Two minutes. Often that’s all a high-flying VC can afford to spare for an aspiring entrepreneur. A short, snappy sales pitch is, therefore, a key weapon.
What is common between a good venture capitalist (VC) pitch and stand-up comedy? In both the cases, a perfectly timed and delivered spiel can make or break your career. A comedian begins with a killer opening and keeps rolling to peak a couple of minutes later. He makes a graceful exit with a customary greeting, leaving the audience yelling, whistling and clapping. ET tries to get the low-down on what it takes to get a similar response from a VC.
The urban legend regarding start-ups is that you get a two-minute shot to reveal your plan and what it is good for. All this is done in such a way that the venture capitalist, with whom you’ve jumped into a cab or elevator, will write you a cheque one day. You want to win over your audience so that it supports your idea with its heart, soul, mind — and money.
Winning these, in a start-up business, means you have to construct a short and snappy sales pitch of your idea. In Mumbai, like in the Silicon Valley, face-time with a VC is limited. So, be prepared to make your only shot your best shot. The time window is small, hence the idea has to be crisp and clear.
“The entrepreneur has to be very clear about the market situation for his product. Investors , generally, tend to avoid funding those, who lack the knowledge about key differentiators which their company has to offer and project the potential of their business without actually having the details about the execution of their business plan,” says Alok Mittal, managing director, Canaan Partners. In case of angel investors, they tend look for a good quality of management team along with the entrepreneur’s operational background and professional experience in the chosen field of business.
Apart from knowing their own business, knowledge about their respective VCs is also a must. to do. Says Rajesh Jog, co-founder and CEO, vJive, which recently got a Rs 20 crore VC investment, “Before actually approaching a VC, one should be thorough about the focus areas and investment portfolios of the chosen VC fund.” When deciding on a VC it makes sense in not putting all the eggs in one basket, in other words, pitch to as many VCs as possible. In addition, it helps to approach a VC who already has the experience of investing in similar fields.
External factors and cliches aside, it is what’s inside that counts. Says Srikanth Iyer, CEO and co-founder, Edurite Technologies, an educational content producer, “Unless and until you truly believe and have a passion for what you do, no one is going to buy into it (your idea). And even if they do buy in, then it’s not going to be on the scale that you would like it to be.”
Besides knowing the business aspect for a successful pitch, entrepreneurs who have ‘been there, done that’ say that the personality and presentation skills also dictate the outcome. They all agree that while pitching his/her ‘billion dollar idea’, the entrepreneur should exercise control on timing of words and pace of the meeting. This is his opportunity to shine. Spending too much time in introductions, small talk and dropping names detracts from the opportunity to convey the primary message. But entrepreneurs should proactively balance the time spent on less-relevant topics with others that are essential in communicating their full agenda. A VC’s mind is likely to wander, and it is the entrepreneur’s job to try and refocus the conversation when it drifts.
While these are all the must dos for any entrepreneur, there are certain things that all of them should avoid at all costs. According to Tim Guleri, MD, Sierra Ventures, “You should not seem promotional or ‘over pitch’ your business idea. VCs like CEOs that have a heavy dose of realism in their thought process.” It is therefore important to present facts about the company as they stand rather than embellish them. Any attempt to pad up their own individual backgrounds or the current company situation will be either immediately recognised or discovered later during the due diligence process conducted by the VC.
“You should not try to bullshit your way through this (due diligence). You do not want to build an expectation in the other party that you cannot meet. The VC-entrepreneur relationship is built on trust. If you violate that trust at any stage it comes back to haunt you. The reality is that we all are working for one common course and that is to make the organisation a success. You have to be honest to that cause from day one,”points out Gaurav Misra, COO and cofounder, Guruji.com, a search engine for Indian content, that recently raised $7million from Sequoia India and angel investor Suvir Sujan.
Lastly after after pitching the idea to a potential investor, entrepreneurs must never forget to follow-up with the VCs. Adds Mr Iyer,“Set a deadline for the VC to get back to you for no VC will say ‘no’ to you. The catch is that they won’t say ‘yes’ to you either. They usually leave you hanging. What you need to do is set a deadline.” So what if nothing transpires by the deadline? You just have to start all over again. Remember the entrepreneur must try and control the pitching process, regardless of his dependency on the VC.
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