VC and Startup How-To's

Ditch the Perfect Pitch: How to Converse with Venture Capitalists

Venture capital (VC) – the specific combination of the words ‘venture’ and ‘capital’ carries an exceptionally formal tone. And it’s this air of formality that really tricks founders into a more stiff, proper approach to speaking with VC firms. To start off on the right foot, let’s begin by renaming ‘venture capital’ to something more meaningful.

Venture: what do we mean by venture? Merriam Webster defines venture as the following: to proceed especially in the face of danger; to expose to hazard : RISK, GAMBLE.

Now, what is capital? Wealth in the form of money and other assets.

So in essence, what is a venture capitalist? Drawing from these definitions…

A venture capitalist is someone who, in the face of danger, exposes themselves to hazard by gambling resources on startups.

That is one tough job, even for those with a particularly large appetite for risk. Yet if you were the one making bets on such risks, would you want the startup founders you were evaluating to speak as if reading from a carefully crafted script whilst showcasing a flawless deck, outlining an idealized opportunity to ride into the sunset together with $5M dollars? Most certainly not! Wouldn’t you prefer to have an authentic conversation with a rational individual who accepts the risks at hand and has a well thought out action plan? Now we’re talking.

Even though the previous imagery may evoke humor, it is precisely how many first-time founders (including myself) begin their fundraising journey. Depending on their initial advisors or accelerators, founders are almost always encouraged to wow investors with a mesmerizing presentation. I am here to tell you that this is a HUGE fallacy that will - at minimum - impede the relationship building with a VC.

Because that is what a VC and a founder will inevitably enter at the end of it all: a relationship forged in a mutual appreciation for risk and for building a successful company. And the best relationships are not built solely on picture-perfect online dating profiles or pitch decks.

Instead, focus on what really matters to a VC – even though you may be very pretty, it’s what’s inside that counts. What’s inside? A bloody product! And maybe this product will be revolutionary, and maybe your go-to-market strategy capitalizes on your unfair advantages as a founder – now THIS is what’s sexy to VCs, because you are showing how you as a founder can help reduce the inherently high risk of your new company, inviting the VC to also describe how they can help contribute to reducing this risk.

And that’s the key – both of you are agreeing to ‘proceed in the face of danger’ together, each contributing expertise and resources to make the company succeed.

An amazing partnership is forged, and it has nothing to do with how slick your slide deck appears. Let’s focus on teaching founders how to communicate their vision in simple terms (go-to-market), how to describe their approach to overcoming risk (IP, unfair advantages), how to outline the opportunity for both them and the VCs (problem statement, TAM), and most of all, how to be honest from the very start of the dialogue. A VC backing a founder can create a very powerful team when the relationship is based on mutual respect and trust. Sounds like this type of relationship does not differ from most other types of relationships, and that’s because it doesn’t. So stop pretending VCs will forget the financial hazards when they see your magnificently designed pitch deck. In the world of venture capital, we are all facing the dangers of high-risk business endeavors, together.