Ever pitch a VC Firm...?

GerardWon

GerardWon

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Dec 6, 2008
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I'm pretty sure there are some members here who have walked into the venture capital arena...

I was wondering what your advice might be. Specifically along the lines of a business plan -- but also as my "product" can be described as a financial instrument -- should I have some reputable financial type board members first, or will the VC team help in that area also?

Thanks in advance for your expertise.
 


Is it an actual VC firm or just a few angels? Regardless, they are going to rip you to shreds so make sure you know your product inside and out. If there is a flaw in your idea, they WILL find it and call you out about it. The answer "That wont happen" isnt good enough.

They also want to know WHY for everything. WHY are people going to use your product? HOW do you know this? HOW are you different from your competition? HOW are you going to market your product? WHY is this going to work? Again - you cant BS these questions, they will see right through you and think your an idiot.

Do you already have your product completed, or are you going off of just merely a business plan? That also makes a huge difference. All VCs/Angels look for different things but many of them look for a diversity of skills within the founders. In other words, they would rather have a marketing guy, a finance guy, and a programmer already on board where each member brings something unique.

Moral the story - VCs are not your friend - they will screw you, and make the terms extremely favorable towards them and their situation. They are a business just like any other company, and are looking to collect their profits asap. Only go to them if its really necessary.

Angels on the other hand are completely situational and alot more flexible. May want to check that route first over VCs.
 
Ideas in online advertising are not really suited to venture funding. I would recommend looking into other forms of financing.
 
[ame="http://www.youtube.com/watch?v=64WZMHk5hTc"]YouTube- Broadcast Yourself.[/ame]

[ame="http://www.youtube.com/watch?v=OfB_4v3BPxI&feature=related"]YouTube- Broadcast Yourself.[/ame]
 
Second the advice on going the angel route or F&F funding first. I've been through the VC rounds, and have gotten funded and having VC's was a major PITA. The business essentially stops while you are on the VC hunt, and your business changes dramatically once they are board. Their number one goal (besides an exit) is to extract as much equity as possible, and that means future dilutive rounds. Not to mention all the craziness surrounding prepping for and running the monthly board meetings. Oh, and they won't hesitate to boot the CEO, in fact it's fairly common if it's a jr. one.
 
GerardWon said:
I'm pretty sure there are some members here who have walked into the venture capital arena...

I was wondering what your advice might be. Specifically along the lines of a business plan -- but also as my "product" can be described as a financial instrument -- should I have some reputable financial type board members first, or will the VC team help in that area also?

Thanks in advance for your expertise.
Click to expand...

Public Service Announcement: You are about to jump into a shark tank!

Venture Capital is the most expensive capital in existence, but if you really have this fatal attraction, check out these resources back-to-back:

The VC Comic
TheFunded.com: The Resource for Entrepreneurs.
Archives - Venture Hacks

You might be better off funding your idea with internet arbitrage monies, or just pocketing them right away.

With a VC or angel-backed startup you do not get paid till the company is sold or goes public. Even then you might end up with ZERO, like the guys who write VentureHacks. They started epinions.com that got sold for $300M or so and they got nothing. Better learn how venture math works or you might rue the day you decided to pursue VCs.

Good luck bro!
 
Bevo Ryan said:
Is it an actual VC firm or just a few angels? Regardless, they are going to rip you to shreds so make sure you know your product inside and out. If there is a flaw in your idea, they WILL find it and call you out about it. The answer "That wont happen" isnt good enough.

They also want to know WHY for everything. WHY are people going to use your product? HOW do you know this? HOW are you different from your competition? HOW are you going to market your product? WHY is this going to work? Again - you cant BS these questions, they will see right through you and think your an idiot.

Do you already have your product completed, or are you going off of just merely a business plan? That also makes a huge difference. All VCs/Angels look for different things but many of them look for a diversity of skills within the founders. In other words, they would rather have a marketing guy, a finance guy, and a programmer already on board where each member brings something unique.

