10 Things You Must Have to Impress a Silicon Valley Investor
Imagine this setting:
You, a super-smart startup founder with a killer business idea, have a pitch meeting with an investor in Silicon Valley. You’re nervous. You can’t eat. You’re dwelling on all the terrible things that could happen in the meeting (forgetting key points of the presentation, fumbling over difficult multisyllabic words, falling out of your chair). The investor is willing to give your company funding, but only if you can convince him that not only your idea, but also your team and company can and will succeed.
Most likely you wish you can get into his head and understand what he wants to hear and what matters to him. Well, a few weeks ago on Valley Talks, I interviewed Dominik Andrzejczuk from Morado Venture Partners and gladly did the work for you. You’re welcome!
I asked Dominik series of questions about what and who he’s looking for, and he gave me 10 gems that could make you stick out before and during a pitch meeting!
1. Use Your Extensive and Connected Network in the Tech World
Morado Venture Partners writes around 1 check per month to worthy start-ups. Before the pitch meeting, they carefully select the people they want to interview.
“We get about 200 deals a month. It’s a lot of filtering. It’s a lot of due diligence on founders…There will be weeks where we saw four or five really great companies. We would love to invest in all of them but we can’t. We have to pick one, and we have to be very, very particular on how to select that company.”
A good, solid network allows them to notice a potential start-up.
“A lot of it [filtering], has to do with your network recommending an entrepreneur and saying ‘hey you should really talk to this guy. They have really interesting tech’. A lot of the times it’s from our own portfolio companies and one of the founders will say, ‘Hey one of my good friends, fellow classmate or whatever, he’s building this product. Can you take a meeting with him?’ Most of the meetings that we do take are warm introduction from somebody we really trust.”
2. Be Prepared For a Thorough Examination of Your Company
VC Investors in Silicon Valley conduct a lot of research on your company before a meeting. They will ask you a series of prove-to-me questions.
“There were a couple of meetings that the entrepreneur walked out half-way through the meeting. They were not used to how Silicon Valley VCs operate. Sometimes you ask a lot of questions, and they’re not ready to dish out all the secrets. Typically VCs don’t sign NDAs.”
Investor’s own research on the pitching start-up does not go wasted. He makes sure that he asks the potential start-up all his questions.
“When I take the meeting, it’s something that is interesting. So, usually, I fill in that whole entire hour because I do have a lot of questions prepared for going into that meeting.”
The more the fund member is convinced of the start-up’s product, the better he will do convincing the rest of his partners for a final deal.
“We have an open conversation about the companies. So if there’s a deal I really like, then at the partner’s meeting on a Wednesday I have to pitch the company to rest of the partnership and win them over. Because VCs don’t look at reasons to invest in companies, they look at reasons not to invest.”
3. Can Your Business Serve To An Attractive Market?
Dominik and fund partners look at multiple things about a startup’s product. A big indicator of the potential success of the company has to do with the market space.
“How attractive is the market? Is it huge? Is it, meh, in the middle or so-so range? Is it small? If it’s a huge market: Are there any competitors? How saturated is the space? If it’s a medium sized market, are we talking that they are going to dominate this entire market with their product? Which company will reap the most value?”
Just because an investor decides not to strike a deal with a new company, doesn’t mean there isn’t potential for future deals. The good news is, that when they say that they want to stay in touch, they really mean it.
“We always try to maintain a good relationship with those entrepreneurs. We say: ‘Hey, we can’t do it this time. But we really respect what you are doing and we want to see how we can help you guys out.’”
4. Prove that You Are an Expert in Your Field and Passionate about Your Craft
Founders should have quality stakes in their own business and an expertise that no one else has.
“We place a very strong importance on the quality of the individual founder, and how well the founders work together. When they move onto their next venture, they will kind of already know what to do, how to hire. They have a large network of engineers that they can tap into and say ‘Hey, I’m starting this new project can you come join me?’”
An expert founder is also a passionate one. Passion equals charisma.
“You [founder] have this aura; you can actually make people do crazy things. Like: ‘Hey take a pay-cut, come work for me, and maybe this will pan out.’”
When you have charisma, you can convince anyone.
“[Investors] can pick that up in the first fifteen minutes — you’ll be sitting there and you’ll be like, ‘wow I believe it, I totally get it.’ Investors look at how multidimensional founders think…”
5. Understand the Current and Future Generation’s Behavior
Dominik uses Snapchat as an example of a company that was able to tap into market that was already developed and furthered the space.
“…along comes Snapchat, they tap into a behavior that our parents wouldn’t understand — maybe you and I wouldn’t understand — but for some reason they found something unique.”
Morado Ventures Fund fund look for companies that accommodate the modern consumer.
“I look at companies that are doing interesting things targeting millennials. Millennials have weird behaviors. They have insight on how their generations act, how their generations consumes content, how their generation communicates.”
6. Keeping Positive Body Language (Stop fidgeting!)
Investors, just like everybody else, pick up on the subtle body language of founders. A lot of positive or negative things can be conveyed without anything being said.
“We pick up on these things. Let’s say we don’t know what it is, but it’s like something was sketchy, fishy. We can always figure it out through back channels because it’s a very small community.”
Don’t hide or oversell anything. The old advice says:
“Honesty is always the best policy.”
7. Energy! Energy! Energy!
Can you imagine giving thousands of dollars to a boring presentation? Dominik gets straight to the point:
“The founder has to have a lot of energy. He’s got to be super passionate about it because he’s got to inspire others. We really look at that.”
Don’t fake energy or passion. They can tell…
“It’s very difficult to fake. You can tell when somebody is faking it too. Which, again, is a HUGE turn off.”
8. Roll With Your Fumbles (literally)!
Okay — a pitching founder does something really embarrassing at the meeting. There’s a way to handle such follies with grace!
“About a year ago we had a robotics founder, very smart guy. He was in his chair and fell out of his chair, fell forward onto the ground and made a really loud shake. I was laughing really hard on the inside and trying not to show it. The thing is he may have been embarrassed but I didn’t think anything less of him. It was actually good kind of fodder for the meeting. He rolled with it really well, and that was kind of cool.”
9. Put Thought into the Little Things (Design your documents, no Plain Microsoft Word!)
The presentation of your documents really counts. An investor will get the impression, right off the bat, whether you care about every aspect of your company’s image.
“If you send a doc to my email address, and you put no thought into the design, then those will get looked at pretty fast. It’s very boring.”
Video presentation are always the most useful and efficient. It allows the investor to sit back and participate without doing too much unnecessary work.
“Videos do a much better job illustrating the problem as well as illustrating the solution. They’re entertaining. We like to be entertained.”
10. Demonstrated on a smaller scale
A lot of founders don’t know where to begin. Here is one crucial advice that is really often repeated here in Silicon Valley:
“The best approach to running a successful business is going out and finding the problem first. Instead of building the software on that problem, use a pen and paper, use google docs, and try to create your own work flow and do so in a non-automated, traditional kind of way. Once you start getting customers, once you start building interest, once you cannot sustain this model of notebook-and-pen, then you build software on top of that.”
That’s all you need (simple, right?). So do you, a super-smart startup founder, feel better about your chances? Go into that meeting — you’re going to be late — and pitch your awesome idea!
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Good luck!
