With the rise of a trillion-dollar crowdfunding market, angel investors bundling their investment offerings, and family offices doing more direct investments, venture capitalists are no longer the only available source for entrepreneurs seeking funding.
Now that anyone can benefit from the global growth of entrepreneurial activity, venture capitalists need to show their true added value more than ever, in order to attract the most capable entrepreneurs.
Capital On Stage – an invitation-only conference about funding that runs annual events in the US, Israel, South-East Asia, and Europe since 2011– is tackling this issue. I wrote last year about their unconventional format that allows venture capitalists to pitch themselves to growth-stage startup founders in under 5 minutes.
Arjen Strijker, co-founder and CEO of Capital On Stage, has had more than 200 top-tier venture capitalists on stage at his conferences (view all 5 minute VC pitch videos here). Arjen:
“Successful startup founders really want to know the same thing about VCs that VCs want to know about startup founders: the unwritten stuff that’s never mentioned in a bio or on a website. Imagine you have a successful company that’s profitable and ready for global expansion, wouldn’t you be looking beyond the financial commitment of your funder, like a matching skillset and experience?”
I asked Arjen for his top tips for VCs when pitching founders, based on his experience viewing lots of VCs competing with one another. He writes:
- Explain one situation where you bootstrapped a business yourself. Something that’s not mentioned in your bio, but where you showed you’re a true entrepreneur. Go deep, explaining just one situation as time is limited.
- Be human. Tell your personal life-story before you became a venture capitalist. For some VCs this is easy, but for most it’s difficult as the VC business is a tough one. Being personal breaks the cliché VC pattern and makes you instantly more likeable.
- Define exactly what you’re looking for. Even though you’re probably open to a wide variety of investment opportunities, clearly define one scenario of a company or product you’d invest in on the spot, today. Hint: this is often a (near) copy of a company you built and sold / made you turn investor.
- Why are you really different? Nearly all VC websites start with “we are a different type of firm, because…”. Most of the time a long text follows that doesn’t really capture their actual unique selling propositions. Break it down and say what you’re really about and what companies you’re focusing on today on investing in, which might be different than the ones you focused on yesterday.
- Represent yourself, not only the brand you work for or (co)founded. As founders are looking for the right investors in the same way you are looking for the right startups, there can only be a match if you’re representing yourself on stage. The founders you are pitching to will already be familiar with your company’s reputation anyway, so what you need to convince them of is that you are the right match for their startup, and that you have the personal background and experience that will support their company’s growth.
- Get your interpersonal communication skills in order. We all expect professional investors to deliver the perfect pitch, after all they did hear hundreds of startups pitching them over time, and often mention how many startups did not make it in their portfolio. However, it happens quite often for investors to mess up their own pitch, mainly because they enter the stage unprepared. It is normal to be nervous, but you want to avoid wasting valuable time by going off topic and start comparing nurturing startup companies with breeding horses for example (true story!). Luckily, most VCs deliver innovative pitches, tongue twisters included!
- Mention 1 person you really respect, and why. This will actually reveal more about what you are about and what you stand for, instead of the person you’re describing. By showing who you surround yourself with on a regular basis and what type of people you respect / find interesting / learn from, founders can identify themselves with you.
- Be bold. Remember that you’re on a stage, not a pedestal – prepare to be exposed and don’t expect to just teach your audience something. Share your company’s numbers, as well as the amount and type of startups you funded, ROI they gave you, what support services founders can expect if they sign with you, etc.
Startup founders looking for funding can apply now for the 3rd annual Capital On Stage New York (October 30) and London (December 3); I’ll participate in the NY one. VCs who’d like to attend should get in touch with Arjen directly.
Previously posted at Forbes.