DISQUS

Sara Sommer · 2 years ago

Wil -
Fantastic article! If all VC's followed your advice, I think entrepreneurs looking for funding would be much more comfortable and confident in making their pitches. Kudos to Sequoia for outlining what they wanted to see out of your pitch. It's the time spent considering the agenda that is often times most stressful!

Ryan M. · 2 years ago

Those are great points Wil. VCs get so bombarded by every entrepreneur on the planet that they wants to pitch them for funds. They can quickly lose sight of the need to maintain strong relationships with the handful of promising entrepreneurs that they do actually meet, but don't fund the first time around. It's simple customer relationship management. You don't have to extend the same service to every entrepreneur that contacts you, but it will pay off nicely if you keep in touch with the folks that are building the next big startups that you'll fund 2-3 years down the road.

DC · 2 years ago

Fresh perspective! VCs generally to come across as the ten thousand pound gorilla that can do no wrong b/c entrepreneurs need them to survive and prosper. It's nice to hear from practical experience that the VC community itself could also benefit from a "tune up" now and then. Maybe you can share an actual agenda in your next post - just to ensure they get it right. Cheers.

Brian C · 2 years ago

Great article! It's amazing how hard entrepreneurs can work to get their company in front of VC's, only to fumble on the 1 yard line. I'd be interested to know what the VC's think of the entrepreneurial pitch.

David R. · 2 years ago

Very insightful. Gives me a new perspective into the VC's mind. I'd love to see the agenda for one of these meetings. Keep it up.

Tyler · 2 years ago

That article is exactly what VC's need to know. The current process is unorganized on both sides and could be much more stream lined.

Vlad · 2 years ago

It's amazing that the process has become so one-sided: VC's are treated like deities and the entrepreneurs bow and kneel at every capricious impulse. Good business in most industries involves clear communication and respect for the other party. Your article brings to light a need for VCs to be more accommodating in those very ways. Many VCs need more insight such as yours - thanks for sharing!

guy · 2 years ago

I guess they don't teach this stuff at Stanford or Harvard B-Schools. Clearly they should. Furthermore, how is a VC even credible without being an entrepreneur first? A VC is a salesperson and the best salespeople are good at relationship building not changing around their customers businesses. The fact is most VCs make poor decisions 9 out of 10 times. Not very good stats no matter how you slice it or dice it.

Jeff Canter · 2 years ago

This is a great article. It would be nice if people trying to do business together could be a little more honest and blunt in the process. As and entrepreneur, you shouldn't have to waste time guessing what VC's want see or have to wait on a yes/no answer. That time could be better served growing the business. Again, nice article!

Joe Entrepreneur · 2 years ago

GREAT Article. I am also working on my startup called Onista. http://www.onista.com
This article provides good info on which VCs actually provide information on what they are looking for. Pitching to VCs should not be like meeting on blind-date where you have no idea what to expect.

John Hunter · 2 years ago

I couldnt help notice that most of these replies came just minutes apart from oddly anonymous names. It almost looks like there is some self promotion....substantiation here.

I bring this up to question the shameless promotion of this articles author. I would like to know more about the outcome of these pitches to benchmark and sequoia as there is where the lesson is learned. I doubt any of these pitches materialized into a bonafide transaction. The point? Whether the VC knows how to pitch 'the borrower' or not is irrelevant....it will ultimately boil down to the integrity of the concept, plan or model.

Yes, any 'borrower' should know the banker they are meeting and the hot buttons. The banker however needs to do nothing....cash makes him king. The 'pitch' is not on the VC but on the 'borrower'. We all know the old saying 'beggers cant be choosers' and Wil tells us they should be more respectful.

While that would be cordial...it is almost laughable. If you are at VC stage (no mature proven model more fitting for private equity...but strictly VC-concept) simply be grateful you have even been invited to the meeting at all in the first place.

