associate calls are a complete waste of time. It can be hard enough getting taken seriously if you aren't brought in by the right partner, and getting funded off of an associate or analyst introduction is very unlikely, despite the fact that each and every one of them makes it sound like they are ready to cut a fat check on the spot.
There's smart and then there's perspective. VCs are smart, but they're looking for perspective. They're cold calling you to understand your company and your space and try to possibly invest in you. In fundamental analysis, they call this the scuttlebutt approach. From our personal experience, we've even gotten partners who haven't done their research. The would immediately want to go into the demo during the pitch. When we meet the occasional partner and associate who actually knows the space and the product, we are more than impressed. In reality, if you only vaguely know the space and you're asking retarded questions about engagement and metrics, you're not really adding value. We judge VCs by their questions.
I wish i'd be in that position that it happens to me at all
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There is another reason why some of these calls may be made: due diligence before investing in a competitor. This would explain why VC's ask for an explanation of things that are obvious and available on the website: they are looking for any unreported changes, and trying to get some nuance by talking to a founder.
I like the WuFoo folks and have been impressed with their approach and their application ever since I saw them at the first Office 2.0 conference, but one thing they may not appreciate is that their business stands as a beacon pointing at a large and profitable market, and their lack of desire to take funding means that some other team may be using them as a proof point. Naturally a VC firm will contact them before making an investment in a competitor. I am not suggesting that it's every call, but it's likely to be some of them.
I like the WuFoo folks and have been impressed with their approach and their application ever since I saw them at the first Office 2.0 conference, but one thing they may not appreciate is that their business stands as a beacon pointing at a large and profitable market, and their lack of desire to take funding means that some other team may be using them as a proof point. Naturally a VC firm will contact them before making an investment in a competitor. I am not suggesting that it's every call, but it's likely to be some of them.
If you have a chance to prepare before the calls, they must be prearranged, right? So why not send a form email that says, 'We're flattered that you'd consider working with us. We're not looking for funding right now, and we're really busy improving our product, but if you have any thoughts on what we could be doing better, send me a short memo at this address, and we'll follow up. For more information on our company go to wufoo.com/faq.'
From what I understand about VC psychology (all from PG essays and this site, not personal experience) this would drive them mad with desire. Plus you'd save a lot of time.
From what I understand about VC psychology (all from PG essays and this site, not personal experience) this would drive them mad with desire. Plus you'd save a lot of time.
I love this! It will indeed drive some of the VCs nuts. And it's the ultimate test. Everyone's money is the same. What can you bring to the table beyond a check? Tell me something smart and I might take your money.
It's the right way for a founder to do due diligence, and it puts the relationship upside down with VCs. I'd love to be in that position. I got my share of calls from VC associates, but the real VCs I care about barely give me more than the time of day.
It's the right way for a founder to do due diligence, and it puts the relationship upside down with VCs. I'd love to be in that position. I got my share of calls from VC associates, but the real VCs I care about barely give me more than the time of day.
I suspect this is a case of "poor venture capitalists circulate more", like poor programmers or poor boyfriends. See http://www.overcomingbias.com/2007/03/you_are_not_hir.html
This article clearly shows the fear VCs have to miss the next big thing.
IMHO thats why they try to collect data on as many companies as possible and according to the article that happens without much coordination or without a clear goal. At least from the outside it seems like an effort to only cover their asses.
IMHO thats why they try to collect data on as many companies as possible and according to the article that happens without much coordination or without a clear goal. At least from the outside it seems like an effort to only cover their asses.
Two paragraphs lead off with the "Now, <statement>" construct:
"Now, our funding situation is that..."
"Now, we understand that..."
I'm starting to get sensitized to this construct. The 'now' is like an 'um' -- i.e., filler -- except, it's an 'um' that says, "I am about to say something authoritatively."
Obama uses it a lot, too.
I'm starting to flag it as sort of poser-ish.
The content of the article was super high quality, and outweighed this nit.
"Now, our funding situation is that..."
"Now, we understand that..."
