How To Explain What You Do To An Investor
Describe Your Company Like Naval Defines Blockchain
An entrepreneur recently asked me how to best explain her company to a VC. She shared that the VC visibly grew disinterested. Apparently, the VC wasn’t fully comprehending the scope of her work and why he should care. The entrepreneur wasted most of her 30-minute conversation on something that should have taken 60 seconds. Brad Feld said it best in his blog, Feld Thoughts:
“I strongly believe that a founder should be able to explain what they do in one paragraph.” — Brad Feld, Partner, Foundry Group
A tremendous example of a pitch going well is Naval Ravikant’s explanation of blockchain.
In 2010, Naval Ravikant founded AngelList, an online platform where angel investors meet startups. In this discussion, held at the 2017 Private Internet Company Conference, Naval describes how he’s democratizing the investment process and how blockchain and cryptocurrencies, in particular, have helped usher in a broader group of investors.
Watch the first few minutes of how Naval defines the power of blockchain, a particularly complicated technology to many, which can be directly applied to your startup:
In two minutes, Naval takes an extremely complex concept and puts it into words that anyone can easily understand. Naval really captures the essence: blockchain is a new way of organizing groups of humans through an open, decentralized, merit-based protocol. Although extremely intelligent, Naval doesn’t use unnecessary words.
“Big words don’t signal intelligence.”
The ability to use simple language to explain what you do is only possible with mastery of a subject. Inability to do so may indicate your lack of expertise in the space and/or an unproven business model. If anything, you should at least hit these three areas in no more than a paragraph's length:
- What we do
- Who we do it to
- Why you should care
If a VC has to ask you what your startup does more than once or can’t decipher what you’re doing from your website, then you’re not being clear enough. By the time they do understand your proposition it’ll likely be a pass and too late.
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