Before I begin, let me say that approaching a Venture Capitalist with only an idea and nothing to show for it (no team, no resources, nothing executed) and expecting funding is a recipe for disaster. There are some Angel Investors who may be willing to listen politely to you, but do not expect to receive any real money from anyone until you have put in some real effort.
Instead, work on implementing your plan with the resources you do have. Take stock of your own abilities, the free resources available on the Internet, your network and their abilities, and then start working on an execution plan.
Once you have an actual product, with a team in place, and you are showing traction, you can move toward finding investors.
The most successful pitches have a rough outline that goes something like this:
- Get me excited about your thing
- Take it away from me
- Tell me what I need to do to get it
- Tell me how I’m going to make money on it
When working with teams on their pitches, hands down, the hardest part is getting them to a solid #1.
It isn’t about story, it’s about getting the person you are talking to interested enough to keep listening.
In order to be successful with the first stage, it’s about getting the person you are talking to interested enough to keep listening. To do that, you have to research the person you are pitching to.
What kinds of things do they care about? What about your idea would be interesting to them? Realistically, there will be more than one person at the table, so try to find out as much as you can about all of them, and try to connect your idea to them. This is a sales pitch, and you need to do research on the people just like any excellent salesman would do on a company.
(Lest you think this is a lot of work, assume you will only get around 1 in person pitch for every 20 VCs you contact.)
What you should never, ever do, is create a single pitch and use that everywhere. If you are doing that and wondering why you have no funding, I’d start there.
If you are having trouble getting into the pitch room in the first place, though (1 in 20 isn’t great odds), take a look at your 7 second and your 30 second pitches. What makes you interesting enough in the first 7 seconds to make someone want to find out more about you? If you don’t know, you have some work to do. Think of this as defining your personal “call to action.”
One more tip: if you are not someone who likes being in the spotlight, you are likely the wrong person on your team for the pitch room. You can be coached, but the most successful pitches are performed by people who exude confidence and energy. If that’s not you, get a cofounder who can do it.
An investment deal is like a marriage – they actually last longer than most marriages – so investors need to want to do business with you, and the first part gives them incentive to move on.
In the third section, you need to be solid about how you can deliver what you are asking. I’ve seen teams with a rock solid #1 unravel here because they didn’t ask for enough money, or they didn’t have the right team in place, or their financial assumptions were wrong, or the worst sin of all – they arrogantly claimed they have no competition.
If you nail the four steps though, the only other thing you need to really watch out for is attempting to overcome objections that no one has actually raised.
I see teams all the time putting slides into their deck that volunteer information that isn’t necessary, things that would come up in the due diligence round (if at all) but not in a pitch room where every little thing counts against you.
Stick to the four steps, and answer questions that come up, but don’t add anything extra that isn’t needed.