Pitching to Prospective Investors ... Part 2

At the end of March I posted a blog outlining some key considerations in pitching to prospective venture capital investors. This was not the usual pitch content stuff - more on demonstrating, listening and interacting with your target audience. After another couple of months of seeing and hearing pitches I'd add a few more observations:

First, be realistic about the current (mid-2009) funding environment. Frankly, if you raised money a year or so ago at, say, a $4m valuation of the business then EVEN THOUGH YOU'VE MADE GOOD PROGRESS SINCE you should prepare to accept a lower valuation today for new money. That's the reality of the market. Look at it this way - the money you took earlier just happened to be very cheap, by both historical startup standards and by those of today. Today is hard - but more normal than you want to think!

Second, as a corollary to the first point, take only the money you really need to get to complete the next key business milestones for a further round later. Don't go in and say you need $5m if - with diligent focus and execution - you can deliver major progress in 12 to 18 months with $2m. Not only will you not get $5m but you'll look naive - and you'll have a better shot at raising additional money later at a hopefully higher valuation.

Third - demo time again. Do it, but for crying out loud, make sure it works ... no fumbling, no passwords, no glitches. If you have set up to do, arrive early, set up and test it before the investor steps into the room.

Fourth, don't bring a whole team unless each person has a key role in the pitch or reason to be there. In a few pitches recently there have been 5 or 6 folks from the startup - and only one does any talking. What's the point? To show you have a bunch of deaf mutes on the team? On the other hand, don't do a pitch where you're constantly tag teaming on every single slide. The CEO should pitch - anyone else chimes in only with a few carefully orchestrated points or slides (eg: the CFO presents the financial slides). 

Fifth, management is a key factor - even more so today (and as I say above the whole team does not have to be present in the pitch - the investor will get to meet them later). Do you have a team who can pull it off? If the investor asks about your background, have the relevant info ready to spout. Relevant meaning as in how you're qualified to be entrusted with this money and proven capable of pulling it off. If you can't remember the basics of why you're the guy, then why would you get money?