Over the years I have been amazed time after time, regardless of advice, how so many entrepreneurs present to a venture capital firm and repeatedly make the same mistakes. A company has one chance to make an impression, 10 minutes to capture the audience's attention and persuade a VC that their company is truly innovative and worth their time (not to mention their capital). On average, a partner at a VC firm will review over 300 deals a year and invest in only one or two.
I usually give first-time entrepreneurs the following 8 key mistakes to avoid when presenting to a VC firm:
1. Starting a presentation off by discussing the IPO or billion-dollar exit A lot of people do this because this is the ultimate end goal, but experienced VCs understand that building a company takes time and if you are unrealistic about the amount of work that it takes to build a company, you lose credibility.
2.Going over 30 minutes Venture capitalists are busy so don't waste time rambling. Have a laser focus on your vision, the large market opportunity and the team as well as your competitive advantage. The presentation should be no more than 20 minutes and leave 10 minutes for Q&A.
3.Spending too much time disparaging the competition Avoid excess bombast on why no one else is good enough to have developed the idea. There are very few original ideas--focus on presenting why this one will work.
4.Not talking about customer acquisition costs Be clear on the channels necessary to acquire customers as well as the long-term value of the customer.
5. Just talking about yourself Speak about your team's credentials. VCs want to understand why the management team can win and the key elements that give them that confidence; VCs invest in people. Let other team members speak about their respective areas if they are in the meeting.
6.Giving unrealistic projections
It helps to give a range depending upon the capital raise and also be clear about the assumptions used in the financial projections.
Leave your ego at the door. Be confident in your presentation, but not arrogant.
8. Leaving the meeting thinking your work is finished
First time entrepreneurs often walk away excited about their meeting with a firm, but the process is just getting started. Real interest from a VC is demonstrated by the action that happens afterwards including calling customers, issuing a term sheet and meeting other members of the team. Also, simply having one interested investor is risky so entrepreneurs need to pursue approximately 20-25 investors.
Presenting to VC firms is an intensive process, but there are ways that will increase an entrepreneur's chances of success if they master presentation skills, aggressively set up meetings and efficiently manage the requests after the meeting.