Moral the story - VCs are not your friend - they will screw you, and make the terms extremely favorable towards them and their situation. They are a business just like any other company, and are looking to collect their profits asap. Only go to them if its really necessary.

Angels on the other hand are completely situational and alot more flexible. May want to check that route first over VCs.
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Ryan it will be an actual VC firm. I need their management expertise and we are talking some long dollars to start. I have selected the firm that appears to be the best match.
As my product is not new, just unique there is no flaw in its marketability --a bit like "many people who enjoy apples will also enjoy peaches".
The main problem is I have No finance background, at all -- and this is where the product will live. I know this can be overcome-- I just haven't decided on the best way to do it.
I fully expect them to be harsh. And I am prepared to give up a majority stake in the company, it has IPO potential in less than three years.
As for the initial marketing -- the domains are registered and the press releases are written.
As for your last, I really think I need someone else onboard... but whom?

Dullspace said:
Ideas in online advertising are not really suited to venture funding. I would recommend looking into other forms of financing.
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Dullspace, actually some ideas in online ads are very well suited to VC firms though you'd probably need a unique platform.
However this is not my product -- sadly I must be vague -- it is a financial instrument which is already proven and wildly profitable in nature and yet it is also unique.
 
GerardWon said:
... I have selected the firm that appears to be the best match...
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NotSureIfSerious.jpg
 
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GerardWon said:
Ryan it will be an actual VC firm. I need their management expertise and we are talking some long dollars to start. I have selected the firm that appears to be the best match.
As my product is not new, just unique there is no flaw in its marketability --a bit like "many people who enjoy apples will also enjoy peaches".
The main problem is I have No finance background, at all -- and this is where the product will live. I know this can be overcome-- I just haven't decided on the best way to do it.
I fully expect them to be harsh. And I am prepared to give up a majority stake in the company, it has IPO potential in less than three years.
As for the initial marketing -- the domains are registered and the press releases are written.
As for your last, I really think I need someone else onboard... but whom?


Find a business partner who has the skills and experience in the Finance marketplace first so you can put together a really well thought out business plan. Then figure out how much money you need to get started (product development, marketing, ?). Marketing is way more than press releases as I'm sure you know. You need a very solid business plan that spells out what you're doing, who you are going after, what it will cost and what the projections for revenue and profit/loss are for the next 3-5 years. Once you have that then you should start worrying about funding and where to get it.
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I've been on both sides of the table at angel pitches, and i've pitched DFJ before.. hit me up on AIM if you want some pointers/help with some of the questions in your original post (lot of variables for me to just write a generic answer)
 
high risk said:
I've been on both sides of the table at angel pitches, and i've pitched DFJ before.. hit me up on AIM if you want some pointers/help with some of the questions in your original post (lot of variables for me to just write a generic answer)
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Thanks. I may take you up on your offer.
I looked at DFJ -- for a long time -- and they might be a good fit.
 
I used to pitch investors all the time,

was a stockbroker, it's amazing how many really rich people would send money to brokers in NY over the phone without ever meeting them.

I worked at a firm which was a spin off of JT marlin aka Stratton Oakmont

I was a young kid, 20-23, it's amazing how the acai business reminded me so much of the brokerage days.

One thing I learned was never be afraid to ask for the order.

Always ask for money from someone like you're doing them a favor by letting them invest with you.
 
GerardWon said:
Actually: I'm fuckin serious as a hearty attack -- various VC firms deal in specific industries. Some only deal in certain states and others won't touch a start up.
But thanks for your input braugh. :rasta:
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Dear Friend,

You do not get to "select" a venture firm, like you select a vendor, an affiliate network or even a law firm.

There is an adage that if you turn to WickedFire for legal advice you are already screwed because you do not know what you are doing and probably already made some crippling mistakes. This is 10x true for dealing with VC firms.

I know I come across like a not-very-helpful asshole, but I have seen this VC industry for several business cycles and all I can say, before you approach anyone, you need to do your homework and understand who you are dealing with.

