I was a judge for a recent
VC/startup pitch session with Startup Epicenter. I may be in a bit of
a rut given that I was also a CODiE judge earlier this year. All told I’ve been listening to start-up money begging
pitches for over six years now.
They haven’t gotten any better.
The fact that most start-ups still have weak pitches is strange. We are a decade into the tech industry rise, complete with the
burst bubble and dot-bomb fallout. Throughout, much has been written on
kick starting a business and seeking cash from strangers. Guy Kawasaki ( oddly another "Guy" in the business who somehow I have not yet met ) even provides a checklist
of all the items that should appear in every pitch presentation. There is
ample information for any green CEO to use and become more successful
at entrepreneurial panhandling.
Yet they continue to fail. At last week’s event, all the companies
has pleasant enough pitchmen, and most had interesting product/service concepts.
But only one had a complete proposal, a keen idea of where they were in the
market, and how they were moving forward. They also had $900,000 annual
traction … they had been through the wringer before and knew what the audience
needed to hear.
It occurred to me that angel investors likely have it worse than venture
capitalists. Angels typically come into the investment cycle earlier in a
start-up’s evolution and thus deal with newbie CEOs greener than Kermit the Frog
with a hangover. I chatted with a long time acquaintance and angel investor,
David Greer. He confirmed my fears that angels should either be
ripping their hair out by the follicle roots, or be institutionalized in the Home
for the Terminally Bewildered, for actually wanting to deal with callow
tech execs. It is painful to see the average start-up
fumble through a pitch, but angels get to shave off the really rough edges
first.
My personal nit picks — coming from the marketing strategy perspective — are the failures to understand and communicate:
- The segment or segments in which marketing and sales will be focused
- The genotypes ( buyers and influencers ) and their motivations
These two factors retard more start-ups than under funding, stiff
competition, or coke snorting CEOs. It is the identification of a segment
that matches product features and demand, and then understanding how to
communicate the solution value that decides how rapidly people will buy, and if
they can/will communicate that value to their peers. So when you pitch
your company, if you fail to identify one or two specific segments, and fail to
describe how you will sell to the decision makers and influencers within these
segments, then I mark your sheet as "no deal."
The aforementioned Mr. Greer enlightened me with a link to the Angel Journal,
which had a list "10
Mistakes in Approaching Angel Investors." Though going beyond funding
pitches, it is worth reading to know what your angels and VCs are often
concerned about, and how you can effectively end your chances of receiving (
more ) money.
#1 on their list: Not Knowing Your Market and Buyer. Enough said.