Tips for the first VC Meeting

I had a meeting last week where an entrepreneur insisted on showing me a demo first.  He was scrambling around asking for wireless keys and looking for ethernet jacks, while I sat there and tried to engage him in conversation.  He lost my interest right then and there.  As I started to think more about it, I thought it would be helpful to share some of my thoughts on how to make the first VC pitch a better experience for all participants.

1. Be flexible: Have an agenda but listen to and know your audience.  If the VC wants to run a meeting a certain way, be flexible, and go with the flow.  I have seen many a pitch where an entrepreneur comes in with an agenda and wants to go through each powerpoint slide in excruciating detail.  These meetings typically do not last very long as I wonder what it would be like working with that person or for that person.  Deal with questions as they come up, not later.  VCs can be impatient at times, and it really bothers me when an entrepreneur says, "Let's wait until slide 15" especially when you are just on slide 3.  Meetings have a rhythm so be in sych with your audience.  Startups require entrepreneurs to be agile and adept to respond to quickly changing market needs.  If you are too engrossed with following every powerpoint slide, it makes me wonder how flexible you will be in responding to market conditions.

2. Have a well-honed elevator pitch: If you can't explain to me succinctly what your product does, what problem it solves, and how you will make money then I wonder how you will explain it to your customers.  Don't worry, I want to see your baby in action, but save the demo for later as I want to hear you articulate these points first.

3. The Slide Deck: make it short and sweet, 15-20 slides will do.  However, the best meetings happen when we never even touch the slide deck and end up in a free form conversation about the team, product, business, and market.  Many times, I have even found myself brainstorming with the entrepreneur about other revenue opportunities and go-to-market strategies - I just love those types of meetings.

4. Listen and ask questions: try to get feedback about your business and the opportunity.  The meeting is not a one-way street.  Make sure you figure out if you like me, my firm, and my style as much as I am looking for a similar fit.  Remember, it is a competitive market out there, and I need to sell my value add to you as well.  Asks lots of questions - be open to feedback but do not be afraid to respectfully disagree.  Not all of the feedback you receive will be right and many times it will be wrong, but take all the data you can so you can be better prepared for the next VC pitch.

4. The Demo: First, if you have any web-based business, I would hope that you have the wherewithal to have an alpha version running.  As we all know it is cheap to start a company, and if you have not taken the first steps to get a product/service up and running, I am going to wonder whether you have the technical know-how to make it happen or the passion and risk-seeking behavior to be an entrepreneur.  I love it when entrepreneurs have sunk some of their own money into their business or substantial amounts of time to turn their dream into reality.  This shows me a real level of commitment.  With respect to the demo, I like them live, but as Bob Rosenschein once told me, there are 20 things that can happen in a demo, 19 of which can go wrong.  So be prepared and have a cached version of your service to walk through.

5. Next steps: In any meeting, never forget to ask about the next steps.  What is the VC firm's process, when will they expect to get back to you, is there any more information that you can provide, etc...

A couple of other points to add:

Pre-meeting: Research the VC, the firm and get to know the types of investments that he/she likes to make, that the firm likes to make, and what is currently in their portfolio.  Google is a great resource, look for VC blogs, and talk to others that may have pitched the VC and the firm recently.  We need to sell to you as much as you need to sell to us.

A couple of don'ts: don't be late, don't be arrogant, and don't ask for an NDA before you start the pitch

Happy pitching!

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This post was written by who has written 358 posts on BeyondVC.

22 Responses to “Tips for the first VC Meeting”

  1. Annonymous Nov 29, 2005 at 11:06 pm #

    Good post for circa 2001. Dont bother with VCs. This is my advise for software startups.

    1. Develop a beta product which can scale
    2. Go to market with Adsense revnue model
    3. Avoid management teams – Google did very well without one.
    4. Ignore VCs at all cost.
  2. Ed Sim Nov 29, 2005 at 11:54 pm #

    It depends on what you want to accomplish and how big your opportunity is. If your goal is to flip quickly and if ultimately your service or product is a nice feature for a larger player then by all means I would not suggest VC money. Take the $20mm exit and run. If you think you can build something much larger then VC money is certainly a route you should consider.

  3. Anon Nov 30, 2005 at 12:31 am #

    How do you factor in the age of an entrepreneur? Would you respect a 21-23 year old coming in with a new beta without some huge success before (as in it is his first major start-up)?

  4. Richard Rodgers Nov 30, 2005 at 8:38 am #

    Not all VCs are like Ed. I want to present a couple differences of style.

    1. Given that the pitch is appropriately sized and scoped (15-20 slides as Ed suggests), I don’t like to interrupt an entreprenur’s pitch to have him talk about something on slide 15 if we’re only on slide 3. To me it’s more valuable to learn about him by listening to the entire pitch. How he’s crafted his pitch is a critical piece of my evaluation. I don’t want to shortcircuit that learning. As an entrepreneur, pretend you’re trying to be ready to pitch your IPO to large room of investment bankers.

    2. As to free form conversation and discussion of new markets and ideas, I save these for later. If we have an ongoing relationship, there will be plenty of time to get into that “fun” stuff. In this first meeting, I’m all ears, evaluating the entrepreneur. I want to talk as little as possible.

    I strongly agree with Ed on the demo…I don’t need it to lead the meeting, it should be at the end, after the presentation. I’m focused initially on the management team and the business model.

    I totally agree with Ed on the Alpha version for Internet businesses. It’s so cheap to do, it has to be there.

    I would be even stronger than Ed on the 15-20 slide limitation. As an entrepreneur, you MUST control your enthusiasm for the idea and scope the presentation down. 40-50 slide presentations drain the life out of a pitch meeting. Many, many entrepreneurs ignore this to their detriment.

