VC Fund Raising Manual – 4 The Pitch

People attribute a lot of importance to the pitch. I guess most people believe that if they give the ‘perfect pitch’, the VC will invest in them. I doubt very much that this is true. The reason for this is that VCs are much better at analyzing pitches than founders are at giving them. It is not so much in how well you pitch, but what you pitch that will determine the outcome of your first interaction and whether you progress to due diligence.

Overall, there are two aspects to pitching: how you pitch and what you pitch.

How you pitch means the way in which you construct your presentation, number of slides, topic of each slide, the order, the kind and amount of information on each slide, how you stand when you pitch, how you use body language, how you use your voice, where you place the emphasis etc. These are generic skills that you will need in business life. If you are inexperienced in giving presentations, then I suggest you take a course where you learn how to do that (seriously). I took one a few years back, very interesting and useful stuff. In terms of the presentation that you should put together, have a look at my previous post here.

What you pitch is far more important then how you pitch. In order to understand what to pitch, you need to understand what VCs are looking for. This is what this article is about.

At a top level, there are only a few considerations that VCs have when they are looking at an investment opportunity. Most people will tell you that VCs are evaluating the following aspects:

Market: Is this an interesting market that the company is addressing?

Product: Does the company have a compelling product that can address the market well?

Industry: Can the company compete effectively in their space and is there a good exit opportunity for them?

Technology (this links to both product and industry): Can they leverage technology to produce a product and does the technology give them competitive advantage?

Financials and business model: Do they make sense?

Team: Can they execute the plan well?

Investment case: Is this a compelling opportunity to make a lot of money?

The above is completely correct. If you have all these bases covered, you probably have an investable company. However, this is not all for which VCs are looking. In order to understand what VCs really want, put yourselves in their shoes. A partner at a VC firm makes ONE (1) new investment per year (meaning an investment in a company that they haven’t invested in before). So, you are asking the partner the following: “Ignore all the other deals that you are seeing right now. I am offering you the best opportunity to invest in. I am by far your best shot this year.”

A VC that I talked to last year summed this up very nicely: “Most entrepreneurs don’t understand that the thing that they need to do is make me clear my desk for them. They must make me believe that right now, this is the best deal that there is for me. They must manage to rise to the top of the pile.”

How do you get to be top of the pile? I am going to try and explain this by example. Imagine you’re a VC. A founder walks into your office. She gives you the following pitch.

Version 1: “Hi, nice to meet you. I am doing this great company that has incredible potential. Have a look at this great pitch. We are raising $5 million. We think we will give you a great return on your investment. Say five times in five years. And we will be great fun to work with, we have a great team. What do you think; are you interested in taking a look?”

So, what do you think? Does it sound like a great proposition? Let’s have a look what other people sound like when they pitch to the same VC in the same week.

Version 2: “Hi, we haven’t met, but you know Bill. As you know, I have worked with Bill in the past and we made a lot of money together. I am now raising money for my new company and I wanted to ask you whether you would be interested in taking a look at it?”

Sounds better, doesn’t it? Here is an even better pitch.

Version 3: “Hi, we haven’t met, but you might have heard of my company. It is going great. There are quite a few reference customers you can ask about that. Really, our users numbers are going up drastically right now. Are you interested in taking a look?”

And here is an even better pitch.

Version 4: “Hi, how are you doing? Remember the money we made the last time we worked together; I still can’t believe me managed to make that much! Listen, I am doing this new company. This time, we are really swinging for the fences! Our old friend Bill has already put some seed money in. I have also started working with the customers who bought from us last time, they are very interested and we have started ramping up some strategic sales. Our early user numbers are looking great. I am now raising a Series A round. Are you interested in taking a look?”

If you were a VC seeing all the above pitches in one week, which deal would rise to the top of your pile and which one would be at the bottom of the pile…?

There are two things that tend to positively influence any investor: trust in the people who run the company and objective proof of the (beginning) success of the company. The more a VC has reason to trust you and has access to evidence that your company is successful, the more you rise to the top of the pile. For the consultants amongst you, think of it as a two-by-two:

VC criteria
VC criteria

That is the ‘what’ of the pitch. Of course you are pitching a company that is addressing an incredible exciting market, has great products, powerful technology, a fantastic team and offers a compelling opportunity to make money. If you didn’t have this, you would be in the VC’s office in the first place. But really, what you pitch is that you are a trustworthy person who can already demonstrate that this company will be a great success. If you can do that, you are likely to progress to the next stage which is due diligence.

VCs are not risk averse. They simply invest in the best opportunities they can find. Or would you invest in anything else, if you were a VC given the choices that you have? Exactly.

Index of VC Fund Raising Manual can be found here.

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VC Fund Raising Manual – 3 The Approach

How to approch a VC firm is pretty important. There are three aspects here: whom you approach, how you approach, and when you approach.

Whom to approach

At most VC firms, there is usually only one/maybe two people there that you really want to talk to. That would be the General Partner at the fund who invests in companies like yours.

