Finding the Perfect Pitch
This is your moment, and you'll never have it again. What do you do to get ready? That's the challenge facing 23 female entrepreneurs who have been selected to present their businesses before hundreds of VCs at an exclusive venture-capital forum. The cast of company builders is noteworthy for the number of early-stage entrepreneurs sporting Ph.D.'s and M.B.A.'s from Ivy League schools. But credentials aren't enough to get an audience with VCs.
Enter stage right Springboard Enterprises, the nonprofit hosting the forum. Springboard aggressively recruits the best and brightest female entrepreneurs and gives them coaches galore. Ever since its first packed forum, in Silicon Valley in January 2000, Springboard has defied expectations. All told, nearly 40% of its graduates have raised in excess of $700 million from VCs and angels. This year Springboard Enterprises is host of three VC forums and even more boot camps across the country.
So what does the nonprofit bring to the money hunt? Herewith, a backstage tour with three of Springboard's rising stars as they endure a grueling five-week "rehearsal" culminating in the VC forum on November 9, 2001, and, they hope, a deal.
Act I: The Pitch
Scene I: Springboard boot camp, Babson College, Wellesley, Mass., October 5, 2001. Five weeks to Springboard: New England 2001 Venture Capital Forum.
"Can we start over? Pleeeeeze!"
The video camera pans on a young woman struggling with her "lines." Wielding the camera is Kim Marinucci, a "pitch coach" with long blond hair who stands patiently in her high heels. "Try to make it through the 60 seconds without stopping," she says gently to the woman who is begging for another chance. After two false starts, the woman completes one of the longest one-minute elevator pitches in history and walks off mumbling, "I only got three hours of sleep."
But Marinucci offers her own aside: "It's not a sleep problem, it's a memorization problem. She cracks under pressure." Many entrepreneurs try to memorize their presentation, she says. Big mistake.
One after another, the 23 entrepreneurs come before the camera to make their pitch, some of them clasping notes on a napkin. But Shoba Purushothaman blows into the one-day boot camp laughing and smiling. Unlike the women who stumble over their feet, she seems to walk on a cloud of blustery bravado. With her British accent and well-fitting suit, she exudes the air of someone who's just stepped off the Concorde, even though she's actually driven herself in from New York City. You want me to talk about my business for 60 seconds? Let's go! Her megawatt smile lights up the room as she speaks about her company. "The NewsMarket offers enterprises a software solution ... that significantly simplifies the process and reduces the cost of marketing and distributing video news to the media ...," she says. Hard to know what her company does, exactly. But she makes it sound enticing.
Cheerful Lucy McQuilken, who has short brown hair and dimples, ends her videotaped elevator pitch by giving out her E-mail address.
A.G. Breitenstein breezes in for her close-up wearing a tight black T-shirt, no jacket, and one silver hoop on her upper left ear, the whole look topped off by a head of orangy blond hair. She is so casual that you'd never guess she dreads doing an impromptu pitch. "It's like getting the test before you get a chance to study," she says.
And most of the class flunks the test. Granted, 60 seconds isn't much time for a student to explain the size of her market, who her competitors are, and why investors should give her company millions. But most of the entrepreneurs don't even try. Instead, they wax poetic about their products. In short, there's a lot of work to be done before the women can represent their companies at the VC forum, where they each will have 10 minutes to address an audience of probably 200 to 300 venture capitalists and angel investors. It is Springboard's mission to groom female entrepreneurs for this moment.
Springboard has chosen this class of 23 entrepreneurs from a pool of 150 applicants. The rules: the women must hold a management position and a substantial equity stake in their business. It comes as a shock to find that many of the 23 already have major angel backers. So it's not a question of why they want VC money; the only issue is how fast they can get their hands on it. Shoba, Lucy, and A.G. -- as we will refer to the stars of our story -- seem to epitomize the new generation of aggressive female entrepreneurs. All three want to build their start-up companies to $20 million in sales within three years or less. They have the same fast-growth aspirations as their male managers and cofounders do.