I'm starting to get sensitized to this construct. The 'now' is like an 'um' -- i.e., filler -- except, it's an 'um' that says, "I am about to say something authoritatively."
Obama uses it a lot, too.
I'm starting to flag it as sort of poser-ish.
The content of the article was super high quality, and outweighed this nit.
Obama uses it when speaking without a script, right? In that circumstance it's a kind of time-filler while he arranges his next sentence in his head -- he often uses a long, drawn-out 'Aaaaand' in the same way. At least it's better than 'uh,' which is what most people (including me) use.
But in written English it serves no purpose.
But in written English it serves no purpose.
It serves the purpose of imparting a conversational style with minimal effort.
That's right. Now, that being said, it begs the question of whether or not the style imparted is any good.
If you're going to focus on style, you should use "prompts the question" or "raises the question."
http://begthequestion.info/
http://begthequestion.info/
"Prompts" sounds stilted, "raises" is an extra syllable.
"rare position" indeed but that also means it's a solid business. Congrats!
This sounds like your fault rather than theirs. You have VCs who are inviting you to pitch your company to them, you are accepting their offer and then getting upset that they actually expect you to pitch them.
The point of an intro call is that you tell them what you are up to and they tell you what their firm is about. If you aren't interested in hearing about their firm and and you don't want to explain to them what you are up to, then don't waste their time and yours with the phone call.
The point of an intro call is that you tell them what you are up to and they tell you what their firm is about. If you aren't interested in hearing about their firm and and you don't want to explain to them what you are up to, then don't waste their time and yours with the phone call.
But it's the other way around. This isn't the typical startup hustling for VCs intros while hoping to get funding.
Wufoo is profitable and growing. And Wufoo is in the very fortunate position of having VCs sell them on the idea of taking money. So far, the VCs appear to be doing a piss poor job of it.
Wufoo is profitable and growing. And Wufoo is in the very fortunate position of having VCs sell them on the idea of taking money. So far, the VCs appear to be doing a piss poor job of it.
There is an impression among VC's that every startup wants their money. We've had calls like this too. We tell them we are building sweat equity and they offer to call next quarter to check on our progress.
I suspect the author of the blog post could do more to change the situation into one that is mutually beneficial.
Why not just reply to the initial email with a link to a page that has answers to the common VC questions? Let them fill out their spreadsheets from that.
Unfortunately for Wufoo, they are losing the opportunity to have a productive conversation by allowing it to repeat itself over and over. If they "know" how the conversation is going to go, it's their responsibility to move it in a different direction.
I suspect the author of the blog post could do more to change the situation into one that is mutually beneficial.
Why not just reply to the initial email with a link to a page that has answers to the common VC questions? Let them fill out their spreadsheets from that.
Unfortunately for Wufoo, they are losing the opportunity to have a productive conversation by allowing it to repeat itself over and over. If they "know" how the conversation is going to go, it's their responsibility to move it in a different direction.
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probably an opportunity here, since all of the VCs are asking for the same exact information, have a website that has the information for multiple companies in the same place
That's what CrunchBase (http://www.crunchbase.com/) is. The phone call definitely serves more of a purpose beyond data collection - pitching the company and verifying legitimacy.
What do you mean by verifying legitimacy?
Making sure there's actually a company behind the website and not just a 13-year-old kid who's good at FrontPage.
if its a startup that they think is good enough to pitch to, why should they care?
Because they are humans who need to form social connections. If they were programmers they would realize the information was logically equivalent whether it was gathered from CrunchBase, the company website, or a phone call with a smooth-voiced young man who claims to be a founder.
Because VCs invest in teams with good ideas not in ideas alone.
yes at the earliest stage, when its just an idea, and nothing more.
But we are talking about something that has already been built. Something that is already popular enough to catch the eye of VCs. So obviously the team is good enough, if they arrived at that stage. If they didn't have a good team, they wouldn't have arrived at that stage to be hounded by VCs.
But we are talking about something that has already been built. Something that is already popular enough to catch the eye of VCs. So obviously the team is good enough, if they arrived at that stage. If they didn't have a good team, they wouldn't have arrived at that stage to be hounded by VCs.