  5. Reg Braithwaite Nov 30, 2005 at 10:42 am #

    Thanks, terrific tips. I’ve squeezed my own deck down to a title plus ten(!) slides. If that helps the listener, great.

    Also, it forced me to really, really focus on the kernal of the business idea: what does it do, who wants it, why will they pay, how will we sell it.

    Next step, as you suggest: the alpha version…

  6. Jeff Blum Nov 30, 2005 at 6:58 pm #

    FYI: I have posted an annotated link to this article on MBA Depot at:
    link to mbadepot.com

    Regards,
    Jeff

  7. Ryan J. Dec 2, 2005 at 3:12 pm #

    I understood everything in the article, and it all made sense, until I got to the last piece of advice:

    “… don’t ask for an NDA before you start the pitch”

    Why exactly is this? It seems that as an entrepreneur I would want to make sure that the VC doesn’t take my ideas and share them with their companies. In many cases, when it comes to IT startups, an NDA becomes crutial as patents aren’t really possible. Always using an NDA just seems like a good practice.

    Why wouldn’t it be right to start things with an NDA?

  8. Carol Skelly Dec 2, 2005 at 5:21 pm #

    Thanks for the ideas Ed. I think you hit the points that are really important. Any ideas on writing an executive summary. My potential investors have requested this.

  9. Anon Dec 2, 2005 at 5:47 pm #

    Ryan J:

    Any idea you bring to a VC probably won’t be new, they aren’t so much investing in the best or newest ideas, they are investing in a management team that can innovate and succeed.

  10. Don Bell Dec 3, 2005 at 9:56 am #

    I’m not sure why the NDA is such an issue. For or against that is. In the hundreds of pitches I’ve listened to, in most cases, unless there is new patented material being done, the concept/product line is probably already out there. If it is a process, there may be some questions as to it.

    Why does it bother a VC (and I know many of us don’t like or sign them (I do)) to have to deal with a NDA? If you are a legit company/VC, you aren’t going to be “stealing a concept/product/process from Peter to pay Paul” and if you are the creator of the company, you should know the VC well enough that they don’t do those things, so you shouldn’t need the NDA. If you have concerns that the VC will take your product to someone else, you are visiting the wrong VC.

    Don

  11. Ed Sim Dec 3, 2005 at 10:04 am #

    I like to spend time focusing on the business and getting to know the entrepreneur. Putting out an NDA as a barrier to discussion slows the process down. As a VC, ideas are nice and most likely there are many others that have thought of the same one. It comes down to execution. Many NDAs I have seen are structured in such a way where I could not even look or think of investing in other companies with a similar product. Once again, rather than have to negotiate the finer aspects of the NDA, I can just move on and look at the next opportunity. We are not in the business of stealing ideas but rather backing the best entrepreneurs in the best markets. We are also only as good as our reputation so if we were in the business of stealing entrepreneur’s ideas we would have no one coming to us to get funded. That being said, if I am looking at your company and talking to others I will tell you that and also let you know to tell me as little or as much as you feel comfortable. Most entrepreneurs I have met with have no problem sharing their thoughts with me as long as I am direct and honest about where I am in the process.

  12. Charlie Crystle Dec 4, 2005 at 1:45 pm #

    Fred Wilson has a pretty good post at unionsquareventures.com on business plans. But the most useful site i’ve read for a TON of things (especially operational) is ScottMaxwell.com (Ed introduced readers to Scott in this blog.

    i presented more than a few times for my last company (Chilisoft) and raised 2 rounds. The entrepreneur needs to be able to improvise and play to the audience. it helps to give the VC a few options for the presentation–off the deck, conversational, etc. But the medium shouldn’t change your goal and your ability to nail it: to convey the essence of your business, how it scales and to what value, the strength of your team (show, don’t tell), how much you want to raise, and how you’ll invest the money in your company. That’s a lot for an hour slot.

  13. Matt Dec 7, 2005 at 5:35 am #

    1. I don’t sign any legal document for my business that hasn’t been vetted by my lawyer first. Whether the hypothetical VC I’m meeting with has a similar policy or not, I expect he has due-diligence requirements of _some_ sort for legal documents. I don’t want those to get in the way of the pitch. No NDAs.

    2. If the person doing the pitch can’t sell the idea without slides, the wrong person is doing the pitch.

  14. Peter Ireland Dec 8, 2005 at 4:47 pm #

    VC’s don’t sign NDAs for good reason. It could come back to haunt them. Think of it this way, you’re a VC who makes an investment today in a company in the X space. Then some entrepreneur you talked to and turned down 4 years ago shows up and claims you and the portfolio company ripped off his idea.

  15. Mike Rundle Dec 21, 2005 at 2:39 am #

    Great post! Honestly I thought all entrepreneurs worth their salt already did the things you said, but since you had to list them, obviously some people just don’t know what’s going on ;)

    As for the NDA argument, there is absolutely no reason to ask a prospective investor to sign an NDA right off the bat. First of all, it makes them think that you don’t trust them (at the very first meeting no less!) so if they think you’re untrusting, what makes them want to trust YOU with $5MM or whatever you’re going after.

  16. Burak Dec 29, 2005 at 12:41 pm #

    Hi Ed,

    This is a late post but I was wondering, when does something you talk with a VC become a trade secret? If you have proprietary information or idea or project and you show it to a VC without any NDA or confidential agreement, does it mean it is not a trade secret? Also I read somewhere that if you do not sign such an aggreement with the other party, you cannot patent it. Am I missing something here?

  17. David Foster Dec 31, 2005 at 11:38 am #

    Ed…I linked this, with some additional discussion, at my blog.

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