Shoba, 39, is a walking oxymoron: an independent Indian woman who grew up in Malaysia, achieved the American dream, and wants more. "I'm at Springboard to raise money, and I have nothing but the highest expectations," she says. And yet she is also a humble bootstrapper. The NewsMarket, based in New York City, is her second company. (It markets and distributes video clips over the Web for use by TV stations. Clients include big corporations that want to get their name and news on TV.) She started the first company with $1,500 and grew it to $7 million in sales before selling it in 2001. At boot camp, she is among a few entrepreneurs with any substantial revenues -- $404,000 in 2001.
A.G., 33, is in a league of her own. She's a lawyer with a snake tattooed on her arm. She's an avid jock (snowboarding and biking) who graduated from Yale. And she was bored silly at UConn law school until she found her calling: civil rights. As a young lawyer, A.G. took landlords to court for evicting AIDS patients. She sued public officials for invasion of privacy. Her claim to fame: she drafted legislation that served as a model for the new federal privacy regulations governing the use of medical data by hospitals and insurance companies. She cofounded PrivaSource, in Waltham, Mass., to help health-care companies buy and sell patient-level information while protecting patient privacy.
Lucy, 37, is the big-company graduate. She earned her stripes as an engineer and sales star at large computer companies before taking the job of president at Chaoticom, in Hampton Falls, N.H. (The start-up provides a technology platform for compressing and resynthesizing images, videos, and music so that, for example, you can download a hot song to your cell phone inexpensively.) Her hope for Springboard? That it will prompt the investors she's been courting to "get off their butts and sign a check."
"I thought nothing else was important but those 10 minutes."
But for Lucy, A.G., and Shoba, boot camp marks the start of an arduous journey with lots of risks and no guaranteed rewards. The entrepreneurs can't forget that they're playing the VC game in a man's world. (The percentage of VC dollars flowing to female entrepreneurs is still paltry at 5%.) The women have just five weeks to perfect their pitch and convince this world that they hold the next billion-dollar market opportunity in the palm of their hand. All while running their companies.
At boot camp, Shoba, A.G., and Lucy each meet their main coaches, the people who will take the women under their wings and spend long hours helping them craft a 10-minute presentation. "It's an intense getting-to-know-you process," says Amy Millman, president of Springboard Enterprises. The New England forum is brimming with more than 100 volunteer VCs, bankers, lawyers, CPAs, executive recruiters, successful entrepreneurs, and business consultants. (And that doesn't count Springboard's network in Silicon Valley, Chicago, New York City, Dallas, and Washington, D.C.)
Springboard graduates like Jill Card are also on hand to provide their insights. Card, the founder and chairman of IBEX Process Technology, has raised $6.8 million. Once painfully shy, she shares how she finally overcame her stage fright. "The best advice I can give you is to imagine your audience naked -- 300 venture capitalists naked."
Scene II: Coaching, McKinsey & Co. offices, October 19, 2001. Three weeks to the VC forum.
"You guys rock!" says A.G.
The young cofounder of PrivaSource is sitting in a plush conference room inside the hallowed halls of the upper-crust Boston offices of McKinsey & Co., one of many Springboard sponsors that agreed to loan out their highly paid employees for a block of time. On this day, for the first and perhaps only time, more than a dozen of the Springboard women will receive 60 minutes of free tutoring from one of the most highly regarded consulting firms in the world.
A.G. is on the edge of her seat. After weeks of crafting her presentation and cranking out slides, she relishes this moment. The McKinsey consultants have been instructed to grade the entrepreneurs on the content and length of their presentations, on the quality of their slides, and on style (pitch, pacing, stance, body language, eye contact, and so on).
A.G. begins her pitch with an amusing anecdote showing how easy it is, with a little technology, to figure out someone's identity from supposedly private medical data. A cleverly created slide features the faces of some well-known people and their fictional ailments. The slide and story serve to grab the audience, providing a perfect segue into the entrepreneur's explanation of her company's solution to a pressing problem.
"Your style is great, so I won't mess with it," says McKinsey consultant Susan Mulder. A.G. is clearly comfortable in her own skin. After all, few female entrepreneurs show up at McKinsey's doorstep wearing army green pants, a black turtleneck, and a concealed tattoo. But the nonconformist A.G. can't ignore all business conventions. Specifically, she is struggling with the question that vexes every company founder that ever was: How big is my market, and what's my slice of it?
