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How to Get Venture Capital: What NOT to Do

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Many top venture capitalists (VCs) have blogs. And because there's no way I can speak with all the VCs on a regular basis, I read many of their posts so I can understand their latest thinking and decision-making.    

These VC blog posts vary quite a bit. Sometimes they talk about this cool new company they funded. Other times they talk about the startup industry in general. And on the rare occasion, they'll give some blunt feedback to the entrepreneurs that pitch them day in and day out.     

These latter blog posts get me the most excited. Since they tend to express exactly what the VCs are thinking when speaking with you, the entrepreneur.     

Importantly, you need to understand the life of a VC. Every single day they are generally sitting through four or so face-to-face presentations from entrepreneurs, and maybe a couple more on the phone.

So, every year, VCs are probably sitting through 1,000 entrepreneur presentations. That's a lot. And the process inevitably makes them a bit cynical. Why? Because the vast majority of the claims made by the entrepreneurs presenting to them never come true.

So, that being said, I recently read an interesting blog post by Josh Linkner. Josh is the CEO and Managing Partner of Detroit Venture Partners.

Josh's post, entitled, "Five Disaster Moves to Botch Your Pitch" discusses 5 key blunders that he sees entrepreneurs making everyday, both when pitching him and pitching to partners and customers.

Here are Josh's 5 "disaster moves" along with my commentary.

1) THE RUN-ON SENTENCE: One of my pet peeves is listening to someone drone on for a 45-minute monologue.  In your big moment, your instinct is to communicate everything you know, the entire history of your idea, and endless amusing anecdotes.  Avoid this urge!  Your pitch will be 100 times more powerful if you can make it concise.  Make every word count.

Dave commentary: Your PowerPoint presentation should include 12-15 slides. Each slide should only have a few lines of text on it (30 words absolute max per slide). Having and practicing the slides will force you to avoid the "run-on sentence" and rather deliver a succinct, hard-hitting presentation.

 2) THE FACT LEAP: Anyone who is being pitched has turned on their highly-developed BS-detector to full tilt.  We are questioning everything you say and trying to poke holes in your story.  So the minute you exaggerate a stat, make an outrageous claim, or state a fact that can be challenged, your credibility crumbles.
 
Dave commentary: I mention this a lot when discussing business plan writing. Avoid superlatives (e.g., we are the best, the market is absolutely exploding, etc.) unless you can immediately back them up with facts.

3) THE OVERSELL: If you make a strong point once, it resonates.  If you feel the need to make the same point several times you end up diluting the power of the message.  If you keep pushing a point, you transform before our eyes from a passionate world-changer to a used-car-salesperson or infomercial pitchman.  If what you are pitching it that special, you don't need to oversell it.
 
Dave commentary: This goes back to my first point. Having a concise PowerPoint presentation and practicing enables you to avoid this pitfall.

4) THE S.A.T.: When responding to a question, just answer it directly.  If you tell a four-minute story that includes 73 data points, the listener feels like they are taking an S.A.T. exam in which they need to sift through all the irrelevant stuff in order to get the answer.  This does not help you shine or get your message heard.
 
Dave commentary: In practicing your presentation, identify the questions that you might be asked, and answer them. I like to create back-up slides that I show when certain questions are asked; they show you are prepared and ensure you answer them succinctly.

5) THE GREAT GATSBY: Grandiose braggers may entertain at cocktail parties, but they rarely win the battle of the pitch.  Keep it authentic and real.  Your startup with 11 beta customers isn't a billion-dollar company just yet.  Think big, but stay humble.  After hearing a pitch where the daring hero outperforms Groupon and Apple in their second year with trillions of revenue and six billion customers, I'm ready for a shower instead of a closing dinner.
 
Dave commentary: This relates back to my second point about using superlatives. Yes, you want to get the investor excited, but you need to be careful bout appearing too cocky or grandiose.

Thanks to VC Josh Linkner for his list of the 5 "disaster moves." You are now informed; so avoid them.

Suggested Resource: In Venture Capital Pitch Formula, you'll learn exactly how to find and contact venture capitalists, exactly what information to include in your presentation, and how to secure your financing. This video explains more.


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