One wrong decision is all it takes to turn years of VC-backed effort into a total write-off. At least for you personally, because VCs can still make out like bandits at your expense. This is not like starting another throw-away PPC campaign FFS!

May the luck be with you! There are so many LULZ in this thread already.
 
DKPMO said:
Dear Friend,

You do not get to "select" a venture firm, like you select a vendor, an affiliate network or even a law firm.

There is an adage that if you turn to WickedFire for legal advice you are already screwed because you do not know what you are doing and probably already made some crippling mistakes. This is 10x true for dealing with VC firms.

I know I come across like a not-very-helpful asshole, but I have seen this VC industry for several business cycles and all I can say, before you approach anyone, you need to do your homework and understand who you are dealing with.

One wrong decision is all it takes to turn years of VC-backed effort into a total write-off. At least for you personally, because VCs can still make out like bandits at your expense. This is not like starting another throw-away PPC campaign FFS!

May the luck be with you! There are so many LULZ in this thread already.
Click to expand...

Yo dude-- sorry if I offended you. I missed your earlier post and I appreciate your help and input. It's the aggressive racer mentality that is a part of me when i made that post. Hope you understand.
 
johnysc430 said:
I used to pitch investors all the time,

was a stockbroker, it's amazing how many really rich people would send money to brokers in NY over the phone without ever meeting them.

I worked at a firm which was a spin off of JT marlin aka Stratton Oakmont

I was a young kid, 20-23, it's amazing how the acai business reminded me so much of the brokerage days.

One thing I learned was never be afraid to ask for the order.

Always ask for money from someone like you're doing them a favor by letting them invest with you.
Click to expand...

am i the only one who caught the JT marlin reference?
 
And I am prepared to give up a majority stake in the company, it has IPO potential in less than three years.
Click to expand...
Per Felix Dennis (Founder of Maxim Magazine) in the book "How To Get Rich":

Why Ownership Isn't the Important Thing - It's the Only thing.
Click to expand...
To become rich you must be an owner. And you must try to own it all. You must strive with every fiber of your being, while recognizing the idiocy of your behavior, to own and retain control of as near to 100 percent of any company you can.
Click to expand...
Granted it sounds like you need funding. Know what you are getting into.
 
1. Do you have a (potential) team, or are you approaching them alone? If you don't have a team, go to step 2.
2. Did you invent vaccination for AIDS? If the answer is no, go to step 3.
3. Did your uncle loan money to D, F or J? If the answer is no, go to step 4.
4. Do you have a product or service which has generated actual revenues (not by others, but by YOU), and shows potential for tremendous growth? If not, go to step 5.
5. You don't stand much of a chance, unless you have a good team and some revenue/leads/clients to show them.
 
I haven't pitched to VCs before but I have pitched to angels. But I'm guessing it's a bit similar. They both want to make money, you just have to show them how.

You've been on WF since 08. Have you done any actual marketing? Like PPC or get sales through article writing? Why not use some of that skill to make your business more appealing.

You have the domain. Get a site up as if the product were already launched. Have a bogus order page - or a pre-order page to see who buys. Throw down a grand or 2 and promote the hell out of it via PPC. Now you have hard data to present to potential investors.

Nways good luck bro.
 
GerardWon said:
Yo dude-- sorry if I offended you. I missed your earlier post and I appreciate your help and input. It's the aggressive racer mentality that is a part of me when i made that post. Hope you understand.
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I am just trying to be helpful. You did not offend me.

You should really slow down and get a better understand of venture process. My reading of your posts here suggests you are highly likely to blow the first impression with firms who might be the best fit for you. Or they might take you for a ride and at some point you will look back and wonder what the hell happened.

Aggressive racer mentality is great when you are testing campaigns. With VC-backed-process you usually have one chance to get things right before they blow up.

Consider that for every Google or Facebook story you read in Forbes there are thousands (ten? hundreds of thousands?) that made some stupid preventable mistake.

Peace.
 
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