When a company is pitching a VC, there is typically one partner who is the advocate for the deal and is shepherding the process. This usually involves one or multiple meetings with the broad investment team, which culminates in a final decision. Although all VC’s tend to consider similar attributes about a potential investment, we each have certain biases or pet areas that we tend to hone-in on.
When I’m shepherding a company through our process, founders sometimes ask me to point out the things that are of particular importance to the folks on our team. Part of what I like about working with my partners is that I really believe that our collective decision-making is better than our decision-making as individuals. As I reflected on the things that get each of my partners most worried or excited, I realized that they provide a pretty good blueprint for any investor pitch, especially as you prepare to pitch a group vs. having a conversation with an individual. So here are the ares that my partners tend to hone-on on, and some thoughts on how to address them.
First, my partner Melody tends to very quickly drill-down on the value proposition of a product or service to the end user as well as the incentives of other relevant parties (eg: suppliers, distribution partners, collaborators, etc). As a former product executive, she is quick to put herself in the shoes of the target customer as well as other important constituents. Really being clear and crisp about this is super important to Melody and is probably the most critical thing to quickly get across in an investor pitch.
In a similar way, my partner David was a tactical acquisition marketer prior to becoming an investor, and so he gets hyper focused on a company’s go-to-market. He tends to love founding team that have analytical, quantitative marketing DNA. If your startup has a unique edge or distribution advantage, you are typically starting off on first base with David. You should never say anything like “demand won’t be a problem” or “people will choose us because we have the best product”. I wouldn’t just spew out a laundry list of obvious digital marketing channels either. You need to find a way to show better-than average insight or some tactical advantage to growth to get David and many other investors excited.
My partner Lee is great at zooming way out and then zooming way in. He’s the one who is most likely to push us to simplify our thinking and consider the bigger picture market trends or potential of a startup. But he’s also the one who is most likely to get quite detailed and fixated on a startup’s true business model and unit economics. He doesn’t have much patience for hand-waving, and loves businesses with a superior economic model. Founders who can articulate both the big picture well and dive deep into the unit economics tend to impress him. Lee has actually been the investor at NextView who has backed the most inexperienced founders because they wowed him with the depth of their knowledge and rock-solid command of their businesses, irrespective of their limited prior experience.
I tend to be the person in the partnership that is most likely to say something like “there is something fishy going on with X, Y, or Z”. For whatever reason, I tend to notice incongruities or odd details in a company or team’s history, and then get fixated on trying to understand what’s going on. As investors, we are always struggling to bridge a gap of information asymmetry, and there has never been a startup that doesn’t have some sort of unusual attributes or mis-steps in its history. The challenge is helping an investor to bridge that gap in a way that builds trust and confidence. We’ve closed on rounds where prior investors had totally abandoned a company, or where a critical hire didn’t work out, or where there have been major product mis-haps in the past. What I find most effective is when founders don’t go out of their way to hide these sorts of details, but instead figure out how to appropriately share them in a context for why the company is actually on more solid footing as a result. And usually, that’s done in an early meeting 1:1 vs. being revealed late in the process with a larger audience.
Our newest team member Leah joined us fairly recently, but she already adds a unique and valuable point of view to our team as well. She has excellent first-principles thinking, and is quick to point out when things just don’t really make sense. I think she in particular has great instincts about the type of culture a founder is likely to create in their company, and how well that will hold up when trying to build and motivate a world class team. I attribute this to her experience having investigated so many companies and founders as a journalist and having worked at a company with such an intentional and distinct culture as Bridgewater.
Of course, we focus on many other things when evaluating a potential investment, so these areas are not exhaustive. Also, I think it’s not helpful to really approach VC pitching with a “checklist” mentality. Narrative matters a lot more than hitting every critical area. But having now joined my partners on many hundreds of pitches over the years, these are the areas where our team tends to focus. And actually, it’s a pretty decent roadmap for pitching any group. To summarize them again:
- The value proposition to the customer and the incentives of other influencers in the buying process
- The go-to-market approach and any unfair distribution advantages
- Zooming out (market context) and zooming in (unit economics and key industry details) effortlessly
- Bridging the information asymmetry gap in a way that establishes trust
- Effectively representing the culture and priorities that form the foundation of a winning company
If you can accomplish these five things in a partnership pitch, I’d say you’d be in pretty good shape 🙂