1. How to pitch to a VC: Use your network
The phrase â€˜itâ€™s about who you know not what you knowâ€™ is still alive and kicking for VCs and for most the best way to get VC funding is to get recommended.
â€œI get referrals from people that I trust so in that sense, there is no science to it, itâ€™s more of an art,â€ says Chen.
â€œIf you donâ€™t have a lot of brand recognition, itâ€™s hard to get recognition with VCs. The first thing is not to see it as a transaction but to see it as building relationships,â€ Newman tells Techworld.
2. How to pitch to a VC: Understand VCs
Understanding not only how VCs work but the relationship youâ€™re entering into is crucial to securing VC funding and making better business decisions.
â€œI think a lot of entrepreneurs donâ€™t understand gravity of taking someone else’s money, then they wonder why investors have an opinion about things and get frustrated when you donâ€™t react to their advice,â€ says Newman.
â€œIf you want cheap easy money that isnâ€™t going to start a clock ticking down straight away, donâ€™t go to a VC,â€ adds Newman.
3. How to pitch to a VC: Have a deep understanding of your field
Any business pitch, interview or presentation can fall apart of you donâ€™t have a strong understanding of your field. This is the same for VC pitches.
â€œThe biggest turn offs are those that you can tell donâ€™t have depth or understanding of the space. Maybe theyâ€™ve read a few articles about the space and got excited about it but at the end of the day, entrepreneurs fail because they lack depth,â€ says Chen.
â€œIf they lack a depth of knowledge of their particular space [startups] donâ€™t even know why a VC is not interested in them,â€ he adds.
4. How to pitch to a VC: Be authentic
Unsurprisingly, VCs receive a lot of pitches and will see though any startup founders that lack enthusiasm in both the pitch and the business.
â€œI think the better pitches are thoughtful and take an interesting perspective on things. Thatâ€™s always a good starting point,â€ says Chen.
â€œGreat investors are generally great readers of people. They have excellent bullshit detectors and excellent pattern recognition. You know when there’s not enough data and too much story,â€ says Newman.
â€œIâ€™ve sat in meetings before where an entrepreneur is talking and Iâ€™m 20 minutes in and I think, I donâ€™t care if youâ€™re going to be a billion dollar company, I donâ€™t know what youâ€™re saying and I donâ€™t click with you,â€ he adds.
5. How to pitch to a VC: Present your past experience
Like going for a new job, startups should make sure their experience is highlighted and they supports your pitch throughout.
â€œOne of the first things we do is look at their experience. Are they credible? Not only should they have a big vision but can they do what the actually say they can do?â€ says Chen.
6. How to pitch to a VC: Be concise and only mention whatâ€™s important
Keeping things simple is the best way to put your point across and secure the respect of the VCs you’re pitching to.
â€œIf you canâ€™t express what you believe in one or two lines in a clear way then you probably donâ€™t understand it, you donâ€™t understand the problem, you donâ€™t understand your own product and you donâ€™t know how to get it to market,â€ says Chen.
â€œInvestors know when theyâ€™re being told what they want to hear. You have to cut out all of the fluff and just get to the data points that are going to matter.
â€œSo do you have real proof that you have a product fit for market? Tell me why your team is awesome, what youâ€™ve done together, how much progress youâ€™ve made and in what period of time and if you have any clue what leverage youâ€™re going to pull at each round of funding,â€ says Newman.
7. How to pitch to a VC: Know your competitors
Separating your startup to the countless others being pitched to VCs will highlight your understanding of not only your business model but of others, and will be a great way to prove to the VC why your startup is better.
â€œYou get a lot of the same pitches so then you have to ask them how they are different from others. And if they canâ€™t explain that then that means you donâ€™t have enough depth of knowledge of your competitors, what others are doing in this space,â€ says Chen.
8. How to pitch to a VC: Consider a video pitch
A two or three minute video will be light relief for VCs and break the cycle of long pitches.
â€œVideos are an easy way of communicating what youâ€™re doing to the VCs. If you think about it I might get 25 pitches a day and if I were to be fair I can only spend about 5 minutes on one so thatâ€™s over three hours a day on new companies and only just to see if I should spend more time on them. So that one line or two minute video explains what you do, what you problem is and what your solution is,â€ says Chen.
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