Thursday, September 21, 2006

3 Additional Investor Preso Tips

Guy Kawasaki's 10/20/30 rule of investor power point presentations is a great guide on how to pitch your startup to a venture capitalist. If you are preparing to pitch and investor, Mr. Kawasaki's post is a must read and rather than rewriting his article I'll just add three quick tips that I learned from my experiences with Cryptine Networks.

1) Never send your power point slides in advance to anyone

If you follow the 10/20/30 rule, your slides don't convey the entirety your key points without explanation. Sending your slides in advance allows your audience to build assumptions without your guidance. This bit me a couple of times at Cryptine Networks in two different ways. First a VC asked me for the slides, in addition to my executive summary, in advance of our introductory meeting. I was happy to send my slides to him, but it really wound up disrupting the flow of the meeting. The problem was that the VC felt he understood my pitch from the get go and asked me to skip several slides. This is kind of a catch 22 situation because if you don't skip the slide(s) you risk losing the VC's attention while you bore him/her with information they think they already know and if you do skip them you risk the VC missing key points. I skipped the slides but it was clear the VC hadn't really understood the points I was trying to make and that hurt me for the rest of the presentation.

The second case where I really lost a great opportunity was when a VC asked me to send my investor preso to one of his experts as initial due-diligence after my second successful meeting with him. After his expert had a negative reaction, I was able to convince the VC to share his feedback with me anonymously. To my dismay the expert was skeptical over issues that I always address in the spoken part of my presentation but not directly in text of the the slides. In fact, I agreed exactly with what the expert was saying and felt that I had legitimate answers to his questions but unfortunately there was no way for me to discuss the issues with him directly. If I had pushed for a webinar instead of just sending my slides I just might have raised my seed round from one of Sand Hill Roads most famous VCs. That mistake really hurt.

The point in both cases is that your investor presentation is not merely the slides. Its what you say, how you emphasize it and the dialogue that ensues with your audience. While the slides themselves are important, they are not sufficient alone and sending them in advance has no upside. If an investor asks you to send your pitch slides in advance, a perfectly legitimate response is "I use a sparse presentation style so my slides are meaningless without my explanation and I'd prefer to wait until we meet to share them." Executive summaries are much more appropriate to share in advance. But that said, if an investor will only meet you if you send the slides in advance, by all means take the meeting.

(I think Mr. Kawasaki may have addressed this issue in the Art of the Start, but I can't find my copy for confirmation and my experience suggests that the point is worth repeating.)

2) Make the most of your meetings

In the first example I mentioned above where sending my slides to the VC in advance derailed the meeting, I was still able to get valuable introduction to a prospective CEO for Cryptine Networks from the VC even though he didn't want to invest. I knew that as a group of first-time entrepreneurs, management team (and myself as CEO) was going to be viewed as a weakness. Thus, when I explained the management team slide I got in the habit of asking the VCs if they knew of any potentially good CEOs for the company and I was surprise how often I got favorable responses. It is definitely possible to use this strategy for almost any weakness. For example, one could say: "Here is the business model that we are considering, but I'm curious to know how you think we can maximize our ability monetize traffic?" By addressing potential weaknesses as open questions you can also help establish key milestones with the VC even if s/he isn't ready to invest. After I established key milestones I sent follow up emails every time I knocked one of them down, which allowed me to turn mediocre initial meetings into positive second meetings several months later. If you have a bad meeting with an investor, at a minimum you can benefit greatly from simply attempting to understand why it all went wrong, but I believe that much more opportunity is always on the table.

3) Wednesday at 10am

VCs are fickle because they see a lot of bad pitches and it is really easy to lose their attention. The best way to keep a VC's attention is to have a great pitch. However, there is no need to stack the odds against yourself by scheduling a meeting for 4:30pm on Friday afternoon. Everyone is starting to think about the weekend late on Friday afternoon and if your pitch falters the VC is going to be that much more anxious to get of the meeting early. 11am and 1pm are also bad times because venture capital is a relationship business and going out to lunch is common. 9am isn't great because the VC maybe just getting into the office and therefore be 20 minutes late to the meeting instead of just the mandatory 10. Mondays are bad because most VCs have staff meetings and many people are grumpy and/or hung over from the weekend anyway. Tuesday is much better than Thursday, but long weekend trips can effect both days. If the VC is running to catch an afternoon flight you've got a short leash on Thursday morning. If the VC stayed in Tahoe for an extra day than your Tuesday is his/her Monday. But everyone is in the office on Wednesday. Thus, Wednesday at 10am, 2pm and 3pm are the time slots most likely to optimize your VC's attention span. Tuesday at 10am, 2pm and 3pm is an acceptable substitute followed by Thursday at 10am, 2pm and 3pm. To keep this tip in perspective, if an investor can only schedule a meeting at 4:30pm on Friday, by all means take it. However, if you do have flexibility shoot for 10am, 2pm or 3pm on Wednesday.


At September 23, 2006 9:27 AM, Anonymous Ari Newman said...

Andrew - great tips here. I coach all of my clients who are in the fundraising process about these 3 things. Thanks for sharing your experience! Another element to look at is who you are pitching to. Sometimes you may be able to get VC meetings, but you might find you are pitching to a partner who's focused on other market segments, and there is someone else in the firm that would be a better audience. VCs are usually pretty good about managing this, but doing some due-dilligence of your own on who you are pitching to is a smart move.


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