Additionaly, there is a contradiction here. On one hand Wil asks for more courtesy from the VC on their expectation (selling the borrower)....but then he says that they shouldn't let us down easily...instead just giving it to us straight with a clean cut 'no'. Frankly, I think this author is asking for a lot, and may be the real lesson why his pitches didnt pan out, leaving him writing articles about what to do instead.

Ray Bohac · 2 years ago

As an entrepreneur that is raising capital, I agree that it is important to learn about the company your are pitching to and then set the expectations and pace accordingly. Tips like this help us learn more from the mistakes we might make and improve faster.

I'm a subscriber to Wil's blog and I've used a lot of the information he has posted to as a way to try to look at my own company from an outside perspective. Keep it up!

John Hunter · 2 years ago

Raising Capital vs. borrowing money is a term that certainly makes one feel better about life. Ask anyone who has actually received money from a VC firm and has been under the microscope of how it is being spent and they will surely agree that it is in fact Borrowing Money....and at a very high interest level at that.

What the article suggests is that the VC should outline the expectations, stay in touch, take responsibility and finally be honest in their appraisal of the business plan. I agree with Ray that these are valuable tips...just question the realism of these expectations.

My point was simply that Wil is asking for a lot and that this is a tall order for an organization that doesnt have to. He who has the gold makes the rules. The onus is 100% on the one in need.

Don't take my comments the wrong way. This is what blogs are for. I am also a huge Wil Shroter fan and have been for many years and he has helped me enormously with my business. (He literally guided me in retooling my business which eventually sold it in 2000)
That doesnt mean he is immune from some good old fashioned critique.

My point is simply that the due dligience is on the borrower not the lender. These are all great points....but should have been directed toward the entrepreneurs or borrower, not the VC or lenders.

Asking for these things is not out of the question.....just somewhat unrealistic.

Chris Skudder · 2 years ago

Good article - interesting responses.

- As entrepreneurs: when we get the appointment with a VC, we can request a clear agenda, direction, and expectations. You might get it or you might not, but you don't have to wait around to see if VC's pick up on this. If nothing else, the VC's response to your request will reveal a little about who you're pitching to.

- In raising money, selling, and a couple other things -- a FAST 'NO' is the only valuable alternative to a 'yes'. Drive for one or the other; don't invest too much time with anything short of one or the other.

Nick Braun · 2 years ago

I think there have been some great thoughts shared on this topic and I would like to add some of my own from an early-stage VC perspective. I agree with Wil 100%. Not setting clear expectations would be a waste of both the VC and the entrepreneur’s time. Before an entrepreneur pitches at one of our partners meetings we often coach them one-on-one to make sure they are clear about what to expect. This ensures that the entrepreneurs are well-prepared so when it comes time for a pitch we can make a sound decision based on the business as opposed to the presentation skills of the entrepreneur.

We have tried to design our entire investment process to be very ‘entrepreneur-friendly’ for the simple reason that all of our partners are ex-entrepreneurs who understand the difficulty and stresses of raising capital. Part of this process is making decisions as quickly as possible and giving reasons for saying no. In many cases we have said no and actually helped the entrepreneur find other sources of capital better suited for their needs. In cases where we say no because the company is in too early of a stage we will tell them what specific milestones they need to accomplish in order for us to consider investing (and yes, many of our portfolio investments were a no at some point because they were too early… for you skeptics).

Finally, I think Wil is touching on a shift that is occurring in private equity today that will change the traditional VC model. The steadily increasing amount of limited partner investment is compounding the amount and size of funds while the cost for most high-tech start-ups is beginning to decrease. This simple shift in supply and demand is putting more power in the hands strong businesses and seasoned entrepreneurs. Wil is absolutely right, if I were an entrepreneur with a strong business model I would ask the VC, “What value can you add to my business besides money?”

The best VC firms don’t simply make capital investments; they also invest their time, experience, network and other resources in order to enhance the value of the businesses they invest in.

Cameron Sutter · 2 years ago

I agree with Wil. The VC isn't just forking over cash. He's investing it for a big return later. If he wants that big return, he's gotta prepare the entrepreneurs.