Funding: Eric E. Mott

 

Perfecting Your Pitch

 

The scenario is all too familiar: A conference room filled with prospective investors. A two or three-day agenda of hopeful executives, each preparing to make that all-important 10 minute pitch. While there's plenty of money to be invested in technology ventures, the companies who succeed in getting investment continue to be a small percentage of the ventures who are seeking new funds.

For executives preparing to make a VC pitch, what does it take to make that critical difference? Opinions vary, but as the business development lead for one of the region's active investment companies, here are a few of my thoughts:

 

1. Play up your experience. Even if you're not the CEO, if you're the person speaking, you're the most important person in your company as far as your initial VC pitch is concerned. The investors are listening to you. So don't forget to talk about the business accomplishments that demonstrate the value you bring.

 

2. A track record is important. For bankers and investors, your intuition and passion are critically important. But even more important — especially in the current economy — is your track record. Even in a challenging market, if an executive can demonstrate a successful track record, there are investors willing to make unsecured loans based solely on an entrepreneur's intuition for the market and his or her stated reasons why the business will be a success.

 

3. Answer the critical questions. So many entrepreneurs fall prey to the temptation to cram their presentations with product details. But they forget to answer the VC's basic questions: What's the opportunity? How, specifically, will you reach profitability? As an investor, how can I get some of these profits? Far too many presentations fill the entire time with product information and miss the opportunity to cover these fundamental few facts.

 

4. Make yourself "familiar" to the VC. In your verbal presentation, take the chance to position yourself verbally into the kind of category VCs have invested in before. Think, "better/faster/cheaper." Show the investors proof that you have a solution your customer can't live without, and find a way to "prove" your worth to the investor by putting a specific dollar amount on the pain you solve or the savings you help your customers to obtain. Remember that "unique" isn't necessarily an advantage where investors are concerned. Through their eyes, the more unique a market opportunity, the smaller it might be.

 

5. Justify your funds. The more granular you can be about what you intend to do with the funds you're requesting, the more willing the VCs will be to invest. Your attention to details helps to illustrate that you're a good manager. Let the investors know precisely how much money you need to meet each key milestone. Investors love to know specifically, for example, how you plan to create a company that can grow 200 percent in two years.

 

6. Be complete. You may have only 10 to 20 minutes to make a typical VC presentation. But in that time period, you will want to cover as much as possible of the following core elements:

 

Benefit statement of what you do

Problem and solution

Market size and opportunity

You and the team

Revenue model and financial projections

Competition

Milestones to date (partnerships, customers, revenue, product development, investment)

Milestones for the future

Use of funds

Exit strategy

Close and call to action

 

Granted, this is a lot of ground to cover in a 10 to 20 minute discussion. Practice is critical, and it may even be beneficial to videotape your presentation, or to invest in some preparatory sessions with a specialized coach. In the end, it's surprising how many investments are won or lost on the intuitive "read" the investors have on the presenter. When the big day arrives, you'll be glad you prepared.

 

Eric E. Mott is director of operations for Stellar Technologies, the largest private equity investment firm in Idaho (www.stellartllc.com). Stellar's portfolio companies include BioReaction, EmergeCore Networks, iTerra Communications and Wavetronix. He has a multidisciplinary background in biochemistry, biology, and general chemical sciences. He holds a Bachelor's Degree in Chemistry from the University of Utah and an MBA, emphasizing finance, from the University of Colorado.