7 The art of pitching to institutional investors
7 機構投資者投資藝術
- Will you be in tune with the VC pitch meeting vibe to maximize your chance of success?
您會與風險投資演示會的氛圍保持一致，以最大化成功的機會嗎？ - Do you have a great VC pitch deck? Suggestions on how to structure it.
您有一份出色的風險投資提案簡報嗎？有關如何結構化它的建議。 - Surviving VC shark tank drama. Are you ready for nasty curveballs?
在 VC 鯊魚缸戲劇中生存。 你準備好應對惡毒的曲球了嗎？
Different types of investors require different types of pitches. In anecdote 6, “Angels—your bridge financing solution,” I discussed how to pitch to individual angels, who, even if they are part of a group with organized meetings, ultimately invest about $25,000 per person. In this anecdote, I’ll cover pitching to institutional investors, which means Venture Capitalists; highly organized, fund-based angel groups; private equity firms; and corporate or strategic investors.
不同類型的投資者需要不同類型的推銷。在軼事 6 中，“天使-您的橋樑融資解決方案”，我討論了如何向個別天使推銷，即使他們是組織會議的一部分，最終每人投資約 25,000 美元。在這個軼事中，我將談論向機構投資者推銷，這意味著風險投資家；高度組織化的基金型天使團體；私募股權公司；以及公司或戰略投資者。
Definition 定義
Institutional investor is a legally organized partnership or corporation whose sole business activity is investing to make a profit consistent with their corporate structure (for shareholders, limited partners, or parent company). These are the investors you will get to once you have market traction, have proven Product-Market Fit, or later when you are ready to scale the company.
機構投資者是一個合法組織的合夥企業或公司，其唯一的業務活動是投資以實現符合其公司結構的利潤（對股東、有限合夥人或母公司）。這些是您在市場上取得動力、證明了產品-市場契合度，或在準備擴大公司規模時將會接觸到的投資者。
There are naturally a lot of common topics between the pitch to angels and the pitch to institutional investors. In both you need to highlight the problem, your solution, the opportunity, your business model, the competition, and so forth. But as discussed in anecdote 6, the angel pitch is on the order of 10 minutes or less and the institutional investor pitch is at least 30 if not 60 minutes in length. So even if the outline is similar, the amount of depth you will be going into is vastly different.
天使投資者和機構投資者之間當然有很多共同話題。在兩者中，您都需要突出問題、您的解決方案、機會、您的商業模式、競爭對手等等。但正如插曲 6 中所討論的，天使投資者的演講時間大約是 10 分鐘或更短，而機構投資者的演講時間至少是 30 分鐘，甚至可能長達 60 分鐘。因此，即使大綱相似，您將深入探討的內容量會大不相同。
highlight, annotate, and bookmark
突顯、註釋和書籤
選擇一段文字，然後點擊適當的圖示進行註釋、書籤或突出顯示（您也可以使用鍵盤快捷鍵 - h 進行突出顯示， b 進行書籤， n 進行註釋）。
You can automatically highlight by performing the text selection while keeping the alt/ key pressed.
您可以在按住 alt 鍵的同時進行文本選擇來自動突出顯示。
7.1 The pitch 7.1 球場
The relative informality that works with angels won’t work with serious, professional investors. It may seem surprising, but the only way to get an audience with these investors is going to be via word of mouth. This means you must get a warm introduction from someone who knows you and knows the investor, and the individual at the firm knows the introducer and likes and trusts them enough to have accepted this meeting. That means you are starting off with a positive. Do everything you can to build on that.
與天使合作的相對非正式方式對於嚴肅、專業的投資者是行不通的。這可能會令人驚訝，但與這些投資者見面的唯一方式是通過口耳相傳。這意味著你必須從認識你和投資者的某人那裡得到一個熱情的介紹，而公司裡的那個人認識介紹者，並且喜歡並信任他們足夠接受這次會面。這意味著你從一個積極的開始。盡一切努力來建立在此基礎上。
You need to tell the story of why, out of the thousand companies this partner has seen a pitch from, yours is worth listening to and is going to be something they will want to invest in.
您需要講述為什麼在這位合作夥伴看過的上千家公司中，您的公司值得聽取並且是他們願意投資的對象。
ask yourself 問問自己
Does your idea fit this firm’s investment thesis and, more importantly, this partner’s investment thesis? If not, you may be wasting precious time.
你的想法是否符合這家公司的投資主題，更重要的是，是否符合這位合夥人的投資主題？如果不符合，你可能正在浪費寶貴的時間。
Most recently, I was pitching a startup whose business model was licensing a hardware design that would be built into a silicon chip. Many, many VCs got burned in the early 2000s when investing in semiconductors was hot and lucrative, but as Japan became dominant in semiconductors, the US market consolidated, and the openings for small companies vanished, and a lot of money was lost. I got a nice, warm introduction to this partner, but my introducer did not realize these VCs now had an almost allergic reaction to investing in semiconductors. At firm after firm, the partner I was presenting to would start to get really weird by my third or fourth slide, at which point it was best if I just politely closed my laptop, stood up, and walked out. I didn’t do that, but there never was a point to continuing the discussion—that partner had already made up their mind they were not investing, and a little dance of social politeness ensued, where they did not want to kick me out and I did not want to pick up and walk out, but both of us knew this was a nonstarter. This startup was a real challenge, and after a couple of years of meeting with VCs—and I kept track of each one and what their one-line closing statement to me was—I had met with over one hundred firms.
