Venture Capital Elevator Pitches

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Venture Capital Elevator Pitches

I left my job at a venture capital (VC) firm in 2010. After freelancing for a bit I then worked with a high-technology company in the robotics space. I then started my own strategy consulting practice, which over the years has matured into an interesting blend of design thinking, management strategy and human behaviour. Three fields I am keenly interested in, and which I use to help companies. I help them understand their customers and customer needs better. I also help companies tackle complex problems or pursue opportunities and grow.

VC funding, business plans and elevator pitches however, are areas a lot of clients associate me with. My initial list of consulting services didn’t even factor business plans or elevator pitches. However, along the way, by heavy demand, it became a prominent service. I continue to get a lot of inquiries for elevator pitches. There probably will never be a shortage of companies aspiring to get their entrepreneurial dreams equity funded.

However, I have observed one common aspect across a lot of clients and prospective clients. It is in their view of what an elevator pitch is. Or should be. Given the overly enthusiastic, almost orgasmic effect that venture capitalists have on a lot of business folk and new entrepreneurs, they tend to assume that that’s what an elevator pitch is about too. That the brief time the pitch gets in front of the investor, with or without the entrepreneur actually being present, should blow their mind. And to achieve this, they start thinking like advertisers. They think loud. Or blingy. Or just outright abstract.

They assume the pitch needs to be all glitsy and filled with high quality images, video, and graphs! That’s it! And on occasion, it has been tough convincing them otherwise. Reasoning with them that having been an investor, I might probably have a better sense of what might bring out the core essence of a venture. And what might be outright distracting, or worse, confusing. But it doesn’t work often. They are so enamoured by a faceless and nameless investor who probably frequents their dreams, to reason.

Sometime last year, someone made Uber’s first elevator pitch public. For those working on their elevator pitches to seek investment, and if you haven’t seen this already, UberCab – Dec 2008. How many captivating images do you see? They seem to me like just random pictures pulled off a Google search. A few phones, a few cars. No plot, no sub-plot, no theme, nothing. Just a vision and a compelling business proposition and a plan on how to make it happen! Nothing else matters.

I have been quite blunt with clients when it comes to delivering a no-nonsense pitch. However, I have had my pitches go to design folk, artists, and even sent to experts in digital and web design to give them a ‘makeover’. And I’ve had others turn my pitches upside down to present what they believe is a better way to ‘pitch’. Only to then come back and use one previously made by me.

The reason being, at the end of the day, even if some people don’t agree, venture capitalists are humans too. They have similar attention spans. They aren’t fools not to spot a great opportunity, even if it is scribbled clearly on a restaurant napkin. And they certainly aren’t fools to accept a mediocre vision or action plan just because it was in a ‘beautified pitch’.

This is the third of a series I’ve written regarding entrepreneurs and VCs. In case you missed the first two, they’re here: 1. What’s Your Profession and 2. The Entrepreneur in a Venture Capital World

Hope you found these useful.

My attempt at sketching a puzzled investor.

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The Entrepreneur in a Venture Capital World

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The Entrepreneur in a Venture Capital World

Imagine a food connoisseur has a vision of opening a restaurant. Selling a carefully crafted list of delicacies, whose preparation has taken years to refine. This aficionado has thought of everything. The cutlery that would highlight the preparations, what the entrance to the restaurant would be like, the kind of chefs he or should would need. Everything.

Now imagine, you, as a customer, visit that restaurant. No guarantees you’ll like the food there. Or you might have preferred a better selection on the food menu. Now let’s say you, and your friends or family who have accompanied you, get to have a say in what the menu should be. Just because you’ll be paying the bill. Or simply because a local bank or relative bankrolled the entrepreneur’s dreams, they want to have a say in what food should be served.

