How to Pitch to Venture Capitalists

John Babcock, a partner of Rustic Canyon (http://www.rusticcanyon.com/), explains how to successfully pitch to venture capitalists. Pitching can be the trickiest part of the process, as saying the right thing is very important in order to receive funding.

  1. Emphasize any prior experience and success
  2. Embellish the amount of potential competition
  3. Be comfortable admitting a lack of understanding

So, entrepreneurs pitch me everyday and it’s one of the things I love of just hearing how people look to take on a new business opportunity. And to think about it how a venture capitalist thinks about it, I think maybe you want to think about what would it take for the guys who backed Lewis and Clark? They’re heading off on those audacious plan and we kind of finance audacious plans. And so, a couple of things I’d recommend.

One is highlight relevant experience you’ve got. Have you gone out on the ventures before? Do you know this market? Are you someone who I might actually hire to run this business if you weren’t also the person who is starting it.

The second thing is to overestimate your competition. There’s nothing that gives me more fear than to hear and often they’ll say, “I don’t have any competition.”

As you go back to Lewis and Clark analogy, to have him off heading West and they say, “We don’t expect any problems.” Nothing could tell you that they’re less prepared to handle problems than to say they don’t expect any.

The third piece of advise would be to don’t be afraid to say, I don’t know, because I know you don’t know. I don’t know either what you’re going to find. When Lewis and Clark were heading off, they didn’t know. So, you know, someone looked after those guys – backed those guys because they were a credible team going off into a great adventure which is really what we tend to back.

And the last piece of advice would be as an entrepreneur, to solicit advice from your investors you talk to. If you’re out looking for funding, you’re probably going to talk to a half dozen or dozen different firms and it has two benefits really. One is you might really get some good advise. And two, people who are you know, looking to finance you, want to have someone who listens. It’s a valuable skill as you’re going out into a difficult spot.

Building a company and making it grow into something really big is difficult and it’s audacious like Lewis and Clark. As you go and communicate to investors to help you on that path, I think you want to communicate to them the same way which is you’re not sure of everything you’re going to find, you’re a good team to back in doing it and you’re going to pursue it with passion and with vigor. And frankly, that’s all an investor can ask for.