Clearly, A.G. needs help shoring up her revenue model. Is it based on service fees or hardware or both? Mulder and her McKinsey colleagues advise her to separate revenue streams and detail the assumptions behind the sales numbers. She has never done any of that before.
After 60 minutes, A.G. emerges from McKinsey triumphant, with her own personal punch list: "work on sales projections, be clear about target customer, include exit strategy, and talk more about my background." She is elated, even if what she got was just a glimpse into the McKinsey mind. "An hour of McKinsey time? I tend to be pretty cynical about these things, but I loved the process," she says later.
Lucy, of Chaoticom, delights in her McKinsey moment, even though she gets trounced for discounting one of her largest competitors: Microsoft. Hey, selling the company may be more valuable than an IPO, the McKinsey folks point out. Lucy nods in agreement, soaking up every word. If she comes off as cocky, perhaps it's the salesperson in her coming out. "What I learned from McKinsey is, Don't talk bad about the competition," she says afterward. "Microsoft could be an acquirer down the road. They're not the total evil enemy -- it's good to have a rival."
Shoba gets her McKinsey coaching in New York. But she makes weekly trips to Boston to convene with other advisers. A coach at Ernst & Young has even arranged for her to practice before half a dozen venture capitalists and angel investors. She hears conflicting advice. The biggest debates revolve around how much funding she should ask for -- $2 million? $3 million? $5 million? -- and how to begin her presentation. As she hustles to incorporate one suggestion after another into her presentation, her message becomes more convoluted. She scarcely recognizes her own pitch.
Shoba isn't the only one making last-minute revisions. Recounting how many times she's changed her pitch, Lucy says, "I'm coming back around to where I started out."
Act II: The Dress Rehearsal
Scene I: Walk-through day, Boston law firm Testa, Hurwitz & Thibeault, October 24, 2001. Two weeks to the VC forum.
"We're not your coaches," Bob Franklin, an executive recruiter, says to Shoba. "You've got to get focused!"
The words hit Shoba like a tidal wave. She and the other presenters have reported to a Boston law firm to individually "defend" their presentations before a panel of 6 to 10 Springboard observers, including VCs, executive coaches, consultants, and lawyers. The observers have received a few last-minute special instructions. "Help them not sound too girlish. Better to sound like an ice queen," says one Springboard manager.
Franklin has a reputation as Mr. Tough Love, but he's right. He and his colleagues aren't there to coach so much as to judge. Collectively, they could "vote" to pull Shoba from the program.
What has she done to bring down the judges' wrath? For one thing, her pitch is way over the 10-minute limit. Franklin demands in a booming voice, "Are you serious about Springboard?"
"Yes," she answers. But she doesn't look very sure of herself. Dark hair hanging limp, Shoba wears the haunted look of exhaustion. Half-finished sentences punctuate the latest version of her pitch, completed only the night before. She is trying to operate on less than four hours of sleep.
Sitting quietly in the background is her longtime business partner, Anthony Hayward. He remains silent while Shoba endures a searing critique, right down to her physical appearance.
"Personal grooming is important," says Franklin. "And get comfortable with the stage." But what really bugs him is this: "I have no sense of who Shoba is and why I should invest," he says.
The room grows uncomfortably quiet. Shoba makes a feeble attempt to get a chuckle from the crowd. No go. Unfortunately, her own laugh sounds like a protracted gasp. At times her gasping is the only sound in the room.
"People are pretty quick to say, 'Should I listen or tune her out?' It's going to be a lazy audience," predicts Jonathan Hunnicutt, a young VC at Weston Presidio.
"The question is, Is this business run by experienced people and is it sustainable?" says Tony Fiore of Rosse Enterprises, a venture firm. "I'm going to ask, 'Does she have good business sense?' I would try to build trust up in you."
When Shoba explains that her biggest market is the 20,000 newsrooms in the world and that she needs just 2,000 of them in order to be wildly successful, the judges love the concrete detail and urge her to include it. Even Mr. Tough Love tries to lift her spirits after dashing them so. "I like your margins," Franklin volunteers. But it's not so consoling when he tells her that "being a mess is a normal part of the process." He says he's always amazed when the final presentations bear little resemblance to the practice runs.
But privately, Franklin expresses doubt that Shoba can transform herself in time for the big day. He calls her presentation "a disaster." Which is exactly how Shoba characterizes her performance.