VC firms usually uperate as partnerships. The General Partners of the firm (GPs) employ further support staff, some of which are on the investment side, such as Analysts, Associates, and Investment Managers, and some of which are further support staff.

The key to approaching a VC firm lies in understanding that the GPs will make a group decision as in which companies the fund will invest. Everybody else in the firm can and does influence decisions, but they don’t get to make them. The GPs of a fund will make that decision.

They key to getting VC investment lies in convincing one General Partner to support and lead your deal. It is then this partner’s job, with your strong support, to convince all other General Partners in the fund to invest in you.

Let’s use an example to illustrate how this would usually work. Let’s assume there is a VC fund with some 6 General Partners. One partner invests in mobile companies, two in semiconductors and IT system, and three in software and Internet services (this is not an unusual distribution). If you are a mobile (phone) related company, you probably need to convince the partner who makes these kind of investments to champion your deal. Once you have convinced that partner, he/she will then, over the period of due diligence, convince herself/himself and everybody else that this is the best deal he/she can champion this year. Your (now) champion will put forward the proposal to invest in you. Typically, all other GPs need to consent. Many firms operate on the basis that if one partner thinks it is a bad idea to do a deal, then it won’t happen. In any case, the only person in a fund who can actually convince ALL partners to agree to do the deal, is one of the General Partners. If you can’t convince that one partner, there will be no deal.

Going back to the list of VCs that you created initially, where you identified VC firms who actually have the ability to invest in you, you now need to identify the partner at each firm whom you need to convince. You need to pitch to that potential champion. Unfortunately, it isn’t quite as easy as this:

VC comic

How to approach

For all the funds that you want to approach (based on whether they can invest in you and haven’t invested in a competitor, yet), note down the name of the relevant partner. The best way to connect to that partner is to get a personal introduction to that person. Scour your address book. See whom you know who might know that person. Chances are, if you get a personal introduction and if you have a well written teaser document, then you will get invited to pitch.

Pitching to Analysts, Associates, Managers, Venture Partners or GPs with a different focus is a great opportunity. They can give you an introduction to the partner(s) that matter to you. If you have to pitch to them to get to the GP in question, then take the opportunity, but if you do, don’t believe you have actually already pitched, yet. All you have achieved is getting on step closer to the GP that you really want to pitch to.

If you find it difficult to get in touch with VCs, you may want to bring somebody onboard either as an angel investor, or advisor/director who is well connected and who can make these introductions. Other ways are to attend many of the small (and free) networking events, where you can get to know people. There are also events specifically for VCs where you might sneak in (it is good fun). Many VCs blog, you can start talking to them online. Or you could get to meet them on online social networks.

Find VC

There are many ways to get in touch. Ultimately, the route doesn’t matter. What matters is that you pitch to the right partner.

When to approach

There are two parts to this. First, remember that you had identified VC firms who don’t have any new funds, so can’t really invest in you, but still would like to see you pitch, so that they remain in the deal flow? Pitch as few of these first, say 2-3. The people there are no less smart than the guys at any of the other funds. They will flush out any problems that your pitch might have.

Once you have practiced and refined your pitch, it is time to approach your real prospects. I think it makes a lot of sense to line up the approach to all the VCs that you care about, and then to execute them simultaneously. I am no the only one thinking this, by the way. Approach all these investors at the same time. The reason for this is as follows: unless you do this, you won’t have several term sheets from interested investors at the same time. And unless you are in that position, you won’t be able to compare them. Comparing term sheets is important not so much for playing investors against one another (which is very hard to do unless you have been around for a long while), but it will tell you what your value in the market really is. It will also tell you which terms you won’t be able to negotiate away and which ones are really unusual or which ones are borderline (at that time in the market place). Once you receive a term sheet from an investor, you may have some two to three weeks to negotiate and decide whether to sign it or not. If you stagger your approach of VCs over several weeks or months, you are extremely unlikely to have multiple term sheets at the same time. This will disable you from understanding your market value and that will likely result in a deal that is less optimal then it could have been.

Pursue a number of well qualified VCs prospects you can manage simultaneously (say 10-20) and approach them all in the same week. Then take it from there.


  • Identify the relevant partner(s) at a VC firm
  • Find various approaches to get introduced to these partner(s)
  • What you want is to pitch to these partners. Nothing more, nothing less.
  • Approach a small number of investors who can’t invest in you first and practise and refine your pitch.
  • Approach a solid number of well qualified prospective partners simultaneously, so you get to term sheet stage simultaneously. Do not stagger your approach.

Index of VC Fund Raising Manual can be found here.

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VC Fund Raising Manual – 2 Documentation


When you are preparing documents for VC fund-raising, the one piece of advice you will be given by a lot of people is that you need a ‘business plan’ document that you should send to the VC firm. You are also supposed to have an ‘executive summary’ that you can send up front.


That doesn’t mean to say you shouldn’t have a business plan, but I suggest you don’t email that to a prospective investor. There are several reasons for this:

1) VCs don’t read business plans, they are long and boring

2) Neither a business plan nor a business plan summary achieve what you need to achieve at the point of first contact

3) The business plan will start floating round the start-up scene, I have seen many dozens of business plans that were not intended for me

4) There is scientific evidence that shows that submitted a business plan does not lead to successful fund raising. See this interview for the details.

