Ever pitch a VC Firm...?

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.
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I completely disagree with this.. in fact, I advise you to seek out a few VCs who you think have a good "synergy" with the investment you're proposing based on their existing portfolio companies.

i.e. say you're doing a VOIP startup, and DFJ has invested in some messaging stuff that could be of assistance to you.
 


high risk said:
I completely disagree with this.. in fact, I advise you to seek out a few VCs who you think have a good "synergy" with the investment you're proposing based on their existing portfolio companies.

i.e. say you're doing a VOIP startup, and DFJ has invested in some messaging stuff that could be of assistance to you.
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There is a huge difference between "targeting" and "selecting" a VC firm. Consider that every partner on average takes hundreds of meetings per year and makes one investment. You are not doing the "selecting", unless you already generated hundreds of millions in market value for VC-backed companies.
 
somebody said:
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.
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Great flowchartesque post! Yeah,I really think I need someone... maybe someone with political clout--or some reason that thought keeps entering my head: a politician, but I don't know why.
 
Bootstrap it man, VC never ends well if you don't know what you're doing.

Join your local chamber of commerce, get to be VERY involved for 3-7 months, then hit up those you have grown to trust with an equity proposal.
 
No good deed goes unpunished.

I got neg repped for helping the OP understand VC industry.

/facepalm

Greenleaves gets my May ban nomination, details in the ban thread.
 
DKPMO said:
No good deed goes unpunished.

I got neg repped for helping the OP understand VC industry.

/facepalm

Greenleaves gets my May ban nomination, details in the ban thread.
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This is actually a nice thread you started. Actually if all goes well I should have some articles coming out in Alt Assets, perhaps I can connect with some people...
 
Obviously I don't know your background, but my university had a business unit specifically for marketing college startups to VCs, and the offer is always open for alumni to come back for advice and assistance, even if it's unrelated to the university.

Apparently this is quite common, so if you have that in your past it might it might be worth checking out.
 
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.
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You worked for Jordan Belfort?

He's actually "back" now that he's out of jail. Has a facebook fan page 'n everything...
 
GerardWon said:
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?
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I know fuck-all about VC financing, but I'm gonna go out on a limb and suggest you need someone on board who is a very strong finance guy...
 
Only pitched a VC once in college, but I've met a few. The most important thing was watching one of the big guys give a presentation on how to pitch a VC.

His basic rules where
- 12 slide presentation absolute max, with very few words on a page.
- Any documents you send to them need to have a very specific and very concise < 1 page summary, and then a mountain of support to follow (which they will not read)
- "How the fuck are you going to make me money?"
- Who you are, your past performance, who you know, who else is on your team, etc. are far more important than how good your idea is. If kevin rose asks for money for some dumb shit, he will get it. If kevin rose is one of your advisers, you will get money for dumb shit. You and your cure for cancer as a no name without some hot management team will not get any money except as a secured loan from the bank.
- If you are building a web based application, where the fuck is it and how much is it already making? It costs a few grand to make pretty much anything under the sun. If it's working and making money, why would you need venture capital?
- You're speadsheets are bullshit, you know it and they know it, but more commonly than not, most people don't even understand how a basic financial statement works. Your predictions should be based on real data not something this: "99999999999 people drive cars, if we can get just 1% of that market we will make billions." Expenses need to be based on real numbers (industry averages)
- whatever it is you are building I want to see it. Make a pretty website, build some prototypes, whatever.
- and finally WHY ARE YOU ASKING FOR MONEY? How much do you need? What are you going to spend it on? How long is it going to last you? How many programmers, office chairs, lines of code, etc. will that buy. Are you going to need more in 6 months, 5 years, etc? How much? If you go under in 3 months because you're a poor manager is there anything of value for me to spin off and sell?


The VC I pitched, basically said he only cares who you are and how good you've been in the past. It's 100% networking for him. You do something awesome, then you get VC money for your next project.

Read up at avc.com on all his financial statement and budgeting stuff http://www.avc.com/a_vc/2010/05/budgeting-in-a-small-early-stage-company.html
 
pocketrockets said:
Both good reads on the VC process

SEOmoz | My Startup Experience: VC, Entrepreneurship, Self-Analysis & The Road Ahead

and

SEOmoz | SEOmoz's Venture Capital Process
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This is probably the best resource in the whole thread.

Note the conclusion of his second article - he was turned down even though he had profitable growing business that however did not have high enough projections. That is the challenge with pursuing VC, ideal investment has to "jump the curve" and bet on something radically new that either shoots to the moon or turns into total loss. Affiliate marketing is totally different mindset, all about incrementally applying the same old models.

You should slightly discount some of his advice for the fact that he had only positive experience with his Series A investors. For some balance you should read the classic VC horror stories, like this one: Burn Rate : How I Survived the Gold Rush Years on the Internet (Hardcover)
[ame=http://www.amazon.com/Burn-Rate-Survived-Years-Internet/dp/0684848813]Amazon.com: Burn Rate : How I Survived the Gold Rush Years on the Internet (9780684848815): Michael Wolff: Books[/ame]


There is even more misinformation and misconception about Venture Capital than about Affiliate Marketing, so that should tell you something.
 
fatmoocow said:
- and finally WHY ARE YOU ASKING FOR MONEY? How much do you need? What are you going to spend it on? How long is it going to last you? How many programmers, office chairs, lines of code, etc. will that buy. Are you going to need more in 6 months, 5 years, etc? How much? If you go under in 3 months because you're a poor manager is there anything of value for me to spin off and sell?
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This exactly
 
And secondly - finding VCs via networking is by far the most powerful tool to raising money. If you think an email or some online form submission will get your idea even a thought - you are mistaken (most often atleast). Many VCs wont even listen to you unless they found you through a referral. These meetings are no joke, and often you only have one opportunity to pitch to these guys IN YOUR LIFETIME, so dont mess your first meeting up. Once you have a bad label your screwed in the very tight niched VC group. It's much better to be way over prepared for these meetings, than just a little under prepared.

Before you even pitch - have a prototype at the very minimum. I am surprised anyone would even listen without one.
 
Many really solid ideas are in this thread and some fantastic resources are also given. I really appreciate everyone's help. Thank you.
My next step? -- I had started to reach out to someone @ score who seems to have a really relevant background in finance and M&A; and so now I will.
Years ago I raced with (against) a man named Bernie S. who owned his own bank and had a huge real estate business. He lived a few mansions away from Ross Perot. We were pretty friendly -- considering how hard we fought it out and we had a huge mutual respect for each other on the track. Once I asked him just how in the hell one goes about getting their own freakin bank-- 'its easy all you need are investors' he said quite casually. I think he might be a decent resource for information too.
 
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