Have you ever pitched an investor, or thought about what you'd say if you got the chance? Check out this post by VC Guy Kawasaki answering this question on Sun Microsystems small business blog today. If you haven't heard of Kawasaki, all you need to know is that he's a VC, a former Apple exec—and that entrepreneurs sweat him.
It's unfortunate, then, that the advice he doles out regarding what you should say to an investor is ho-hum:
"Here's what you should say: 'This is what my company does...' It's that simple."
Thanks, Captain Obvious!
While it may be spot on, does anyone else find that unsatisfying? Don't VCs hear that same, sad lead-in every day? I suppose it's what comes next that counts, but it struck me that there has to be a better way to get a VC excited than that. As Kawasaki himself points out, "What you're trying to do is get potential investors to fantasize about how your product or service will make a boatload of money." That aside, his post does offer a useful list of things you should never say to an investor. Does anyone out there who's pitched an investor have any tips, or horror stories to share? Here's our favorites from Kawasaki's list of what not to say to a VC—consider yourself warned:
1) You say: "I'm bright and ambitious." Investor thinks: "That's a relief because I usually invest in stupid and lazy people."
2) You say: "If you sign an NDA, I'll tell you my idea." Investor thinks: "You are clueless. How can you not know that venture capitalists don't sign NDAs?"
3) You say: "I'm sure you are aware of the growing need for security. Web 2.0, Open Source, whatever." Investor thinks: "If you're sure I'm aware, why are you telling me you're sure I'm aware."
4) You say: "I've always wanted to be an entrepreneur." Investor thinks: "I've always wanted to be a professional golfer. So what if you always wanted to be an entrepreneur?"
5) You say: "I love to think of new ways to solve problems." Investor thinks: "Is this a high-school science fair?"
6) You say: "I don't know much about your firm, but I thought I'd contact you anyway." Investor thinks: "You're a lazy idiot--why are you wasting my time?"
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The VC screener is a good idea. Pay someone $15 per hour and don't miss out on the next home run. The reason why they haven't figured this out yet is the very reason why they are VC's. I.e. they invest in ideas, they don't come up with them.
—mjandri
23:19, June 3rd, 2008
The problem with all of this is the posturing. From a very recent meeting with an investor what I came away thinking was the biggest problem with investors is that they believe they have the money, they are worth it. Feedback from "pitch coaches" are always "don't say this" and "don't say that."
Why?
Am I to understand that whether or not someone of supposed high business intelligence (since they hit a home run at some point) has cashed in their human element and are now judging my idea solely based on delivery? So I can't be nervous? I can't say something stupid or obvious without the investor jumping all over me thinking "A HA! I knew you were wasting my time! No merit! Get out!" Recent industry examples abound of VC's passing on great ideas. I wonder how many of these were from arrogance and self importance that shut off the VC in mid pitch without seeing through the human mistakes to the business model below.
The new VC model should have a well balanced screener who talks to the entrepreneur, someone devoid of judgment. When they realize this person is a crackpot, "thanks but no thanks" or has a great idea that fits in the firm's profile, they relay the idea to the VC who knows this screener wouldn't "waste their time" and can make decisions solely based on idea merit—not personal crap. So every entrepreneur gets their time with the screener and its probably still 1 in 500 who have a decent idea. Last I checked, missing one potential home run far outweighs employing a few extra people—but maybe that makes too much business sense and doesn't hold to the old guard. Just an idea.
—bryanh
19:34, June 3rd, 2008
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