The documents that you should prepare for the fund raising should be alinged with the phases of the fund raising process. In my experience, the following is useful (I will elaborate on a few docs later on):

1) Pre-pitch phase: 2-3 page teaser document

2) Pitch: 15 slide (or so) PowerPoint presentation

3) Due Diligence: Depending on your business, you will need to present the following documents:

Documents related to spending money:
– Financials (past and forecast). Probably prepared in a professional accounting software and exported to either Excel or Word format. If you prepare your financials in Excel, this is fine for a seed stage company.
– Hiring plan associated with the financials (where appropriate)

Documents related to the product, the technology, their development and protection:
– Technology outline (if any). Word document format
– Product outline. Word document format.
– Product development plan. Word document and associated Gantt charts, probably in MS Project
– Patent strategy (if any). Word document.

Documents related to sales and marketing:
– Marketing plan. Probably in PowerPoint format.
– Sales plan. Various formats, but either an export from a CRM system (to Word) or an Excel spreadsheet

Document related to your industry:
– Industry and M&A analysis. PowerPoint format.

4) Legals – after you have signed a term sheet

You should have prepared digital and physical copies of all contracts that the company has signed in the last few years, as well as any previous investment agreements and the articles of association of the company.

General comment:

Prepare all these documents separately. There are many good reasons for keeping them separate.

Different people can create these docs independently without interfering with others.

The content is in relevant formats.

You gain the ability to distribute certain documents specifically to certain people whom you are dealing with during due diligence and legals, but not to others. For example, should the VC hire a technology expert to evaluate your technology, then these people really don’t have to see your financials or your sales and marketing strategy. Likewise, when the VC is asking potential customers about your product, then they don’t need to see your financials, or technology outline or patent strategy either. Having separate documents allows you to compartmentalize your information and distribute it on a when-needed and need-to-know basis. This reduces the likelihood of leakage somewhat. Also, should a VC abort due diligence, you haven’t shown them all your documents, but only a few.

You can also send documents one by one (no VC is going to read all these documents in one go). Also, it gives quite a nice impression when a VC asks you for your […] plan and you can send over a whopping doc one day later.

The first two documents are the most important ones, so I will describe them in somewhat more detail below.

Teaser Document

I suggest this a 2-3 page long PDFed Word document. This document has several purposes:

1) to enable you to pitch to a VC
2) to mentally prepare the VC for the pitch
3) to enable the VC to communicate your story within the firm

The content of the teaser document should cover the most important aspects of your company, but not all of them. It should cover:

Product: what is your product, why does it matter
Market: why are you addressing an interesting market
Team: who will make it happen

The ideal thought that a VC should have when reading this document is: “Hmm, very cool, I want to see these guys pitch…” So, don’t try to answer all the questions in the document. Leave blanks. You are not trying to convince people to do something. Your purpose is to make them curious. To want to know more. To want to meet you and have the opportunity to find out more.

(By the way: obviously you won’t call it ‘teaser document’, right?)

Pitch Presentation

Endless articles have been written about this one. Have a look at the Stanford Educators Corner, loads of good stuff here, including this one:

As I said before, I have seen 100s of start-up pitches. Some were brilliant, some were disasters, most were somewhere in the middle of the extremes. Your document should cover the same points as your teaser doc, but there is more information in it:

Product: what exactly does it do? What pain does it make go away?
Market: who are the people who will benefit from your product? why is this an interesting market?
Business model: how will you make money? why is this a good model?
Marketing & sales: how will you bring your product to market and how will you sell it? will you have good margins and if so how large are they? what are the costs of sales?
Industry: who are your competitors and how will you compete? are there elements of buyer, supplier or regulatory power that impact you? how are you going to maintain a competitive advantage?
Team: who will make it happen? do you have a good mix of experience and hunger?
Financials: how much money is this going to cost over what period of time? how much revenues do you expect to generate? what are the key variable that will influence your revenue forecasts?
Investment case: is this sector acquisitive? what are the acquisition drivers in your industry? What are the acqusition drivers going to look like say 3 years from now? how do you fit into all of this?

If you can present a case covering the above points on some 15 slides (some 2 slides for each point), you will have done better than most. When I was working at Library House, we asked presenters to cover all the above points in 7 minutes (no more than 12 slides). And yes, it is possible to do that very well.

Overall, the request in the pitch is NOT to get investment. Your simply want to further intrigue the prospective investor. You want them to dig in, to do due diligence on you and work with you during the coming weeks.

As a side note: sometimes you are asked to pitch your company at a public event. In this case, I suggest you don’t include all the detail of a one-on-one presentation. This is more of a shorter ‘teaser’ presentation document in that case.

I will cover how to pitch to a VC in one of the future episodes.

UPDATE 2: Good advice on how to write well can be found here. Good advice on how to present good charts can be found here.

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