Working out of the Townhouse has been an interesting experience in that I'm working side by side with a lot of non-startup people. It's a co-working space full of creatives and freelancers, most of whom who have never pitched an investor, and probably never seen a startup pitch either. Their reaction to what I do day in and day out is very telling about how a lot of people, including VCs themselves, think of the job.
The first question I always get, which I find endlessly hilarious, is "Don't you get tired of people pitching you all the time?"
Umm... No. That's, well, a big chunk of the job.
I say that, but I'm not entirely sure all my peers understand that. One time, I spoke at a meetup that was divided into my talk and demos--and the organizer assumed I wanted to go on before the demos. I didn't understand why it would matter, but she told me that most of the investors like going before so they could skip out after the demos and not get bombarded at the end of the event.
Well, I guess I'm not surprised. I've had a debate with other investors before about the "warm intro" requirement. For a seed fund, I find it a bit silly. Most founders barely have anything that looks like anything at this point, and most of them haven't done this before.
How good of a screen could someone else who doesn't do what I do be to make the intro?
Great, so you went to coffee with someone I know or maybe even funded once. The founders I backed aren't VCs (well, except Dave) so I don't know if that is such a great signal.
I asked another VC why they do this and they answered, "So we don't have to go through all the random crap."
If you're an investor that has a magical dealflow stream that isn't mostly random crap, please tell me how you do this. Also, if none of the investments you made first looked like random crap at the beginning, and you have a great track record, I'll buy you lunch.
Obviously, there's a wide spectrum of founders trying to raise money. A lot of them have really really terrible, poorly thought out ideas. In my life, I, too, have had a lot of really terrible, poorly thought out ideas. It happens to the best of us. But, they're trying--and I try to see where they're coming from. That's why I don't mind hearing from them. I'm just trying to be helpful.
That's the key--when you think you can help just about anyone, and you really do like helping people, each new pitch is an opportunity.
That's also why I like hearing from people who really don't need to pitch. There are some extremely well connected founders who have achieved lots of success that either self-fund or just get the band back together for their last deal. No one is ever going to turn them down, and they know more money than they need. The idea that they need to go pitch someone they might not know as well isn't on their radar, but it should be.
First, their best buddies from their last startup are probably going to give them a free pass or two--and a good investor audits your thinking--challenging you where the story might not be as strong. Just the other day I had a great conversation with someone who had already raised, had a good product and was making excellent progress--and I thought he was undercutting himself with some really conservative financing plans. In my mind, he was going to need to be right back in the market again and was wasting a round, taking 20% dilution when he didn't need to be. I may not have convinced him, but I think he found the conversation helpful and I was happy to help.
So go ahead and pitch--but please keep in mind the following:
1) If you haven't done your homework on your idea, it's hard for me to be that helpful. Talk to potential customers and others who know the space really well to learn what has come before you in this area--why it worked and why it didn't. Don't make too many assumptions about why Instagram will never do this or why so and so failed. I don't mind getting idea stage stuff, but at least do a little bit of work on it.
2) Pitching is not about getting me to say that something is a good idea or bad idea. It's about working out a plan and finding out whether or not I want to be a part of that plan. A lot of people ask for "feedback" but they don't have a specific question or some assumption they want me to agree or disagree with. The more specific the answer that you're looking for from me the more helpful I can be.
3) Grabbing me at an event for thirty seconds is just about the worst justice you could do your startup. In person is a great chance to establish that you're not a nutball and that you're the kind of person I'd like to engage with going forward. Telling me your name, your background and that you're going to follow up with me by e-mail about an idea to [insert thing worth doing] is so much better than a rushed pitch. Let's just talk like humans who aren't in the middle of a potential transaction first.
4) It's my job to hear you out. Please don't apologize or act like you're bothering me. Don't say, "I'm sure you're really busy." What do you think I'm really busy with? Other pitches! This is what I signed up to do. You can't get the big fat carry check when your rocket ship investment goes public without talking to some new entrepreneurs really early.
5) Don't get antagonistic if I say no. If I thought it wasn't for me, I might be missing out on something, but if I understood your idea and just wasn't into it, you need to move on and find someone who is really psyched. I'm not that person and now the clock is ticking on additional minutes wasted trying to convince me.
Best of luck. I look forward to hearing from you... really!