The Idiot’s Guide to Raising Venture Capital

“What is all this?”

That's what's running through my head at slide seven of your deck. I'll say it out loud, right to your face, even if most VCs won't. They nod. They write you a nice note on Thursday.

The unedited version in my head is just: “No.”

“No no no no no.”

“What's even happening here?”

“Where's the money?”

You've built a beautiful deck. There's a slide with all the other people doing something that I might find if I Googled "AI sales trainer." Luckily, none of them have any more than three checkmarks next to the eight arbitrary qualities you picked. You? You've got all eight. Good fucking on you, Brad.

Or did you go with the quadrants? Horizontal axis goes from Hard like a fork in the eye to easy like Sunday morning. Vertical axis goes from Awesome down to shitty and there you are, awesome AND easy. Bullseye.

Meanwhile you've yet to answer the only question I care about:

Can I make a shit-ton of money?

That's it. That's the whole meeting. Everything else in that deck is there because someone told you a deck needs eighteen slides and you're a conscientious person who does the assignment.

Here's the part only a VC knows: when your meeting ends, the investor who liked you has to walk into a room with four people who weren't there and describe you in about ninety seconds. That's the actual product of your pitch. Not the deck. The ninety seconds. Ninety seconds is three things: "there's a giant pile of money here," "these guys have figured out how to reach it without heroics," and "this is happening right now and we're either in or we're watching."

So. Money. Is there a lot of it?

Not "the global market for logistics software is $340 billion," which is a number you got out of a Gartner PDF and which means nothing to me, because you're not getting $340 billion, you're getting whatever the fourteen customers who actually have this problem will pay you, and I want to know what that is. Tell me what one customer is worth and how many of them exist.

That's a real number.

I can do arithmetic. I like arithmetic. Give me the arithmetic and I'll do it in my head while you're still talking and I'll get excited without you having to tell me to get excited.

Second thing, the money has to be easy to get. Complexity kills enthusiasm. If I don't understand what you're doing, or if it seems like the customer needs to download eight things before they save a penny, we're done here.

The problem, besides your dumb customers not realizing how awesome you are, is you're going to hire people, and most people are idiots. I’m an idiot. You’re an idiot.

Have you done anything stupid today? Of course you have.

I mean, they’re nice and they'll seem smart when you hire them, but it turns out interviewing well is something idiots have learned how to do, like your idiot dog learning how to play dead.

He’s not aware that he’s acting or even what death is. He just wants a biscuit.

So when you show me a sales motion that needs a twelve-week consultative process run by someone with a domain PhD and a relationship with the CFO, I'm not thinking "sophisticated." I'm thinking: who's doing that in year three? It's not you. In year three you're in a room with your board explaining why the number moved sideways. It's your fifth sales hire, who you haven't met yet, and who's worse than your first four, because that's how hiring works.

The business has to work when normal people who get sucked into internet comments are running it on a normal day.

Founders get this exactly backwards. They perform difficulty on purpose. They think complexity is a moat, so they explain how hard it all is, how many integrations, how deep the workflow goes, how long the deployment takes, and they think I'm hearing "defensible." I'm not hearing defensible. I'm hearing expensive and slow and dependent on a caliber of person you can't hire at scale for the salary you can afford. Complexity isn't a moat when you're twelve people. Complexity is a hiring problem you haven't had yet.

You're not being graded on whether you're smart. You're being graded on whether the money still shows up when someone less smart than you is running the thing.

Now picture the position you've actually put me in, because I don't think founders see this part. I look at something like two thousand companies a year. I invest in five. Five. Your pitch isn't being graded, it's being ranked, and it's being ranked against 1,999 other things, most of which are also good, plenty of which are run by people smarter than both of us.

Almost nothing gets rejected in that process. Things finish fortieth. Fortieth and dead are the same outcome, and they feel identical from where you're sitting, which is why you get the "we're a little early for this" email and learn nothing.

Third thing, and it's short. Is this happening now?

Not "the market is growing at 14% CAGR." Something changed. Something broke, or got cheap, or became legal, or stopped working the way it used to, and because of that a thing that was impossible in 2023 is now merely hard, and there's a window before everybody notices. I want the sense that this train is leaving whether or not I'm on it. That's not urgency theater, it's not "we've got a term sheet from a fund I won't name," which I can smell from across the room and which makes me trust you less, not more. It's just: here's the change, here's why now is different from eighteen months ago, here's what happens to whoever moves first.

If those three things are true and you say them in the first four minutes, I'll sit through your regulatory slide happily. I'll ask you questions about it. I'll look like the most engaged investor you've ever met, because I'm not evaluating you anymore, I'm doing the thing where I imagine jumping into my money bin like Scrooge McDuck.

If those three things aren't true, no slide fixes it. There's no font. There's no narrative arc. There's no coach who can put the eighteen slides in an order that turns a small market into a big one—although there is one who will tell you whether you’ve nailed the first four minutes or not and will be honest with you about it.

So how else do you know whether you've got it or not?

For starters, you can let a bunch of comedians roast you.

No, that's not a euphemism for fundraising. That's Pitch Roast Live, which is what happens when somebody looks at Shark Tank and a comedy roast and decides those two formats belong in the same room. Four founders pitch. Three comedians and a VC take the pitches apart in front of a paying audience. One founder wins. Noah Obstfeld runs it, it's at Caveat on Clinton Street.

I'm the VC on the panel Wednesday night.

Comedians are better at this than investors are, which is the part founders don't see coming. A comedian finds the soft spot in your pitch in about nine seconds, because that is the entire job, and they don't have a fund's worth of reasons to be polite about it. If your business is confusing, they get the laugh on the confusion. If your market is small, they get the laugh on the market.

Noah gave me ten free tickets. Code NEXTNYCVIP at registration, first come, at luma.com/pitchroastaugust.

Bring a founder who needs it more than you do.