Not only at the idea stage.
VC's obviously want a team that isn't simply capable of launching a site and get 10.000 users. They're looking for a team that can make it into a business that's worth millions.
Not many teams can do this. So yes, people matter, both in the very earliest stages, mature companies and everything in between. If you don't believe me look at Apple's stockprice every time there's a story on their CEO's bad health.
The team that built a site and got 10.000 users may not be capable of driving it forward to a real large-scale business. Maybe they just got lucky, maybe they don't really care for the money but just want to have fun, maybe they have no idea how to manage other people. The team in a companys earliest stages doesn't say a lot about how well they will perform in the setting of a larger company, which they will hopefully become.
VC's obviously want a team that isn't simply capable of launching a site and get 10.000 users. They're looking for a team that can make it into a business that's worth millions.
Not many teams can do this. So yes, people matter, both in the very earliest stages, mature companies and everything in between. If you don't believe me look at Apple's stockprice every time there's a story on their CEO's bad health.
The team that built a site and got 10.000 users may not be capable of driving it forward to a real large-scale business. Maybe they just got lucky, maybe they don't really care for the money but just want to have fun, maybe they have no idea how to manage other people. The team in a companys earliest stages doesn't say a lot about how well they will perform in the setting of a larger company, which they will hopefully become.
That's not really true. We showed up on a couple VC's radars before there was any real credible reason for us to have done so.
I think there's the assumption that because raising a round can be tedious that actually getting in touch with VCs must be too. As it turns out, once you show up on the startup radar some VCs will want to get you in their tracking database so that they've already made a connection at which point you are trying to raise money.
The last one that we had contact us was doing only growth stage investments for companies doing $2mm in revenue per year ... and we're still in beta. It was pretty clear from the start (and we told them that before the call) that they weren't really looking to invest in us, but wanted to have us checked off a list.
Most VCs have a small set of partners and a larger group of associates / analysts. The latter are basically functioning as scouts but don't in general have the power to decide on investments. Getting noticed by them is nice, but it doesn't say a whole lot -- it's their job to be noticing things.
I think there's the assumption that because raising a round can be tedious that actually getting in touch with VCs must be too. As it turns out, once you show up on the startup radar some VCs will want to get you in their tracking database so that they've already made a connection at which point you are trying to raise money.
The last one that we had contact us was doing only growth stage investments for companies doing $2mm in revenue per year ... and we're still in beta. It was pretty clear from the start (and we told them that before the call) that they weren't really looking to invest in us, but wanted to have us checked off a list.
Most VCs have a small set of partners and a larger group of associates / analysts. The latter are basically functioning as scouts but don't in general have the power to decide on investments. Getting noticed by them is nice, but it doesn't say a whole lot -- it's their job to be noticing things.
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If there's a 13 year old using FrontPage to build his startup in this day and age, I definitely want to meet him.
Because, honestly, it’s so bad out there, that it would probably take very little to actually impress us even a little bit.
Brilliant! Applies to much more that just VC.
Brilliant! Applies to much more that just VC.
"When looking at the men of today [...] those who seem like real men [are] few. Because of this, if one were to make a little effort, he would be able to take the upper hand quite easily." --Yamamoto Tsunetomo (1659-1719)
what a great blog, nothing will make them lust after you more then swatting their week attempts back, human nature meets capitalism.
So I developed a system. Step one is to be clear with yourself about what you're looking for. We're not looking for funding and if we do, we will mine our own network for introductions to VC. We don't do partnerships unless the partner already has a customer who is asking specifically for us and who is willing to pay for any integration work. We never work with recruiters and haven't had any problems finding the people we need.
Step two, is to develop a script.
Here's an example, "I appreciate your call, but we don't work with recruiters and are happy with our current hiring practices. Pause. Have a nice day. Pause. Bye. Pause. Click."
If I only say nice things, then that leaves me in a good mood at the end of the call. My barber just hangs up on people without saying a word. But that doesn't work for me. Neither does yelling at them.