Today, the Wall Street Journal ran a story called "Perfecting the Pitch", consisting of tips from VCs on creating the perfect pitch.
Ty McMahan kindly included an account about a meeting I had an entrepreneur I had met early in my career that taught me a great deal about pitching.
Not to be redundant, but I felt it was important to give this story a bit more flesh: it was the height of the dotcom era. People were getting a bit crazy about this thing called the Internet. One day, a strange lady came in, unannounced, into my 13'x10' office in Hell's Kitchen, a fairly dangerous part of New York City at the time.
She was dressed in a bulbus green outfit. I didn't recognize what it was, and I hadn't met her previously. Before even saying hello, she reached into her bag and pulled out...
a business plan.
I almost fainted, my life flashed before me: I thought she was going to pull out a gun and I was going to get shot. Instead she offered me a pitchbook.
While, yes, I probably would be a little put off by the outfit, and not knowing who she was; but for the record, it really was more my fear of getting shot at. That's the full story. So the moral of this story is: don't come in to pitch an investor, unannounced, and look like you are packing heat.
Ok, let me rephrase: raising money is about trust.
Indeed, if you think about money itself, at it's core, it's about trust in a government and other people that they will exchange goods and services in exchange for a piece of paper with green and black ink on it. That is kind of crazy if you think hard about it.
The dollar bill itself says "In God We Trust", and has odd Latin phrases like "E Pluribus Unum". It has pictures of George Washington, and has big capital letters: FEDERAL RESERVE NOTE and THE UNITED STATES OF AMERICA a couple times. And pictures of a weird pyramid, with a magic eye, and an eagle holding wheat and arrows. It has dates of issuance, serial numbers, and signatures of important government offices. All this green and black ink, plus some threads that glow purple under the right light to signal that a lousy buck is really a buck, and not a fake.
There is something to learn from what gyrations the U.S. government goes through to engender trust in it's currency, phyically, and by word and deed. Similarly, startup investors are looking for trust worthy investments and are looking for symbols, words and deeds. In the rush to raise capital, it's easy to forget that in the end trust is really what it's about. It might sound a little silly, just like all that stuff that the U.S. government puts on it's legal tender, but that's how it works, raising money. It's not sexy, it's just the way it is. One might think that a pitch is an elaborate come on, a voodoo dance to woo investors... but investors often see through the artifice. They want the coldhard facts about the opportunity, the product and who you and your team are. That doesn't mean you can't have fun-- indeed, humor can be a great part of a pitch if done right-- it's just that one needs to temper the fun to serve the greater goal of engendering trust.
While there is a lot of stuff about pitching out there, later in the summer I will try to blog further about what I think a good pitch and process needs to create that investor trust. In the meantime, do whatever you can do to increase and enhance that trust; eventually, some one might just take you up on your offer, trading their paper for your paper, the ultimate trust based exchange.