The time in San Francisco is winding quickly to a close. We now have only four days left to make the most of this particular opportunity. I thought in this post it would be good to summarise what we’ve learnt to date about investor meetings and introductions.
I guess the first reflection is that it’s a lot like running a hurdle race with only a very high level knowledge on how many hurdles there are, or how high they are. Some of them we know, some we didn’t expect, and most of them we have little idea how hard they are to leap. While there is a nice fuzzy theory about having everything ready to go, the reality is this isn’t practical in a bootstrapped start-up that’s trying to work on the most pressing priority of the day. Sometimes you just have to roll your sleeves up and get pitching. As we’ve gone along, we’ve needed to produce the following:
- Elevator Pitch — 15–30 seconds on what you do that bites someones interest, with 1–1.5 minutes explaining it.
- E-mail introduction — 4–5 paragraph e-mail covering key points on who you are and what you do that will convince someone to meet with you.
- Executive summary — 2–3 page summary of business plan, team and ask that provides more detail. NB The right introduction will skip this requirement.
- Pitch — Your slide deck and pitch.
- Term Sheets — What you want, what they want…
While I say produce, we’ve always been in a position where we generally know the answers, but it’s the act of putting them to paper we haven’t always got around to until it’s become critical.
If you’re interested in pitching in the valley then the best advice I can give is this is know your 3T’S (I think I just made this acronym up, although there are lots of other discussions on these elements).
Team, Technology, Traction and Social Proof. (3T’S)
I mentioned last week the valley runs on relationships (and is powered by opinions). The Social Proof is the entry fee to talk about your Team, Technology and Traction.
The meetings we have progressed the fastest and furtherest in our time here have all had strong Social Proof — we’ve known someone (or met someone at a conference) who has liked what we are doing and validated us to a further round of meetings. Without the Social Proof, you can email people, but you won’t get far fast. The social proof can come from strange places. The key is to network, network and network. Get out, socialise and chat, build relationships and people from all sorts of unlikely meetups will help you get introductions to others. Don’t forget that Social Proof also includes a great advisor — if you’ve signed on someone who believes in you that is respected and has a great reputation that also counts for a lot.
Once the social proof is down, the 3T’s are critical. You don’t have to have all of them (although of course it’s better that you do), if you don’t have all three, you need to kick arse in at least two of them.
Why would an investor sink their cash into you and your co-founders? What have you done. This is why serial entrepreneurs can raise cash more easily. Yes they have social proof, but more importantly, they have the team credentials. In my opinion Team is the most critical of the three.
Why is your technology better, more defensible, patentable etc. than anyone else’s? If you have fantastic technology this helps. It’s often here that you’ll build the barriers to entry as well.
Show me the money! Traction counts for a lot — if you’ve got revenue, then you’ve got the proof someone will pay for it. If it’s not revenue, it’s customer sign ups, freemium traffic etc. — whatever; there must be some indication that this is something people want to use.
In the spirit of sharing, our Social Proof is improving, we’ve been networking hard and building on it. This is one of the key reasons we need more time here, you can’t rush it, but I think given the time so far we are growing this and we are managing to get introductions.
Our Team is good — we get excellent feedback on this. Yes, we haven’t turned a multi million dollar exit on some other startup, but my background at PwC and Alex’s role as co-founder at Haokanbu count for a fair amount. We’ve got business and entrepreneurial experience and that counts for a lot.
Technology is very strong. We would improve this with patents (although we do believe two component of what we are doing are patentable). People can see and understand how there is a significant technical challenge to what we are attempting and that pulling it off would be a significant barrier to entry.
Traction — This is weak. It’s compensated for by Team and Technology. We do have some traction, but at the end of the day, nothing beats money coming in the door.
Of course these all then lead you to the next hurdle, but before you start the race, think hard about these 3T’S and what you have in place.
- First real pitch and securing a second round meeting.
- Lining up more pitches this week.
- Great community here in San Francisco and the networking.
- Probably the money. Burnt way more cash than I intended on the socialising aspect, but it is leading to introductions which is a good thing I guess.
Goal this week
- Pitch, pitch, pitch, pack up, go home!