Accidental VC is a series of short posts written by me, Jay Acunzo. Though I never planned it, I somehow wound up working in VC as NextView’s VP of platform. As an operator, not an investor, I’m amazed at how many casual, throwaway comments that happen inside a VC’s office would be genuinely useful to entrepreneurs building their businesses. So this series is my attempt to share that knowledge beyond our walls … one overheard lesson at a time.

In any field, there are certain Paths of Truth and Justice (POTAJ for short) that people like to defend. For instance, I’m fairly active in the content marketing industry, where the POTAJ often centers on quality content trumping spammy marketing tactics.

In the startup world, one POTAJ that’s easy and worthwhile to defend is the need to focus on building great products and innovative technology instead of trying to over-sell lousy solutions. This is doing right by both your company and your customers.

I believe this to be 100% true, and I know every partner at NextView feels the same way.

However …

An unfortunate side effect of this particular POTAJ is that, in many startup pitches, entrepreneurs focus so much on product or tech that they leave out one crucial, deal-making-or-breaking detail: distribution.

As NextView’s David Beisel likes to say, “We live in a demand-constrained world. The question to answer with investors is how you’ll address that issue.”

Founders must address distribution in their pitches both overtly and succinctly. One or two summary slides placed early in the pitch — with additional details in the appendix to pull up as needed — is usually the right approach.

This is important partly because of the very nature of pitching VCs. Their business models are, in many cases, focused on outlier exits within the portfolio. Additionally, if you’re talking to VCs, it’s implied that you’re thinking big and thinking about a large acquisition or IPO, as well as generating hundreds of millions in revenue.

But regardless of your fundraising process, another big reason to address distribution in your deck is to actually achieve distribution. You tend to hit goals you articulate, and everyone — from investors to co-founders to executives to new hires — want to know you’re setting clear (if ambitious) goals and thinking about this challenge. Some of it may work, some of it may not, but thinking about it and conveying those thoughts are both crucial.

Regardless of how much you adhere to the POTAJ mentioned above, building a great product or tech won’t be enough by itself. It’s an insufficient approach to gaining customer or user traction, which is the more important thing, but it’s also insufficient in most VC pitches.

david beisel nextview ventures distribution

To offer a few examples, here are a few ways entrepreneurs have addressed distribution with NextView. (Note that many were included in our pitch deck templates for raising seed capital. You can find those here.)

  1. Early, premium partnerships or customers you’ve already converted
  2. Built-in product virality or network effects (in earnest — not simply share buttons or refer-a-friend features slapped onto a product that isn’t inherently viral)
  3. Personal reach of the founding team (if they’re established leaders in their space)
  4. Personal connections to industry or national press
  5. A clear and/or clever marketing plan, either based on actual traction to date or in theory
  6. (There are many more I’m sure I’m missing — leave a comment if you can think of any.)

So, as you build your startup, be sure to follow the Path of Truth and Justice that upholds and defends the need for truly great products. But don’t overlook the need to think about distribution early and often. Because while “if you build it, they will come” makes for a great movie quote, it’s a really lousy way to grow your business…

 

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