She leaves the walk-through distraught. As for her business partner, he is livid. "If I had a gun right now, I would shoot you," he tells her. She fires back: "If you had a gun right now, I'd shoot myself."
Recalling the painful event, Shoba decides she deserved every bit of the criticism heaped upon her. "Three minutes into my presentation I realized it was a disaster. The emotion I felt was intense anger at myself. I felt I had blown a tremendous opportunity,... because people talk." Privately, she says, she also feels hampered by her upbringing "in a traditional Indian family" that taught her to avoid self-promotion, which makes it hard for her to respond to the more personal remarks.
Were some of Franklin's comments out of order? "He's an old investment banker and entrepreneur," says Springboard Enterprises' Millman. "His advice to us is 'Give them a couple days to get their act together or don't do it. Don't allow them to put their company in jeopardy." In the first six Springboard forums, only three women were asked not to present.
Shoba's walk-through feels like a crushing defeat, but A.G.'s is a slam dunk. She's hitting nothing but net. She convinces her listeners that PrivaSource is well positioned to take advantage of the "$3-billion health-care-data market." Her judges are so smitten that A.G. practically has to beg them for something negative. They even admire her lavender sweater. Typical is Lorin Scott of Deloitte & Touche, who says, "I love the whole thing." But finally someone breaks up the fan club. "This wasn't great for me," says Diane Franklin of New Venture Network. "What exactly does the company do, and how? What is the technology, and how is it used?"
Funny how so much of the discussion comes back to business basics -- what do you do and how do you make money? Still, the consensus is that A.G. has a great story for investors. And yet privately, she's scared. What will happen if she doesn't get a deal soon? As she sees it, she has a narrow window to sell customers before those companies come up with their own solution to the privacy problem. How long can her 10-person company go without a major cash infusion?
"An hour of McKinsey time? I tend to be pretty cynical about these things, but I loved the process."
Lucy is wondering the same thing. Still, she's feeling good. Of all the presenters, she is one of the few brave enough to use props. She holds up a balloon and straw as a metaphor for how difficult it is to send large files, like music, down low-speed networks. The props are a hit. But the judges warn her that some of her slides are cluttered and threaten to obscure the Chaoticom story. Just because Chaoticom's technology is based on chaos theory doesn't mean the slides have to be, too. Stever Robbins of Venture Coach suggests she drop her first slide -- a cartoon. But everyone else in the room loves the cartoon. So Robbins relents and even suggests a way to bring the cartoon slide back in at the end of the presentation, a suggestion she takes.
One more piece of advice from the judges: "Don't forget to breathe."
Scene II: Technical dress rehearsal, Harvard Business School, November 8, 2001. One day to the VC forum.
Shoba and her business partner Anthony aren't speaking to each other when they arrive at Harvard's imposing Spangler Center. They're not fighting; she's just in her own world. "The momentum is building, and you feel like you're in a different place," she says.
In the two weeks since her disastrous walk-through, Shoba has poured every last ounce of her being into improving her 10-minute pitch. "I thought nothing else was important but those 10 minutes," she says. "I told my employees, 'Don't call me unless someone is dying.' " She spent entire days holed up in her Manhattan apartment. Some Springboard coaches counseled her to be conservative about her company's mission. " 'Don't be too ambitious,' they said. But that was counter to what I believed I should do as I got more confident," says Shoba.
There are less than 24 hours until the VC forum, and the debate still rages in her heart. "How gung-ho should I be?" she asks herself.
Act III: Stand and Deliver
Scene: Springboard: New England 2001 Venture Capital Forum, Harvard Business School, November 9, 2001.
In the small room off the stage Lucy waits. She is the first presenter of the day. She doesn't feel nervous, but with a few minutes to go, she suddenly bolts from the room. She wants to be alone. She quickly practices again how she will hold her props and the slide clicker. "Don't talk when you walk," she reminds herself. And then it's time.
Lucy walks across the stage holding her balloon and straw and launches into an almost dreamlike performance. She's hitting all her points and having fun. Lucy concludes with words every VC likes to hear. "If you want to invest in a company that has near-term market potential, defensible new technology, long-term growth potential, and a great team, come see me," she says.
The heat is on.
