Expert Tips for Not Blowing an Investor Interview From 7 of the Top VCs on the Planet You can't afford obvious mistakes. Investors are looking for reasons why they shouldn't risk money on your company.
By John Rampton •
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Even if you're bootstrapping your startup, you'll need to raise some sort of capital at some point -- which could include having an extremely important meeting with a VC. This can be overwhelming and nerve-racking, especially if it's the first time that you've had to ask for money.
To ensure that you wow the VC from the get-go, and help you walk into the meeting more relaxed and confident, here are expert tips from seven of the top VC's on the planet on what you may be doing wrong.
1. Bill Gurley -- Benchmark Capital
"My partners and I have noticed an interesting trend over the past few years: an increase in the number of entrepreneurs who prefer to pitch us without the use of a presentation deck," writes Bill Gurley, who has previously backed GrubHub, OpenTable and Zillow.
"On one hand, this is totally understandable. Many believe that PowerPoint decks are emblematic of the type of bureaucracy disparaged in Dilbert cartoons. Others want to appear "casual' and "conversational' and view the presentation as overly formal. But, going deck-less can be a risky move, and here is why. Investors are not solely evaluating your company's story. They are also evaluating your ability to convey that story. Efficiently communicating your strategy, business model, and competitive differentiation is required for many critical things you will do as a company."
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2. Chris Sacca -- Lowercase Capital
During an episode of "This American Life" Chris Sacca, who's invested in Twitter, Uber, Instagram and Kickstarter, told host Alex Blumberg that he needs to tighten up his pitch, which was making money through advertisements and premium paid content.
When asked how much money he'll need, Blumberg responded, "So, it'll take a million and a half dollars, I think? Um, and..."
CS: Take out the "I think."
AB: It'll take a million and a half — I'm looking for a million and a half to two million dollars in seed stage funding.
CS: No, no, no. You're looking for a very specific amount of money.
3. Jeff Jordan -- Andreessen Horowitz
"Every great founder can tell a great story," says Jeff Jordan. "It's one of the key things in a founder, that you can convince people to believe."
The former CEO of OpenTable and investor in Airbnb, Instacart, Pinterest and OfferUp has said that Airbnb's Brian Chesky is an exceptional communicator and storyteller who has ""his entire company laughing and crying within five minutes."
Only an effective communicator and storyteller can persuade investors to jump onboard with their product, vision and dreams.
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4. Fred Wilson -- Union Square Ventures
"Get people engaged in the conversation as soon as you can," Fred Wilson (Twitter, Etsy) said in a recent interview. While being an effective storyteller, "Going through a really long backstory is a bad idea. 'In 1972 I graduated from college' and 20 minutes later they get to the point."
"Like many things in life, less is more in fundraising slides. You can explain your business in mind-numbing detail or you can inspire an investor and let them imagine. Guess what works better?" asked Wilson.
5. Peter Fenton -- Benchmark Capital
"Focus is imperative in a young company's life -- I think more of our companies die from lack of focus than any other single mistake. Something I'm concerned about, that I've picked up on in the past two years, is the perception that it's easier to early-stage round today because there are more positive outcomes than there were in, say, 2003 and 2004. I think it's leading to an erosion of the idea of winning over a core before you expand your horizons," Peter Fenton, who has invested in New Relic, Quip, Twitter and Zendesk, told Bloomberg.
"Venture people want to back big ideas and big markets that will lead to big companies, but when you go back and look at the big winners, they usually started with very little capital and very focused offerings. That's particularly true in consumer Internet: Google (GOOG) began as just page-ranked search, Yahoo! (YHOO) was a very focused directory of the Web, and eBay was really winning in core collectibles. They did just one thing extraordinarily well -- better than anyone in the world. When you have more money, you're more likely to hire more people who can do more things that can mask over the fact that you're not being successful in your core. You have breadth taking over depth."
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6. Josh Kopelman -- First Round Capital
"Have a very clear plan and budget for your seed round. Understand the milestones you need to hit for an A round and make sure you have more than enough runway to get there," recommends Josh Kopelman (Bazaarvoice, OnDeck Capital).
7. Steve Anderson -- Baseline Ventures
"What are the goals for [follow-on rounds] of financing?" Steve Anderson, who was an early investor in Instagram and Twitter asked in an interview on VentureAPP .
"Generally speaking, most of my investments are pre-product launch, they're just an idea. So getting product market fit is the most important goal of the round. My goal as an investor is to make sure there's enough financing to give companies time to do that, a year to 18 months. The worst scenario is to try to raise more money when you haven't achieved that goal."
