The Best VC Pitch: Show How They’ll Make Money

Want to knock ’em dead at your next VC pitch? Don’t talk so much about your product.

Instead, talk about how venture capitalists can make a lot of money. So says Bruce Schechter, an investor with Band of Angels who led a session at Silicon Valley Code Camp called The Art of Raising Capital.

Here’s some of the advice Schechter offered:

  • Yes, your product may be cool, but that’s necessary. The real challenge is to demonstrate how you’re going to get your first to your 1,000th customer and beyond.
  • Angel investors are really eager to be hands-on. If you don’t have all the answers regarding your go-to-market strategy, they’ll help out.
  • High credibility of the founders is often the reason they invest. Show that you have a background that led you to do this project.
  • Your goal is to take as little investment money as possible. Each investment round requires you to give away more of your company. With software, you don’t get funded by angels unless you’ve got a full product in the market with customers.
  • Angels are investing their own money. VCs are investing someone else’s money. Although not required, angels would like to see you launch from their investment without having to go to another investment round.
  • You want your valuation to be as high as possible, and you want to control your company. You always want more than 50 percent of the shares.
  • For an angel round of $400,000, it’s common to take 30 percent. Nothing’s proven at the early stages so it’s a complete wild card.
  • “Investors don’t fund products, they fund businesses,” Schechter said.
  • “People don’t buy what they don’t understand,” Schechter said. Make sure your investors truly understand what your product is.
  • Executive summary must be only one page. Include the following: company overview, market opportunity, competition, business model, “go to market” strategy, acquisition, progress so far, milestones, and team.
  • Don’t ever say you don’t have any competition. Focus more on your advantages than your competitors’ strengths.
  • Focus on the near term. What can you accomplish in six to 12 months?
  • Test, Refine, Test, Refine, Test, Refine. Try it out on your team (they need to be able to repeat it), your mother, friends, advisers, and investors (not ones who will really invest).

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