How to give a great venture capital pitch: Watch lots of pitches!

By: Peter Adams Monday March 2, 2015 0 comments Tags: Peter Adams, Rockies Venture Club


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By Peter Adams

Executive Director

Rockies Venture Club

In my job as Executive Director of Rockies Venture Club, I see hundreds of pitches every year. Most active angel investors will see well over a hundred pitches every year. Venture Capital fund managers see hundreds of pitches every year. Watching all those pitches gives investors a great perspective and sense of context so that they can invest in the best companies that the entrepreneurial ecosystem has to offer.

Companies who are pitching for venture capital have sometimes seen only one pitch - their own.

How do companies expect to be competitive when they don't have  a solid understanding of what the competition has to offer? The message to aspiring entrepreneurs is:

"Watch lots of pitches!"

Watching lots of pitches is where entrepreneurs should start on their path to success. By learning from others and understanding the competitive environment, they will be most likely to be successful in their search for venture capital.

Recently, a group of investors watched the pitch of a company that had raised a lot of interest in our community and we were excited to put a deal together. After the pitch, however, it became clear that the entrepreneur had no idea about what the norms were for pitching and what the competition had to offer relative to his company. As a result, he failed to address key risks, and ended up with a valuation proposition that was more than double what investors expected to pay, based on the team, market, product, risks, strategy and amount of capital needed. A conference room full of investors who were interested in this company left the meeting with no intention to invest -- all because the entrepreneurs hadn't bothered to check out the competition.

Opportunity: Investors are looking for opportunity. Companies who can explain the opportunity and their clear path to take advantage of the opportunity have an edge over those with muddled messages and unclear strategies. Winning companies have defined a clear path to success and have a definite "unfair competitive advantage" over their competitors.

Valuation: Many first time entrepreneurs fail to understand that investors are looking at hundreds of deals in order to pick out just a handful that will be the ones they invest in. After looking at so many deals investors have a pretty good idea about what the market value for an early stage company is relative to its risk and opportunities. Startups that don't understand what their competition has to offer will end up losing investment opportunities because they don't understand the competitive environment they're working in, and may come up with valuations that have no bearing on the market value of what they're offering.

Clarity: Excellent pitches are perfectly clear. They set out a problem, propose a solution, express understanding of the market and the challenges of entering the market, they have a sophisticated finance plan that starts with the exit and works back through multiple tranches of funding, all ending up with a reasonable deal that investors want to get involved with.  Five minutes of clarity is created by hours of work, practice, research and business planning. No, you don't need a 200-page plan, but yes, successful companies have a crystal clear roadmap to success.

Entrepreneurs and investors who want to see the highest concentration of Colorado's best companies presenting pitches over two days, followed by a half-day investor-only forum, should plan on attending the Angel Capital Summit, March 16-18, on the University of Denver campus. Rockies Venture Club will host the event with pitches, keynote speakers, panels, receptions and the University Startup Challenge - pitting Colorado's top university business plan competitors against each other for live investment opportunities. The conference theme this year is "Scaling Up - Growing Big Fast" We will be talking to CEOs of successful Colorado companies who will share their secrets for rapid growth and startup success.

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Peter Adams

About the Author: Peter Adams

Peter Adams is co-author of Venture Capital for Dummies (John Wiley & Sons. 2013) and serves as the Executive Director of the Rockies Venture Club, America’s oldest angel investing group.  RVC is a non-profit organization furthering economic development in Colorado whose companies raised over $23 million in the past year.  RVC’s connects investors and entrepreneurs through conferences (Angel Capital Summit and Colorado Capital Conference), networking events, angel investing educational offerings and facilitation of Colorado’s largest angel investor groups.  Peter is the founder of the Biz Girls CEO Development Program for high school age girls and is an Adjunct Professor in the Colorado State University EMBA program. Peter holds a BA Degree from Colorado College, PhD/ABD from University of Colorado and an MBA from Regis University.