How to pitch

How to pitch tips - a wrap

Back in December of 2016, we started the “Perfecting Your Pitch” series in conjunction with finishing our magnum opus “Perfecting Your Pitch: 101 Tips for Pitching to Angel Investors”. This book remains, without doubt, the best 101 pitching tips you can buy from an angel group beginning with V.

Over the last 18 months we have shared most of these tips with you via twitter, our blog, and the book itself.

We’d love to hear what you’ve learned from it and what else you think we should cover.

In exchange, here are a few things we’ve learned.

First, the vast majority of entrepreneurs seeking capital from us have not read it. This remains a puzzle. If you want someone to write you a check, how can you not research what they are looking for? It costs double in gas to drive to our screening pitch than to get the guide to exactly what we want to hear! Principle #2 failed already.

Second, it’s completely obvious when people have read it. It’s shown in small ways: at our April screening meeting, the best pitcher’s second sentence concluded with “…and I’m here today to tell you about the $750,000 angel round we are raising”. Tip #76 digested and executed.

It’s shown in larger ways too: some pitches are really excellent. While we still have the problem of great ideas being poorly delivered, we are increasingly facing the challenge of moderately good ideas being pitched really well. This is a lot more fun.

Third, blogging regularly (and content marketing) is hard – but feedback is gratifying. Thanks David N and Amazon Customer!

Fourth, we covered a lot of ground over the course of those tips. But in almost every pitch since we’ve seen or heard something and thought “that should’ve gone in the book”. Here’s the good news: we wrote most of those down, so look out for some bonus tips this summer.

Lastly, we’ve learned that we still have great respect for most entrepreneurs. Being willing to risk embarrassment, financial hardship, long lonely hours pursuing a dream unappreciated by everyone deserves recognition. We hope the pitches make that challenge a little less challenging and a little more rewarding.

How to pitch: workshops

If your company passes the barriers in our “definitely won’t fund” and “almost definitely won’t fund” posts last week, we hope you reach out to connect with us. We also think you would benefit from the upcoming “how to pitch” workshops that we are running in Columbia and Charleston over the next couple of weeks.

Even if you aren’t a great fit for our group, we still encourage you to attend. We will cover some nuances about pitching angel groups like ours. But most of the session provides techniques and methods – and ways to avoid potholes – that apply regardless of the type of funding you need.

You can learn more about the session in Columbia on Wednesday here or in Charleston in early December here, or subscribe to our newsletter to stay informed about future sessions.

How to pitch: what we probably won't fund

Continuing the last post, here are some business characteristics we almost definitely won’t fund.

Pharma (and medical devices)

If your business requires ten years, hundreds of millions in total funding, approval from the FDA, clinical trials, etc. we are very unlikely to be a good source. Our investment horizon (meaning when we would like to start seeing a return of our investment) is 3-5 years. This doesn’t completely eliminate medical devices,* but you probably need to find more specialist sources of financing than generalist angel investors.

B2C

Doing something that is consumer focused - a new brand of [xxx], sporting equipment, a clothing line, a new beverage or food line, household goods, or something similar? We are almost definitely going to pass.**

Debatably legal

If the first question people ask you when you discuss your idea is “is this legal?” the chances we fund you are slim. You may well be right that your poker tournament organizing software is permitted. But debatable legalities aren’t for us – because our pockets are not deep enough to make the case once you’re big enough to attract the attention of regulators.

506c investments

We are unlikely to fund any company raising money through a 506c “general solicitation” (or that has been raising money that way but is now switching to a 506b raise). The short reason why is that compliance with these regulations is not straightforward. There are already plenty of things that can go wrong in startup companies: being on the wrong side of the SEC is one challenge we don’t need to attempt.

Still fit?

If you pass these hoops, we might be interested. Don’t send us a one sentence email, ten paragraphs of life story, or something that suggests illiteracy. Do send us a concise “elevator pitch” email and your executive summary (follow the instructions under “initial conversation” here), and we will look forward to learning more.

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* “Not completely eliminate.” If you have a finished product with IP protection that is not implanted in the body, requires “only” a 510k and has clear predicate devices, your application is essentially ready to submit, and there are already reimbursement codes for what you do, we would consider investing. But companies with such a clear “company killer” like being denied FDA approval aren’t very appealing.

** “Almost definitely” – yet we invested in Growjourney, Plum Print, and New York Butchers Shoppe. Each has a compelling rationale for why our usual objections (minimal differentiation / barriers to entry, lack of technology moat, scalability, brand reputation marketing expense) did not apply. In that case, having an “understandable business” can actually be helpful.

How to pitch: what we won't fund

We have a guide to the kinds of investments VentureSouth groups make in our “For Entrepreneurs” section. Even so, every day we receive an email with an investment proposal that clearly does not fit our criteria.

So I thought it might be useful to add what we will not fund. There is no point sending us a business plan for these kinds of opportunities: at best, we have the time to say “no thank you;” at worst, you get no response while we focus on opportunities that do fit, and you waste your time applying.

Size rounds

If you need $250,000 to $750,000, call us. If you need $5,000 to $50,000, or $10 million, do not. (Try other sources.) If you don’t know how much you need, don’t call us yet: get some advice (some of our partners, like SCORE Asheville, can help with this), develop your plan, test your ideas, and then call us.

Valuation and deal structure

We fund “angel rounds.” This generally means the first money you raise outside of your friends and family. If you have already raised and spent $5 million, we can’t help you. If you raised family and friends money at an implied valuation of $5 million, we will most likely pass. If we multiply the implied post-money valuation of this fundraising by 10 and the result is more than $100 million, we will pass.

We invest in preferred equity. Convertible notes, loans, common equity, grants, investment funds… need not apply.

Stage and team

We fund teams executing a clear go-to-market strategy for a product or service that has some proven customer validation – ideally some initial revenue.

If you’re a one-person management team, we aren’t the right partner. If you’re a “want-to-be-inventor,” we’re not the right place; if you’re an actual inventor with a patent but no commercialization plan or team, do some more development, then call.

Geography

We invest in companies that we can drive to from one of our groups. In Georgia, Tennessee, South Carolina, or North Carolina? Call us. In Brazil, Mexico, London, New York? Don’t.

Movies

We have not, and will not, fund movies. We like watching movies, but angel groups do not fund movies.

Mobile apps

If your business is a mobile app that requires significant adoption, we’re very unlikely to be interested. These are very hard.

Social networks

Sorry, we’re not going to fund any business plan with the phrase “The Facebook of [xxx]”.

Retail

Starting a hair salon, a dog parlor, food truck, pizzeria, fast food franchise, a brewery, or some other kind of “bricks and mortar” store? Sorry, we are not the right place.

What’s left?

If your funding need passed through those hoops, wait for the next blog post to see if you fit.