good insight from our friends at the WSJ on pitching VC's

We love this newly created WSJ blog on VC. This particulary posting is a very straight up look at how VC's view startups and their presenatations. Its basic info but a good reminder...


An inside look from VentureWire at high-tech start-ups and their investors.
Venture Capital Dispatch Feed
April 9, 2009, 02:55 PM EST

How To Avoid Making A Bad Pitch --> -->


By Ty McMahan
All venture capitalists have probably experienced a bad pitch from an entrepreneur. But a couple years ago, the team at Canaan Partners heard a real sleeper.

No, we mean, a real sleeper.

The chief executive and vice president of sales for a start-up company visited Canaan’s Menlo Park, Calif., office. Just as the CEO was hitting his stride, really driving home the reason Canaan should invest in his company, a deep, nasally sound vibrated across the conference table.
The VP of sales was taking a snooze.

“The CEO kept blazing through his pitch, acting like it wasn’t happening,” Canaan’s director of marketing, Gina Vakili, said. “If there’s an elephant in the room, we should all acknowledge it.”
It probably goes without saying, the company failed to attract funding from Canaan. Falling asleep in the middle of a pitch is a rare and extreme example of what not do when speaking to venture capitalists, but there are plenty of common mistakes that can be avoided.

To help entrepreneurs be prepared when they present to the firm, Canaan created the Entrepreneur Pitch Workbook, essentially a “Dummies” guide to pitching venture capitalists. (See below for a shorter, slideshow version of this guide.)

Assembled in a slick, colorful 27-page spiral-ring book, the guide outlines the perfect pitch. It covers everything from the typical time allowed for an introductory meeting, the ideal number of slides in a presentation and what the entrepreneur should wear to the meeting.

“The pitch book is written for entrepreneurs who don’t know our firm,” Vakili said. “We need to get to know each other and determine if we can work together because it’s a long-term relationship.”

Canaan’s advice for that first meeting:

1. Let us get acquainted with you and your team. We want to work with smart, honest people. This is a long-term relationship and it needs to be good fit.

2. Help us understand the opportunity. Unless you’re a niche, we probably already know the sector. Don’t spend too much time on that, spend time on the solution.

3. Don’t come in and negotiate. Entrepreneurs who come in and say “before we get started, I’d like you to know that we have multiple term sheets on the table” make us wonder, “then why are we meeting? Why are you here having a first meeting if you’re at the term sheet stage with other firms?”

After polling the firm’s investment professionals, Vakili compiled a list of the top pitch mistakes:

1. Lack of clarity – Executives should be able to express what the company does in 30 seconds. A presentation should be 30 minutes long without interruptions.

2. Arrogance and megalomania – Don’t bring a team to a presentation and not permit them to speak. “We invest in people and teams. If you brought your team, let them speak, show them off.”

3. Avoiding questions – Don’t dance around questions, especially if they’re asked multiple times in different ways. Be thoughtful and willing to explain your concerns with the business.

4. No competition – Don’t insist you have no competition. “We have a unique IP that gives us a multi-year lead” is never true. If someone wants to chase you, they can be right on your heels.

5. Not understanding the market - Market-sizing should be top-down and bottoms up. Saying, “We just need 0.1% of the population of China to be a success” ignores the importance of identifying and describing the target customer.

6. Not knowing the numbers – Be able to explain how your company plans to drive 500% revenue growth in its second year. But don’t suggest a valuation.

“I thought maybe [the pitch book] is just for new people,” Vakili said. “But, I’ve had successful entrepreneurs say how helpful it is. We’ve received great feedback.”

The book has been particularly helpful to entrepreneurs pitching partners in the firm’s offices in India and Israel. “That community is very new [to venture capital] and they’re looking for guidance and thought leadership,” Vakili said.

To better view the slideshow below, click the “full screen” icon on the bottom right of the box below or click the link which takes you to slideshare.net.
Canaan Entrepreneur Pitchbook