VC Deal Lawyer

I recently attended the 2009 Early Stage East Venture Conference.  Very exciting day spent networking and listening to 8 minute pitches from 21 companies seeking funding at different stages.  On the whole, I thought the presentations were well done (although a few presenters seemed to forget that they only had 8 minutes). 

During the conference lunch I met a very interesting writer for Forbes.com – Maureen Farrell.  In addition to her written articles, she produces a video show called BreakOut!, in she which focuses on emerging growth companies with fresh, disruptive business models or products.  We got to talking about how to present at venture conferences.  For what it’s worth, here’s a list of my pointers (in no particular order):

• Consider who you are presenting to– There are two different ways of presenting the same company depending on whether you are presenting to a specific venture firm in their office versus pitching at a venture conference to an entire audience of venture firms.  In the case of the former, your presentation needs to be tailored to that firm’s style – get to know their investment profile, their current portfolio companies and spend time doing as much diligence as you can on what that firm looks for in presentations (speak to current portfolio companies or accountants and lawyers that are familiar with the venture firm).  In the case where you are presenting at a conference to an entire audience of firms, try to prepare a presentation that resonates globally.  Also, be mindful of what angels may be looking for in a presentation versus a venture firm.  If an angel has relevant industry or market experience (as many do), that individual may dig deeper into certain areas than a venture firm would.
• Answer the Question Asked – Make sure you listen carefully and answer the question that is asked, not the question you prepped for.  If the same theme in questioning is repeated numerous times, but in different ways – then you are not answering the question being asked.
• Relevant Experience in Team Members – Your team will have a leg up if it includes members with specific experience in the space or industry you are targeting.  If a company is pitching a new sporting good product, I would suggest that one of your team members should have specific relevant experience in sporting goods (e.g., a former buyer for Dick’s Sporting Goods, a former sales rep in that space, a former VP of Ops of Sports Authority, etc.).  Most investors, in particular angel investors, don’t want you learning a space or industry on their nickel.  Demonstrate you already have the talent that knows the space.
• Full-time – Be fully committed to your venture at the time of the presentation.  Venture firms are not going to put up a couple of million dollars for an idea that you don’t think is powerful enough to have already quit your job.
• Prep, prep and more prep – Talk to everyone that has experience in watching these presentations (e.g., venture firms, angels, lawyers and accountants) and learn as much as you can about what people expect and then practice, practice, practice.  Have your timing down perfect, and then be prepared to get pulled in different directions as people ask questions that may not be in the order of your presentation slides.
• Lifestyle versus Venture Backed – Know the difference between a lifestyle company and a company that could be venture backed.  Venture firms are looking for high growth potential in large markets.  Remember, they need to provide their limited partners with a return on their investment.  Many companies confuse a lifestyle company with one that is proper for a venture investment.  Lifestyle companies are just that, they provide a sufficient amount of money to live comfortably without working 80 hours a week, but they do not provide returns that are interesting to limited partners.
• Value Proposition – Explain in the first few minutes of your presentation who buys your product or service and why.  Give the value proposition up front.  There are lots of people out there that can build very cool, interesting technologies that fail to solve a problem for a customer and thus don’t have any buyers.  The products that sell are those that solve real customer problems.  “Build it and they shall come” doesn’t work in the VC world.
• Risks – Realistically present the risks faced by your company.  Any worthwhile company has them, otherwise there’d be no money to make.  Money is made off of the risk – otherwise, everyone would be doing it.  When you discuss the risks, demonstrate how you plan on mitigating them.
• Numbers that Make Sense – I’ve seen more than one presentation where the financial numbers on the slides didn’t add up, literally.  This is a sloppy mistake and one that can be avoided.  Have someone with “fresh eyes” review the final presentation and scrub the slides for those types of oversights.
• Be Honest – After you’ve seen a lot of these presentations, you get a sixth sense for who knows their stuff cold and who doesn’t.  No one likes have their time wasted with the latter.  If you don’t know the answer to a question, be honest – it may give you some credibility.  But I’d also suggest to offer to get that person an answer and do it quickly after the presentation.