Comic relief comes when A.G. gets ready to walk on stage. The person introducing her fumbles with the PowerPoint clicker and says what sounds like "Oh, shit." The audience roars. But what truly makes the performance memorable is the way A.G. quickly takes command of the stage, makes a joke, and sails right into her story. She has everyone's complete attention as she confidently calls for $4 million in financing for PrivaSource. (One result of all the coaching: presenters have increased not only their sales projections but also the amount of funding they're seeking.) When A.G. reveals her J.D. background, a couple of thirtysomething investors let out a little whoop of approval for the lawyer who has refused to dress the part. In fact, she was counseled to remove her ear hoop for the forum, but she refused.
And the painful moments, well, they are really painful. One woman freezes like a deer in the headlights. But sitting in the first row, Amy Millman locks eyes with the entrepreneur and silently "coaches" her through the pitch. Another presenter apologizes three times for being nervous and bursts into tears when she walks off the stage. Witnessing the few disappointing performances breaks Millman's heart. "These women have done so much," she says.
No one knows what to expect when Shoba takes the stage, nearly last on the lineup. She looks radiant in a flattering beige dress, a bright red Hermes scarf, and crocodile-skin high heels. "The news industry is a bit of a mystery to many people," she begins. But as she looks out at the sea of faces, she struggles not to panic. She quickly focuses on Anthony, her business partner, seated in the middle of the auditorium. He is literally on the edge of his seat, silently reciting Shoba's pitch, word for word, right along with her. Then Shoba spots one of her coaches, a woman lawyer, sitting directly behind Anthony and doing the same thing he is. They are both gripping the sides of the seat in front of them. Shoba feels her feet weaken and her toes go tingly. "I saw their mouths moving. I suddenly went cold and said, 'My God, I can't let these people down," she says later.
But then something happens to give Shoba pause: a man carrying a toddler walks down the center aisle and settles into the front row. Shoba thinks, "Oh, it's a baby. How unusual." The man and the toddler soon leave, but somehow the baby's brief presence has soothed Shoba's nerves and put her in a humorous mood. She launches into the rest of her presentation in earnest. And she does what she once dreaded: she talks about herself and shares her big dream "to transform the way news is distributed." She plays up her own background as an experienced entrepreneur who succeeded in bootstrapping her first company and "selling it for $14 million." Gasps are heard. And for effect she adds, "It felt good then, and it still does." The crowd erupts. You get the distinct feeling it has been much too long since investors have heard a good exit story.
In the audience, VC Tom Claflin puts a little plus mark next to Shoba's name.
Act IV: The Show Goes On
Scene: Springboard reunion, Goodwin Procter law offices, February 13, 2002.
Where are they now? Shoba, A.G., and Lucy are holding on for dear life. Not all 23 Springboard alumnae have seen their companies survive. One woman was forced to liquidate her business for lack of funds.
For Shoba, who shows up at the Boston reunion looking depleted, it has been an exhausting three-month roller-coaster ride since the forum. From Springboard she drew up a list of investors and gave them each a deadline: meet with me before Thanksgiving. To her surprise, a few called her to arrange a date. "Five investors contacted me, and I called 15, of whom 7 agreed to listen." By December she had met with 12 potential investors. The good news: they wanted to go the next step. The bad news: they wanted to go the next step. Shoba struggled to juggle the demands of multiple VC firms, all clamoring for data on the NewsMarket's sales projections and customers. "One partner at a VC firm said to me, 'So you've got 30 Fortune 500 clients. Can you get another 30?' I'm thinking, 'Jesus Christ, guys!' " she says before the reunion.
Shoba has endured the ignorance of VCs who didn't bother to read a word about her company and the insult of walking into large VC offices littered with leftover pizza and some other company's term sheet carelessly left on the table. Once she simply walked out. Other times she weathered the rejection of VC firms that didn't have the manpower to tend to smaller deals.
"People are pretty quick to say, 'Should I listen or tune her out?' It's going to be a lazy audience."
But then came the breakthrough. Claflin, who sought out Shoba at the forum, had failed to persuade his partners at Claflin Capital to invest in the NewsMarket. However, he called Shoba to say that he'd decided to personally invest, and he gave her the name of a big VC firm he knew well. She didn't expect to get a call. But 48 hours later she did. And that was followed up by two meetings with the partners.
