From time to time I’m planning on writing posts aimed at giving some insight into the venture industry. Brad (sometimes co-authored by Jason Mendelson, our GC) has done a series of these that I think are very informative. In fact, my very first blog was a guest column for Brad that described splits and the various ways to calculate them in a venture deal (and why this matters to entrepreneurs). I sit through a lot of venture presentations. Literally hundreds of them. Some are very good but a good number of them are really poor. Seriously. This amazes me. I think it’s pretty hard to get an audience with a VC (I think about the number of plans we receive every year that we don’t see the pitch for vs. the number that we invite in for a meeting). I’m amazed how often entrepreneurs fail to put their best foot forward when they do get a meeting by having a sub-par presentation. I think it’s because too many entrepreneurs know their business so well that they forget how to describe it to people who don’t. Here’s a couple of do’s and don’t that I hope will be helpful. Also below is a list of what a good venture presentation should include (I believe this was originally put together by my colleague Chris Wand a few years ago).
– DO have a 2 or 3 sentence description of what you do. This should be simple and straightforward. You grandparents should hear you sa this and say ‘oh – I get it’.
– DO make sure you start your presentation by telling the people who you are talking to what it is you do (I’m truly amazed by the number of times it takes 6 or 10 powerpoint slides to get to the part of the presentation where I finally understand what it is the company that is presenting actually does)
– DON’T assume that the problem that you solve is obvious. Make sure you do a good job outlining what it is that you ‘fix’
– DON’T have a financial plan that shows you becoming the most successful [insert your company type here] company ever in existence. I’m amazed how many enterprise software companies show us with a plan that has them generating $50m in revenue in their 4th year . . . while at the same time insisting that their plan is ‘very conservative’
– DO make sure you do time checks – first at the beginning of the presentation to know how long you have an audience for, and then periodically to make sure you are still on schedule
– DO make sure you then organize your presentation around the time you have (which is to say, understand the meat of your presentation and make sure you get to it in the time you have allotted); a corollary to this is to make sure that you skip sections that you are asked to skip. We regularly spend 10 or 15 minutes time going through something (for example the market overview of a market we already know broadly very well) that we’ve asked an entrepreneur to skip over, only to run out of time during the real guts of the presentation (i.e., defining how the company’s technology is unique from that which we’ve seen before). – DO make sure you practice your presentation out of order and interrupted – a lot of good presenters get completely flustered if they get off track or have to take things in a different order than they planned – you should expect that you’ll get interrupted with questions, asked to skip over sections and challenged on certain points – practice your presentation that way. Questions to answer in a venture presentation. (n.b., please don’t see this as an end-all/be-all list, but rather as just a guide):
– What is your big vision?
– What problem are you trying to solve and for whom?
– Where do you want to be in the future Market – –
– How big is the market you are pursuing and how fast is it growing?
– How established is the market?
– Do you have a credible claim on being one of the top two or three players in this market?
– What is your product or service?
– How does it solve your customer’s problem?
– What is unique about your product/service?
– Who are your existing customers?
– Who is your target customer?
– What defines an ‘ideal’ customer prospect?
– Who actually writes you the check? Who do you sell to? Who needs to sign off on the purchase?
– Use specific customer examples where possible?
– What is your value proposition to your customer?
– What kind of ROI can your customers expect by using your product/service?
– What pain are you eliminating?
– Are you selling vitamins, aspirin or antibiotics (i.e., a luxury, a nice to have or a need to have)
– Who is the management team?
– What is their experience?
– What team members are missing and what is the plan to fill these open positions?
– How do you make money?
– What is your revenue model?
– What is required to become profitable?
Stage of Development
– What is your stage of development? Technology/product? Team? Financial metrics? Revenue?
– What has been your progress to date? (make today’s reality vs. the future you are pitching clear)
– What are your future milestones?
– What funds have already been raised?
– How much money are you raising and what is your valuation expectation?
– How will the money be spent?
– How long will the new money last and what milestones will be met?
– How much additional financing do you anticipate and when?
– Who is your existing and likely competition?
– Who is adjacent to you in the market that could enter your market?
– What are your competitors strengths and weaknesses?
– Why are you different?
– Who are your current and possible future technology and distribution partners?
– How dependent is your model on these partners?
Fit with Investors
– How does your business fit with the VC’s existing portfolio and expertise?
– Are there any synergies or possible conflicts with existing portfolio companies?
– What assumptions are key to the success of the business?
– What ‘gotchas’ could change the business outlook overnight? Technology? New market entrants? Changes in standards or regulations?
– What are your companies weak links?