Isn’t this the case with the venture capital investment ecosystem? They take a seemingly great idea, imagined by a dreamer. And after some funding, in an urge to “scale” it, they put it on steroids. Often at the cost of the original dream and vision. And with the VC community, their return timelines are shrinking, so their portfolio mutation is growing rapidly. They don’t care about profits. As long as there is sufficient sales and buzz, they’re on track. As opposed to keeping fund and investment choices a little more practical. So as to build a more, bottom-heavy business. On a steady foundation.

In a way, it would compare with a risk in the investment ecosystem called Maturity Mismatch Risk. This is a capital management situation that can disrupt business cash flows. It’s seen when assets held to meet future liabilities are not well aligned from a maturity time point of view. Short term assets should deployed for projects with quick returns. Otherwise, they could cause a financial crunch in the short term. ‘Entrepreneur-Investor’ relationship could be looked at in a similar way. Where an investor who is only there for a few years, sometimes changes the entrepreneurs long term strategy to suit their investment goals.

Now this might seem to contradict my VC related post from earlier this week. One where I said that the VC space seems to have more left-brained, finance, cold-numbers people, and less right-brained, creative ones who would appreciate a good, world-changing vision and back it up in a way that it really changes the world permanently. However, they are two sides of the same coin. Business models do take the world forward. But that doesn’t mean every other potential idea must first blow up with over-funding and investor control, and then explode! And all the while, the disinterested, minority stake-holding promoter is busy with other startups he or she has invested in.

Imagine a great idea and promoter being backed by an investor who actually sees the impact of the idea from the promoter’s perspective. That means, not just scaling an idea, but rather, letting it grow to have the impact it was intended to. Then maybe some of the great entrepreneurs wouldn’t actively shun investors and patiently bootstrap their way to world-change.

It isn’t just about the idea. The entrepreneur’s vision of how the idea pans out matters just as much.

I happened to see this post on LinkedIn when I was writing this post. While decisions like come on one end of the world-change spectrum, a lot of venture funded companies aspire to be on the other. In that they would like to achieve a strong global presence with the least marketing spend. And most importantly, make astronomical stakeholder returns. For the VC community, the ideal place lies somewhere between the two ends of this spectrum. Because in many cases, the entrepreneur sets out on a well-intentioned mission to fix a huge problem for a customer base.

Image source: link

Again, it isn’t just about the idea. The entrepreneur’s vision of how the idea pans out matters just as much.

The title image is that of a vulture. When I worked in the venture capital space, people sometimes referred to the community as ‘vulture capital’. Nowadays, looking at some investment decisions and entrepreneurs who focus more on personal investments rather than their own ventures, looks like vulture capital is contagious.

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Think A-Team: For the Design & Strategy needs of Young Businesses

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Think A-Team: For the Design & Strategy needs of Young Businesses

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Image: link

Hi, all you enterprising entrepreneurs,

I am pleased to give to you, ‘Think A-Team’, a growth partnering service for all your business strategy needs.

The intention behind it, is to help you make your business challenges a little less challenging. And to work with you on growing your business faster & better.

The services I have selected to offer, are a result of nearly a decade of close working with entrepreneurs and young businesses. While the portfolio of services will evolve with time, what will remain constant is reliability, effectiveness, accessibility and affordability to young businesses that have had few, if any options as far as growth partners go.

Think A-Team

Give it a try today! And I’ll look forward to working with some of you enterprising folks on building your businesses for you.
Have an awesome weekend!!

R,
Shrutin

Look forward to connecting with y’all on LinkedIn and/or on Twitter.

Be Your Best Judge

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Be Your Best Judge

This is a small extract from Michael E. Gerber’s ‘Awakening the Entrepreneur Within’. Michael Gerber is the bestselling author of The E-Myth Revisited, E-Myth Mastery.

He says “Unfortunately, most businesses don’t close soon enough. They just linger on and on and on, surviving as best they can. Entrepreneurs should never create a business simply because it can survive. To do so would be to commit oneself to daily dying. Entrepreneurs create business that thrive.”

I guess that simply says a lot.

While starting companies is one thing, but something that entrepreneurs should always constantly do is judge or evaluate their business/ progress/ future growth, rather than losing sight of the big picture in the race to capture more market share…

Judging based on the business itself, competitors, and on the vision.

Many companies just seem to drag the eventuality, that way burning tons of money, sabotaging employee careers, and neither growing nor benefiting from the business.

Opposed to that, it sure takes the rare soul to accept defeat, wrap up, and fight another day.

And there is an advantage to that. Your big business could be based on the idea you get after you’ve freed your mind of a business that’s just trudging along. So be your best judge, and take a good call.

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Dare to Venture?

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Dare to Venture?

“The best things in life are free,

But you can keep ’em for the birds and bees;

Now give me money, (that’s what I want) that’s what I want.”

– Barrett Strong

Lets see. First time entrepreneur? Maybe you’ve already taken the brave leap, but suddenly hit a roadblock for lack of funds to scale up? Or not enough to even qualify for an order? Perhaps banks wont help because your services or IT firm doesn’t fit into their way of doing things? Or even better, you have a crazy idea that could as well be the next big thing, only if someone would see the potential growth and the guts…

If you sniggered after reading any of the above, you’ve probably already had your share of knocking on doors in a bid to expand your business, or even just set sail…

I’ll give you a lil overview on venture capital, hopefully answering some of those questions you had about it…

  • VCs invest in ideas, businesses with a high amount of perceivable risk but also a potential upside
  • VCs invest towards buying a stake in your company (they buy shares of your company, without any collateral or pledge. That however, doesn’t mean that you don’t take their money or them seriously coz it appears to be tension-free capital unlike a bank loan.
  • Not wanting to alarm you, but generally the legal agreements with a VC are made in such a way that the VC has a significant powers where the company is concerned.
  • The powers and rights should be seen as a trade off for the risk the VC takes, and the collateral-free funds they bring into the company, and their time and effort.
  • And while certain clauses in these legal agreements might give some of you sleepless nights, many extreme measures are almost never exercised by the VC. They’re sometimes just there so that promoters don’t think of playing any tricks on the VC or the company.

Yeah I know this is a very basic and simple way of putting it. There is much more to it, but if I were to put more here, you’d be asleep before I’d expect you to scroll down…

Anyway, I’d just like to elaborate a bit on the last point in the image above. I think is crucial for you entrepreneurs to know when you plan to raise money from professional investors:

(ok, now I usually get extreme reactions to my comparisons/ examples, so even if you find the comparison absolutely insane, don’t miss the underlying message)

The relationship between a VC and the promoter/ management team…it should be looked at like a serious relationship, a marriage of sorts. Or even as though you were looking for your next best friend if you’d like. And as we all know, everything long term can’t be based on the trivial. Like ‘I love the way she looks n dresses’, or, ‘I think she’s my soul mate coz we look great together’. Or ‘she just has the most amazing expression when she’s trying to work the microwave while reading thru the manual’. Or some similar nonsense.

The long haul asks for bigger and more important factors to be considered.

Venture funding is never about the money as it is about the connect the promoter, the team and the VC share. You could probably raise capital from multiple sources. But nothing will compare to the magic the team of promoter and VC together can create.

And unlike relatives whom we don’t get to choose, promoters can and must take time to see if her or his visions, objectives and spirit matches are clearly understood and appreciated by the VC they’re in talks with. Coz otherwise, like good ol’ Axl Rose says, ‘nothing lasts forever…’ Things sure can get nasty between promoter and VC if they don’t share a similar vision. And they are bound to lock horns. In which case, they both suffer, along with the business, employees, customers, etc.

You wouldn’t really want a tug-of-war with the promoter trying to go global next year, and the VC ranting for a quicker exit.

Even if your business is strapped for cash, always choose your VC very carefully. And raise only the money you need. Gone are the days when VCs funded the Lamborghini’s of dotcom promoters.

I’m still just four years and learning in this industry. But if you do have any queries about venture capital, fire away. I’d be more than happy to try and help you out with it.

Happy fund-raising.!

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