10 things to know before you pitch a VC for Money
David Rose is a serial entrepreneur and serial investor, a leader in the New York City angel network, and the founder of AngelSoft, the de facto standard software system for angel groups all across the country. In this 18-minute talk at TED in 2008 David lays down the law for how to pitch to investors.
David is not a shy person, and he talks real fast (this is only a little faster than his normal speaking voice). But he knows what he’s talking about. This is a high-powered version of the things I hear investors say all the time. I agree with (almost) everything he says.
The only problem is that in 18 minutes he can outline only the high principles, the big-concept do’s and don’t’s. He says very little about the nuts and bolts of how to build a presentation that would meet his high standards. It all sounds good but, you ask, “now what do I do?” Well, that’s what BizClarity is here for. In my coaching, workshops, and writings, I turn investor imperatives, like those David lists here, into practical advice.
But I’m no match for his authority and intensity. Take a look:
(If you have trouble viewing this here, you can go directly to the YouTube page by clicking here.)
It happens alot. I’m working with a new client, seeing their presentation for the first time. And it’s terrible. I see one ridiculously crammed slide after another, small fonts, tiny images. When I point out the problem and launch into my spiel about the advantages of putting less on each slide, the entrepreneur exclaims, “But how else can I get everything on 10 slides! You know, the ten-slide rule!”
The ten-slide rule strikes again!
The ten-slide rule causes more agony, pain, and awful presentations then almost any other single idea. To be fair, this little simple-minded rule is a part of a bigger wrong idea: that the number of slides has anything to do with the quality or cogency of a presentation.
The ten-slide rule is an old idea, originating in the ’80’s and more recently perpetuated by Guy Kawasaki in his best-selling book for entrepreneurs, The Art of the Start (which I recommend, mostly). I don’t disagree with Guy’s motivation–he’s fed up with long, cluttered, boring presentations. He laid down the law to coax CEO’s of start-up companies to cut their presentations down to size.
The problem is, any rule that limits the number of slides assumes that all slides are equally dense with content. It made sense ten years ago when all presentations were text slides in the title/bullet/sub-bullet format. When investors count slides what they’re really saying is: “Don’t show us more than ten slides dense with impossible to read, confusing crap so we can cut your presentation short and get on with the meeting.”
Here’s the truth: the number of slides in a presentation is irrelevant! It doesn’t matter one dit if you have 10, 20, 50 or 100 slides in your presentation. What does matter is how well the slides support your narrative. And the pace of your ideas. How long you speak and the level of detail.
Here’s something I hadn’t heard before: four handy metaphors for answering the questions, “why go to the trouble of getting a patent?” I found it in a compact and loaded two-page PDF offered by Morgan Lewis on their Entrepreneur Resources website called “Sieve or Safe–How Solid is Your IP?”. You’ll see it here. (There’s a lot packed into this PDF; I’ll be expanding on some of the more interesting ideas in future posts.) The full Morgan Lewis resource site is linked in the right column of this blog page, under Law Links.
From the section on patents:
“WHY SEEK A PATENT?
• “Sword”
− Sue anyone with same or equivalent invention
• “Shield”
− Helps to defend against a patent infringement suit
• “Trading Chip”
− Trade technology rights with other patent owners
• “Walk the Walk”
− Additional credibility for investors”
I’ve worked with a lot of tech companies who own patents (or are investing a lot of time and money to get some). But most are focused on only the first reason–the Sword. It’s true that being able to protect your technology from being copied and stolen is important. The “Shield” idea points up the other side of patent value–to prevent other companies from going after you to stop what you’re doing. “Trading chip” is even more exotic, but I have seen it happen, especially with complex technologies that have many dimensions. You might compare it to “seizing higher ground,” to use another battle analogy.
For laughs only. I heard about this from Andy Sernovitz, the only guy who says “this has got to be the worst idea I’ve ever heard.”
If you don’t know who Ali G is, this bit is a total put on. He’s an actor–the guy who did the movie Borat a couple years ago, and is currently posing as Bruno. The other people in the video, including Donald Trump, don’t know it’s a put on.
For a serious discussion of lessons embedded in Ali G’s charade, check out the O’Reilley blog post, Is Your Prodcut an Ice-Cream Glove or a Snuggie. If you’re in the mood for more reading, follow the links in that post for “lean startups” and “customer development” and anything by Stanford professor Steve Blank–new ideas coming from entrepreneur thought leaders. I’ll blog about these ideas myself at some point.