Friday, February 22, 2008

The One Thing I Love To Hear in a Pitch

In a lot of ways, venture capitalists are like any everybody else when it comes to the listening to presentations. Keep in mind that they listen to lots of them - maybe 100's - in a given year. They get distracted. They get bored. They wonder (and hope!) that the speaker will say something thought provoking. Want a sure fire way to gain their attention? Make a prediction!

The best presentations I have heard over the years have been ones where the CEO or founder takes a position on where a market is headed over the next 2 to 5 years and then intelligently walks through where the opportunity will arise from that. Why 2 to 5 years? Because that is a time frame managble for a start-up. Guessing what will happen 'eventually' is a lot easier than putting a time stamp on it.

Let me provide a few more details on what I like to see when it comes to predictions. Start with a discussion of where your market is today. Who are the incumbents, who are the relevant new comers and what does each contribute today. Now project out 1 year, 2 years, 3 years. How will the market evolve? How will the needs of the customer change? What will each market participant focus on? At the end of this story - and yes you should construct this part of the presentation with a story metaphor in mind - it should be crystal clear to anyone listening to you speak where the opportunity lies and why all the other players - except you! - will have a tough time addressing it.

A well thought out analysis as I have described above is a great way to engage your VC audience. Who isn't curious about what the future has in store for an exciting market.

By the way, I openly acknowledge that what I have described above is a tough assignment to carry out. It takes deep thinking and, frankly, brilliant insight that most people just don't have. Of course, that is as it it should be. Few are bright enough and driven enough to see and pursue what the rest of the world doesn't. But what a rush when you make a prediction, place your bets on it - your time, your money, your career - and it happens as you guessed! Those are the joys of starting and building a great business that few ever experience.

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