A couple of weeks ago, I gave the presentation below to the companies participating in First Growth Venture Network. The focus of the day was how to pitch investors and while every investor has his or her preferences, I find that there is 80%-90% overlap in what most investors are hoping to see and hear. Given that there are so many great resources on this topic available on the web for entrepreneurs, I wanted to focus on a few key things that seem to get overlooked in advance of and during many pitches. This presentation is a bit incomplete without the accompanying commentary but hopefully you can get the key points and be somewhat entertained in the process (lots of cartoons!).
Here are a few, brief clarifying points:
Pursue feedback: Get feedback on the pitch from people that you trust and make sure you practice it in front of an actual audience. Use this opportunity to test all of your assumptions.
Don’t talk to strangers: Research the partner that you are meeting with, but more importantly, understand why that partner might be interested in what you are doing. Investors see hundreds of businesses each year and they say no to 99.5% of them. Investors are prolific “daters” but they need to feel chemistry to get “married”. I refer to this feeling as emotional resonance and I see very few investments made where that is missing.
Small bites, big appetite: All investors ask themselves whether the business they are seeing is a feature, a product or a company. As an entrepreneur, you need to be able to sell a vision while focusing on near term milestones. Start small and focused but have a plan to get big.
Any and all questions and feedback are more than welcome!
Venture Generated Content 
Nice post, like the use of cartoons.
Nicely done Satya. Good presentation, and great advice for entrepreneurs.
Good stuff Satya. I heard from the guys about the portion where you talked about the “eat” vs “dream” aspects of the plan/business at FGVN. Think that is a key insight entrepreneurs would benefit from. We definitely have.
Thanks for the tips. On your last slide, you give two tips that seem contradictory: “Raise money when you don’t need it” and “Too much money can be as bad as not enough”. My company is doing a seed round now ($500k – $750k) and I think we’ll have the opportunity to raise more than we need, but my inclination is to not do so to avoid too much dilution. Can you speak to that a bit?
The first tip emphasizes that you never want to raise money when your back is against the wall. Otherwise, you lose your leverage with investors and most certainly will get terms that are less favorable than you might otherwise. The second tip speaks to the difficulty in maintaining fiscal discipline when you have extra money sitting in the bank. You want to raise enough money (with some cushion) to achieve the milestones that you have set out for your next financing. As you mention, this prevents you from taking excess dilution. But more importantly, it prevents you from building your business in a manner that might not be sustainable without massive pools of available capital.
Thanks Satya. Very simple and to the point. This input is very consistent with my experience with VCs. I love the “Raise money when you don’t need it.” It that a suggestion or the reality of when VCs are ready to invest in you!? 😉