By the time the reunion rolls around, Shoba is thick in the throes of negotiating a term sheet.
Lucy, post forum, took a $500,000 loan from her current investors to keep Chaoticom going. But she still needs a major backer in order to make good on product-development dates. "We're getting in front of customers now, but you only get one chance -- so you have to be able to deliver what you're promising," she says. She is now willing to do a VC deal for $4 million -- half as much money as she asked for at the forum -- to get it done faster.
For the benefit of other Springboard alums gathered at the reunion, Lucy relates her latest VC encounters. "It used to be they didn't call you back when they meant no. Now they will call you back when they mean no," she says. But Lucy, ever cheerful, shares her "Three Ways to Know a VC Is Really Interested."
1. They must use the word excited at least three times in any discussion with you.
2. They must ask for a detailed "cap table" (that's capitalization table); then you know they are really pricing the deal.
3. You're talking to a partner at the firm.
A.G. is getting VC meetings but no talk of a term sheet. So she is redoubling her efforts to land a first major client and is seeking reinforcement from angels. "We may end up with 18 angels, which could make things complicated with VCs," she says. Her Springboard coach, Clark Waterfall, of the Boston Search Group, warned her, "You don't have a choice."
At the reunion, she announces that she has commenced talks with 10 more VC firms, thanks to her new Springboard connections. Ask her what she's learned, and she happily complies with her own crib sheet of the stock questions that "VCs ask when they don't know what else to say." A few of her favorites: What's the mission of this company? Translation: Are you willing to change your model? What are the founders looking for? Read: Will the founders get out of the way when the time comes?
But A.G. insists she's not discouraged. "It's still interesting," she says. "I still get raked over the coals. 'Is it realistic to think you can do this level of sales in this time frame?' I've had to do some fancy dancing. But they're good hard questions."
Scene: Five months after the forum, April 2002.
April Fool's Day marks one year since Lucy quit her big-company job and took the reins at Chaoticom. But she has no regrets. She is waiting for a term sheet from one of three VC firms, including one she reconnected with at the Springboard reunion. Lucy has been courting all three seriously for months. She thinks this is the month.
A.G. has made surprising leaps. On March 10 she closed on a $1.3- million angel round with 15 investors. Now she is deep in term-sheet negotiations with a well-known Boston VC firm, a connection she made indirectly through the Springboard forum. "Springboard," she says, "has been a good branding device for me." Her only disappointment: she can't buy a motorcycle now. After all, she has investors and employees to consider.
Shoba has the best news of all. "I'm raising 50% more than I wanted to raise, and I had to turn people back," she reports. On February 20 she signed a term sheet for a $3-million "A" round that included Tom Claflin, three VC firms, and an angel investor. She met four of the five investors directly through Springboard. In early April she is nervously awaiting a closing date. "You hear all kinds of horror stories, like VCs who walk away even after the term sheet," she says. But Shoba is also counting her blessings.
The progress of the three women gives some credence to a bold prediction by the leaders of the Springboard nonprofit: that by year-end the New England presenters will not only outperform the market but uphold the nearly 40% rate of financing. That's not so wild a dream, says Claflin. "I was really impressed by the quality of the people there," he says.
Shoba says she's a changed woman. "Before, I was embarrassed to go up there and say that what I have is an unbelievable opportunity," she says. "Talking about the company is in many ways like talking about yourself. Springboard said that's OK." She pauses to reflect on how far she's come. "My lead investor told me, 'There's no doubt you knock people's socks off when you pitch.' And I was thinking, 'If you only knew ..."
Susan Greco is a senior writer at Inc and is coauthor of the new book Customer Chemistry: How to Keep the Customers You Want -- and Say "Good-bye" to the Ones You Don't (McGraw-Hill, 2002).
Are you ready to present? Learn more about what investors listen for now at www.inc.com/keyword/vc. You can also find related stories about raising capital, as well as about the birth of Springboard and the new network for female entrepreneurs.
Was It Worth It?
Shoba Purushothaman, 39, CEO, the NewsMarket, New York City
Best part of Springboard: "At a practice session, a VC said to me, 'Stop selling me your product and sell me the investment opportunity.' That was a turning point for me."
And the worst: