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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Way to go, Alok! The Venture Capital Differentiators

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Way to go, Alok! The Venture Capital Differentiators

A few years ago, I came across this interview with Alok Mittal on the internet. Alok is the Managing Director at Canaan Partners, one of the leading VCs in the technology and healthcare businesses, the world over. And in that interview, Alok was talking about their investment in techTribe a few years earlier. techTribe, by the way, happens to have a job referral service offering, similar to the incentive based job referral business model of the company I wrote about earlier.

Alok had publicly agreed that the incentive driving referrals was not going as expected. And that they have been planning to sell the company as the business model didn’t seem to work. I did feel a sense of pride and satisfaction that my gut feel and reasoning was in a way being backed by someone, who is to me, something of an authority in the field.

Then, something struck me. Here was a world where everything that everyone spoke about publicly was, like the Americans popularized, “good”. And amongst them was someone as knowledgeable, intelligent, and capable as Alok Mittal. It took someone humble, grounded, and true to his work, to openly talk about his mistakes. Literally in Rudyard Kipling’s words, he could ‘meet Triumph and Disaster, and treat those two imposters just the same‘.

Hats off to your humility and honesty towards your work, Alok.!

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Models that Puzzle Me

This is one of of some business models that just don’t make sense to me.

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Models that Puzzle Me

If you came here expecting some scoop on Gisele Bundchen or Miranda Kerr, I suggest you hit the ‘Back’ button. This one’s more about the ‘less figure, more strategy’ business models. I’ll work on a post on real models sometime soon though, I promise.

A few years ago, on a random day at office, I received a call about an investment opportunity. At the time, I used to take an average 2.5 inquiry calls per day, speaking to a wide assortment of people. From second and third generation businessmen to entrepreneurs working on their second or third successful venture. And even some final year students who had budding dreams about what could as well be the next big thing. And every once in a way, I’d get a venture who’s business model was confusing. Here’s one of a few business models that puzzle me.

Anyway, so this call, Mr. Promoter of a company that was into the job portal business that was based on referrals. Simply put, the usual job portals work on the model that companies that hire from a particular site would have to pay them certain fees which would give them access to a filtered set of numerous candidates, and perhaps if some of them were hired, the portal would get another x amount of money per candidate hired.

Now that model, as we know, perhaps works just about fine, as demonstrated by the popularity of naukri.com, monster.com, timesjobs.com, and several thousand others.

This particular business model Mr. Promoter told me about, seemed to be based on a reward system. How it works, is as follows. You are  a good friend of mine. I know you’re looking for a job, so I get in touch with this company, and give them your cell number or perhaps your mail id. They get in touch with you, tell you that they’ll help you with getting a job. They ask you for your resume, and for the particulars of the kind of job you’re looking for, etc.

Now suppose they find a suitable opening for you. They put you across to the company, and in case you’re hired, obviously this firm would get their fee for helping them find a suitable candidate. Of that fee they receive, I would get a small percentage for the lead. Thus incentivizing me to refer more friends of mine for more requirements.

I tried discussing with Mr. Promoter, almost to the point of arguing. I just couldn’t see the future of such a business, and I wanted to make sure he saw my perspective. It appeared simple to me. I could of course, be totally wrong. I mean, that’s what the VC business, just like anything else, is about. It’s about perspective. I could have my views, Mr. Promoter would have his. The market and success or failure of the company would prove one of us wrong.

Anyway, so my points of argument were, that the higher the post, the higher the pay the firm, and in turn the person referring someone would receive. But, in the real world, you don’t really find a VP or CEO of a company referring someone to a firm. Right? I mean, who would have the time or the inclination for something like this. And at that level, one would have bigger things to worry about that trying to find people in order to make some quick bucks by way of referral.

So that leaves us with entry-level all the way to perhaps lower or mid-management candidates. Now most of them would anyway be registered on all the top job sites, where many if not most companies, would be tapping into, as one of their many sources for finding candidates. So that being the case, we can’t really expect a group of students from a college to refer each other to this firm in the hope of supplementing their pocket-money, eh?

So, anyway, I turned down Mr. Promoter’s investment proposal and even called him later to try to reason out that somehow, the business model didn’t seem to hold. He however, seemed convinced.

So much for one of the business models that puzzled me. The promoter and I have not been in touch since. And while I do hope he’s doing well, I am curious to know how his business worked out for him.

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