Pitches Are Also For Learning

A lot of times, people think that pitches are like Shark Tank.  Shark Tank is a super condensed version of a months long process.  The impression is that the entrepreneur pitches and the VC listens like Caesar and gives a thumbs up or thumbs down.

There is a lot more nuance than that.

A lot of times, the information presented in the pitch is new to the VC.  After all, this is supposed to be an idea/business that is breaking new ground where no one has gone before.  VC’s don’t know everything about everything so a lot of the things presented might really challenge how an investor views the world.

If an entrepreneur makes a statement, like this from Zuora’s pitch deck, a VC might not believe them.  They need to go back and investigate.  They need to find data to back up the pitch.  Entrepreneurs can provide them data but we all know that they are going to present that data in the best light possible.  

It’s up to the entrepreneur to do their research on the VC prior to the pitch.  Find out what they invest in, when they invest, and how they invest.  If they are thesis driven and you hit their thesis, pitch to it.  If they aren’t thesis driven and are sector driven, show them why you will win in that sector.  The Generalist VC is the toughest to pitch because they haven’t really told the world what their hot buttons are.

In the pitch, take them to the mountaintop and show them what you see.  If they are presented with new information that seems compelling, you have done your job.  You are likely to get a follow up meeting.  If you haven’t, be prepared for rejection.

Even in pitches where the VC knows they are going to reject the firm, they will ask a lot of questions.  This is information gathering.  They file it in their memory bank for the next pitch.  We try to tell entrepreneurs as fast as we can whether we are going to continue trying to build a relationship with them or not.  We are now trying to do it during the pitch.  We tell them exactly why and if things change to come back to us.  Sometimes, it’s not them but it’s because of the structure of our fund.  Sometimes there isn’t enough information to do reject quickly and you have to do some diligence to figure it out.  Those are the tougher calls.

The entrepreneur’s time is precious.  A quick rejection is better than a long no.  Getting to yes takes a lot of time.