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Pitching a VC: Focus on these FOUR things January 25, 2007

Posted by John Vrionis in Consumer internet, Digital Media, Ecommerce, Infrastructure, Security, startups, Uncategorized, Venture Capital, web 2.0, WiMax.

The best part of being a ‘VC’ is meeting passionate entrepreneurs and listening to pitches about how their idea is going to change the world. Since I joined Lightspeed, I’ve found myself meeting amazing people and debating revolutionary ideas on a daily basis.

I’ve had the opportunity to listen to hundreds of pitches and as a former entrepreneur I did my share of pitching. I firmly believe that all great plans highlight the four key areas that are at the heart of every good VCs decision process.

1. Demonstrate you are addressing a Billion dollar plus market. This is the most important thing. If you can’t convince the VC you’re solving a problem in a huge market, you’re dead in the water. Big markets make big companies. Big markets can also hide mistakes. Do the bottoms up analysis. Talk to your assumptions.

2. What is your unfair advantage? Describe this in 30 words or less. Repeat it as many times as you can in the presentation.

3. Does the team have a visionary? VC’s are NOT visionaries. The team has to have someone on it that sees where the opportunity is going to be and can pick the right products to take advantage of that market.

4. What are the capital requirements for the major milestones? VCs want to back capital efficient businesses. They want to understand what the major risks are in the busines, when they can be mitigated and how much money it takes to do it. A simple timeline with milestones compared to cash needs is one of the best slides an entrepreneur can provide.

My final comment. Have fun. Remember — your job is to inspire and compel!

As always, all comments are welcome. Or send email direct to jvrionis@lightspeedvp.com


1. Pablo Brenner - January 25, 2007

Completely agree, I would add something very simple: Show passion

My (short) experience as a VC has shown me that VCs can help the entrepreneur on developing managment skills and/or teams, opening doors through contacts, and lots of other good things, but a VC will never, never be able to inject passion to the entrepreneur, and without passion startups dont fly.

So, my first question after an entrepreneur visits us is:is this guy apassionated about what he is doing? If he is not we will pass the opportunity even if the market is huge, the team is great, etc

2. David Armstrong - January 25, 2007

Kind of a weird little test….is the entrepreneur a marathon runner. Anyone that is…knows that the discipline and priority to train and the mental punishment when you hit the wall is what you need to succeed in a startup. If they’ve done this….there is something special. Especially if they’ve done it more than once. Read what Lance Armstrong had to say about his first marathon. Is it foolproof, no…but it means you can count on them no matter how hard it gets.

3. andre taliercio - January 28, 2007

Agreed. I would add: Demonstrate to your potential investor how he will be a real partner in the business. They can bring invaluable insight to an entrepreneur and his market. A start with a conflictual relationship with an investor will only get worse when it is time to vote for critical decisions where shareholders are better off voting in concert. .

4. andre taliercio - January 28, 2007

One more thing: Sometimes #1 and #3 are incompatible when you are on a new market. You can share your vision, but can’t demonstrate the size of the market, as sometimes it is hard to define the correct business model and customers acceptance at the beginning.

5. Clay Cook - January 29, 2007

Agree. We have raised a fair amount of angel funding and all of your points are relevant to angel funding also.

Like Pablo comments above – show passion could be point 5 (or point 1 for that matter).

I would personally also add – show personal previous success and braking through tough times.

6. No Name - November 5, 2007

Agreed. I would add: Demonstrate to your potential investor how he will be a real partner in the business

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