This document provides tips for pitching startups to venture capitalists (VCs). It emphasizes: 1) Knowing your audience by researching the specific VC and their views and past investments. 2) Knowing your business inside and out, including strengths/weaknesses of competitors and key risk areas. 3) Framing risks and rewards from the investor's perspective - bring risks to the forefront and have responses prepared for objections. Focusing only on successes without addressing challenges can undermine credibility.

1. Know
Persuasion
Know
and
Your Your
Risk v
Audience
Business
Reward
h"p://www.flickr.com/photos/11266609@N00/2872069583/
Presenter: Steen Andersson Co-Founder & Vice President (steen.andersson@5thfinger.com)
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2. Know Your Audience
• The pitch starts well before the meeting…
• Tim Draper’s Blog
• Try:
– Getting introduction (not a cold call)
– Research other similar investees of that VC
– Research articles written by VC himself
– Speak to colleagues of VC about the individual’s "
view on your type of business – develop objection management
– Understand the specific vs global hot buttons – network effect, etc.
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3. Know
Persuasion
Know
and
Your Your
Risk v
Audience
Business
Reward
h"p://www.flickr.com/photos/11266609@N00/2872069583/
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4. Know Your Business
• Know more than the VC
• My good friend went to…
• Try:
– Finding a confident one liner on each direct and indirect competitor –
“XYZ is great at this but their platform is not gear to do this”"
“We just hired X from their sales team and we learnt Y”
– Be able to talk to all parts of your business model
– Understand and have a position on all the risk areas – have an elevator
pitch around the risks they will ask: “what are the key risks? ”
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5. Know
Persuasion
Know
and
Your Your
Risk v
Audience
Business
Reward
h"p://www.flickr.com/photos/11266609@N00/2872069583/
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6. Risks vs Rewards and Persuasion
• Understand the risk profile & stage of the investor
– Seed <$1M
– Series A [5i] $5M (or now $500K?)
– Series B $10M - $25M
– Series C (Mezzanine) $X – growth
• Mantra: Bring Risks Forward
– Most entrepreneurs focus on building a business around what is easy
or what is working, without addressing the ‘hard’ questions. This a
big risk for investors. Burn lots of cash building a product before
realizing that the revenue model is flawed.
– Example – Genentech & Tom Perkins
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7. Risks vs Rewards and Persuasion
• Key areas of risk for investor:
Area
I would hesitate raising funding Examples of how to bring
before…
forward risk
Having at least one reputable customer testimonial – Talk about the sales strategy moving forward
Sales & Marketing Strategy
Beta Ok.
(specifically) and how you will quickly know if there are
going to be any road smashes.
Having proven that the core challenges have been In the product dev plan, showing that any risks
Technology Risk
nailed.
remaining will be tackled upfront will win you points/
respect.
Find A grade people who you can motivate about your If you can test the team by giving them a very tough
Management Execution Risk
idea and have them agree (on paper ideally) to join you challenge up front and then supporting them to nail it,
once your funding is closed.
that will help give the VCs comfort that this risk is
minimized.
Speak to potential clients and get in writing their Get these customers to become paid customers as
Market Risk
interest in you product in development.
soon as possible.
Demonstrate that you understand the competitive Go up against these competitors on clients to find out
Competitors
landscape.
why they
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8. Risks vs Rewards and Pursuasion
• Danger areas – pre-empt!
• List out ALL possible objections and have responses:
– You can’t scale that! -> motivated partners, network effects
– The technology is not protectable -> first to market & speed
– The clients are hard to reach -> clever channel management
– Your team is inexperienced -> brilliant with networks of support
• In business, I honestly believe its not what you say but
how you say it.
• This runs true with pitching, but VCs are too sharp for you
to bullshit. You need to speak with confidence and with
good material.
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9. Recommended Reads...
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10. thanks
Steen Andersson
Co-Founder
steen.andersson@5thfinger.com
415-294-5194
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