最近，我正在為一家初創公司進行推廣，其商業模式是授權一種硬件設計，該設計將被建造到一個矽片中。許多風險投資者在 2000 年代初投資半導體時賺了很多錢，但隨著日本在半導體領域的優勢地位，美國市場逐漸整合，對小公司的機會消失了，很多錢都賠了。我得到了這位合作夥伴的友好介紹，但我的介紹者沒有意識到這些風險投資者現在對投資半導體幾乎有一種過敏反應。在一家又一家公司，我向合作夥伴展示的投資者在看到我的第三或第四張幻燈片時開始變得非常奇怪，這時最好我只是禮貌地關上筆記本電腦，站起來走出去。我沒有那樣做，但從來沒有繼續討論的必要—那位合作夥伴已經決定不投資了，於是發生了一場社交禮貌的小舞蹈，他們不想把我趕出去，我也不想離開，但我們兩個都知道這是行不通的。 這家新創公司確實是一個真正的挑戰，經過幾年與風險投資者的會面——我記錄了每一位投資者對我的一句結尾陳述——我已經與一百多家公司見過面。
Investors can be lemmings and many (except those whose thesis is to not follow any trends) tend to follow the same trends. Recently, it has been trends like Software as a Service, artificial intelligence (AI), blockchain or crypto-currency, and consumer-facing products or services, all of which have been very hot for quite a while, so there are a lot of investors focused on those areas. If you do something in one of those categories, great, if you are very, very clearly different, and better than anything else in your same, very crowded category. My part-hardware, part-software cybersecurity company was about as far as you can get from SaaS, AI, and consumer-facing products, but one investor said to me, “Can you do something SaaS in your solution? If so, I might be interested.”
投資者可能會像旅鼠一樣，許多人（除了那些主張不跟隨任何趨勢的人）傾向於追隨相同的趨勢。最近，像軟體即服務、人工智慧（AI）、區塊鏈或加密貨幣，以及面向消費者的產品或服務等趨勢一直很熱門，因此有很多投資者專注於這些領域。如果您在這些類別中做些什麼，很好，如果您非常明顯地與同一個非常擁擠的類別中的其他任何事物有所不同並且更好。我的部分硬體、部分軟體的網路安全公司與軟體即服務、人工智慧和面向消費者的產品幾乎完全不同，但一位投資者對我說：“你的解決方案中能做一些軟體即服務嗎？如果可以，我可能會感興趣。”
Most investors are going to listen and engage actively while you present. But it was not a rare occurrence to have a partner who would bring an associate into the room, and while the associate dutifully took notes and asked a few questions, the partner was looking at their phone the entire time. The rudest example of this happened at the biggest, most famous of Silicon Valley firms, Andreessen Horowitz.
That first critical, one-on-one meeting with the individual partner who is screening your deal for the full partnership to consider, should be a crisp, thirty-minute pitch that allows ample time for questions. If you do not wow them, you do not get to go past GO!
The big challenge is that you must fight investors’ short attention spans by getting them very excited and interested in, at most, the first six slides. In fairness, it is not just the short attention spans but also pitch deck fatigue. Don’t make it easy for them to lose interest—make your story, and your presentation of that story, compelling. Remember, engage them with a story, keep your slides sparce and simple and easy on the eyes. No matter what, never lead with, or focus too much time on, technology. That is the cardinal mistake of technical founders time and time again.
discuss
7.2 The deck (aka your business plan)
Here are the major elements to include in your pitch deck:
Table 7.1 Major elements of the pitch deck
|
The Big Problem
|
Explain the big problem that motivates you and that you solve. Use no jargon. Be sure to explain how it is not being solved today.
|
|
Your Solution
|
Describe your great solution and how it is ideally suited to solve the just-mentioned big problem. This is where you fit in a brief explanation of how your thing works. Don’t go deep. If they like this and you, they will have an expert spend time digging in, so no need to do that now.
|
|
Big Opportunity
|
Now that they understand there is a big problem and you have a real solution, you want to appeal to greed and tell them how big this opportunity is. Use Serviceable Addressable Market (SAM), never Total Available Market (TAM) or they will roll their eyes.
|
|
Business Model
|
How do you make money? Are you SaaS, enterprise software, consumer-focused, IP licensing, pure services, a mix of product and services? Will you have multiple revenue streams? That is ideal if true. Even better is if, like in SaaS, you can point to Annually Recurring Revenue (ARR); if you have that, the VC will be eating out of your hand because nothing excites them more than predictable future revenue.
|
|
Go-to-Market (GTM)
|
How are you going to market? This is where you describe the vertical market segments you are starting with, what Geoffrey Moore famously called the bowling pin where he argues you need a single narrowly defined vertical market (the bowling pin) that is your solitary focus. What about partnerships? They are a critical aspect of your Go-to-Market so talk a bit about how you will leverage partners to expand sales.
|
|
Proof Points
|
If you are pre-Series Seed, you probably have not got customers or revenue to speak of yet, but certainly you have been talking to prospective customers to understand what the potential for your product/service is. Include what those people said.
