How to Pitch to a Venture Capitalist: Part 1

Key Elements of a Successful Investor Pitch

The average venture capitalist sees thousands of pitches each year.

When done right, a VC pitch will not only grab an investor’s attention but spur them to throw money at you on the spot.

But what makes it done right?

According to David Rose, who has raised tens of millions of dollars from VCs and overseen the investment of tens of millions of dollars into companies, it begins by determining the single most important thing a VC is looking for when an entrepreneur comes to pitch their business.

While there are many factors to consider, such as business models, financials, markets, the most important thing is you. The entrepreneur, the person.

Thus, “the entire purpose of a VC pitch is to convince them that you are the entrepreneur in whom they are going to invest their money and make a lot of money in return,” Rose says.

So, how do you do this?

Time is Money

Pitches have to be efficient and effective. Short and sweet. And sharp.

“Most angel pitches are about 15 minutes, most VC pitches should be less than half an hour,” Rose says.

“People’s attention span after 18 minutes begins to drop off, tests have shown. So in that 18 minutes, or 10 minutes, or five minutes, you have to convey a whole bunch of different characteristics.”

Let’s take a look at what these characteristics are, in order of importance.

Integrity

This is the number one thing your pitch should convey. If an investor doesn’t trust you, it doesn’t matter how great your idea is or how awesome your company’s financials are.

Investors would much rather invest in somebody who they know is a straight shooter, where there is no doubt of what their intentions are and who they’re looking out for.

“The most important thing is integrity,” Rose says.

And the second most important thing after integrity?

Starting a New World

After integrity, passion is the most important thing to convey to an investor. Without it, entrepreneurs will have a hard time getting investors to buy in to their idea.

According to Rose, “entrepreneurs by definition are people who are leaving something else, starting a new world over here, creating and putting their lifeblood” into their venture.

If you aren’t passionate about your company or idea, why should anyone else be?

“So, integrity and passion: the single most important things out there,” Rose says.

Why VCs Love to Fund Serial Entrepreneurs

The next most important factor is experience. You’ve got to be able to tell investors that you know how to start an enterprise and create value, that you’ve taken something from beginning to end.

Even if you didn’t do it right the first time, investors value the fact that “you’ve learned the lessons, which are going to stand you in very good stead the next time.”

Rose says that your experience doesn’t necessarily have to be in business: “It can be in an organization at school, it can be a not-for-profit. But [investors] want experience in creating an organization.”

Domain Expertise

“I don’t want somebody who’s saying, ‘Hey, I’ve got a great idea in a business I know nothing about. I don’t know who the players are. I don’t know what the market is like,’’” Rose says.

You have to know your market and your area. Demonstrating your knowledge — specific knowledge that Rose calls “domain expertise” — is vital in securing an investment.

The Skills and Characteristics You Need to Succeed

Leadership: Obviously, an investor wants to know that you have the skills it takes to get a company going. Because very few people have all the skills required — marketing, technical skills, sales, management — it’s important to demonstrate that you can build the right team and lead them to success. Good leadership means having charisma and a management style that inspires people to follow you.

Commitment:Investors want to know that you are committed to the project until the very end. “I want you to say, or I want you to convey, that you are going to die if you have to, with your very last breath, with your fingernails scratching as they drag you out,” Rose says. “You’re going to keep my money alive and you’re going to make more money out of it. So I don’t want somebody who’s going to cut and run at the first opportunity.”

Vision & Realism: Investors don’t want another “me too” product. They want someone who has a vision that can change the world while being realistic. “I need to know that you know that while changing the world is great, it doesn’t always happen,” Rose says. “Before you get to change the world, bad things are going to take place. And you’ve got to be able to deal with that. And you have to have rational projections and stuff.”

Coachability: Finally, Rose says that investors want to know that you have the ability to listen. You pitch to them not just for their money, but also for their experience and guidance.” They’d like to know that you want to hear that experience.”

Putting Together the Whole Package

So, how does one convey these things in a short amount of time?

Check our blog next week for part 2 of this series, or get instant updates by following us on social media: LinkedIn / Google+ / Twitter / Facebook