If you are going after an A-round or later, you have customers and need to demonstrate Product-Market Fit, which means at least three large customers, except in high-volume consumer, in which case they want to see large numbers and monthly growth rates. Also include here any awards, impressive press, articles, and so forth.
|
|
Competition
|
Never say there is none, even if you are unique. They will discount what you are saying at best, and not want to proceed with you at worst. If you are unique, focus on where the money for your product is going to come from. Assume customers cannot just create new money out of thin air, which means to buy your product, they probably stop buying something else. That something else, at a minimum, is your competition. This is also where you talk about how you defend yourselves against those inevitable competitors.
Do you have a patent “moat” that protects you from encroachers like the protective water troughs surrounding medieval castles? Do you have a plan to get dominant in a market niche fast and expand from there, making it hard to challenge you? Is there something else about the product that makes it highly defensible?
|
|
Team
|
Some argue to discuss this up front, but that forgets that VCs have areas they strongly shy away from. So, no, I do not think this goes up front. If you get past the first six slides and still have their attention, you are good, and they will get here and want to find out how strong your team is. Some like to include the board and advisors. I think that is rarely valuable, unless your advisors are truly a key part of your value proposition, or they fill an important expertise gap.
|
|
Use of Funds
|
Talk about the raise you are asking for. Describe what you plan to spend the funds on, how long it lasts, your burn rate, and your “ask”. You should be asking for enough cash to last eighteen to twenty-four months.
|
That was nice and short, wasn’t it? Resist the urge to add a lot more. You will get many chances to go deeper in key areas, and so don’t load up your first pitch.
You will get whipsawed with some investors who provide post-presentation feedback or various advisors who offer services where they help entrepreneurs craft their pitch decks, saying “put the big opportunity up front,” “more on product,” “less on technology,” “team is the most important thing,” and you should listen and consider their ideas, but my experience says the outline above is generally the best one. It has all the requisite bits, and you can reorder elements as the feedback requests.
Another common challenge is when a prospective investor wants you to send the pitch deck to them ahead of time. The problem is that a great presentation in person and one that can be read ahead are not the same thing. In person, you will follow good presentation rules like three (maybe five, if pushed) lines of text on a slide, maximum. Lots of good visuals, and your voice track that guides the listener through the slide, adding in useful details. (And, of course, in person you can be sensitive to confusion or a questioning look from the investor.) But if you send this type of deck ahead of your presentation, they won’t hear your voice track, so they will look at your slides and not get your key messages. Do you make multiple decks? Sounds like a good idea until you try it. Because we tend to change the pitch deck almost continuously, you would then have to make those changes in two decks . . . continuously. Alternatively, you veer off best practice and put more text on a slide. That is a slippery slope to the point where you could end up with the kinds of slides common in the Department of Defense (DoD) world: an encyclopedia on each slide.
I always end up with appealing slides that have the least amount of text possible, but still enough to make the point. It is worth having a talented visual communications expert with graphics skills by your side because excellent pictures are worth . . . you guessed it, a thousand words. I had the very good fortune to have a five-star general of a visual communications expert as my director of marketing, and her decks were sendable while being even better when presented in person, and we did not have to maintain two separate decks.
Somewhere along the way during my thirty-five-year entrepreneurial career, investors and entrepreneurs have all but dropped the written business plan for early stage (Seed and Series A) companies, and instead one’s “business plan” is the pitch deck. Having said that, the exercise of writing a detailed business plan, even if no one ever asks for it, is invaluable (see anecdote 17, “Ten steps to a formal business plan”). Thinking of your pitch deck that way will put you in the right frame of mind about how serious an endeavor it is to create one and deliver it to perfection. Serious, professional investors see literally thousands of entrepreneurs pitching, so the content, as well as the delivery, best be different, compelling, exciting, and convincing. And you must grab them in six slides before you get a chance to tell the rest of your story. Everyone has their idea of the perfect outline for a pitch deck. Ultimately, your story, your personality, your style, will determine what the actual outline should be. Once you have that, practice, practice, practice so you are smooth and confident during that initial meeting—the one that opens the gate to continue going with that firm.
settings
7.3 The moral of this anecdote
These days, investors don’t request business plans very often. Certainly not for early-stage companies. Instead, everything hangs on the pitch deck and those thirty to sixty minutes you get with a partner at a VC firm. This is why the content, organization, and your performance are so critical since you only get one chance to make that first impression. If you get a no, you will never know exactly why they said no. Usually they will simply say “not a fit for us,” which could mean it’s not a fit or it could mean the partner did not find your pitch compelling. So, work very, very hard on your pitch, practice it a lot, especially in front of friendlies who will give you honest feedback. And seek out expert coaching. Put in the time!
