VCs meet with more than a thousand companies each year in an effort to find the two or three with whom they believe they can partner to build large and enduring businesses, and most of these meetings never get beyond the pitch. So how do you give yourself the best chance of hitting it out of the park?
Many make the mistake of comparing a roadshow to interviewing for a new job. But decision-making at a roadshow is faster-paced and impression-based. VCs are not like hiring managers sorting through stacks of resumes or waiting until the end of the day, week, or month to make a decision on next steps. You need to look at a roadshow in a different way.
The goal is to generate a meaningful conversation. Here is what you need to do to create a complete picture of your business that any venture capitalist will be sure to engage with:
1. Address competitive threats.
It goes without saying that whenever you advocate for your business, you want to paint it in the best possible light, and a VC pitch is no exception. However, many entrepreneurs choose to downplay their competition rather than addressing the relative strengths of those businesses and why they can beat them. Not only does recognizing your competitors' strengths generate a healthy discussion around your strategy and position in the market, but it also provides a much more convincing argument for the long term success of your business.
Overview presentations typically address competitors in one of two formats. The first is a landscape or matrix that frames the competitive discussion around two dimensions, often heavily favoring the pitching company. By its very nature this tends to limit the discussion to a small set of potential characteristics and is not easily modified to promote a richer conversation. Avoid this format.
Instead here's how to wow VCs. Create a table that lists several characteristics or features and evaluate each company or product vis a vis their strengths. While it's possible to tell a one sided narrative with this format, and many do, it lends itself to a more holistic view of the market. Recognizing the competition for what they do well demonstrates a mature understanding of your market and is a topic that you will be asked about anyway, so taking the time to frame the discussion around why you win despite their strengths is an ideal way to position yourself for success.
2. Create a product roadmap.
While it's important to focus on vision for the company, relatively few entrepreneurs take the time to walk through a product roadmap to get there. Many describe their use of proceeds falling into two broad buckets, go to market and engineering. A product roadmap provides a window into how you intend to focus your growing engineering team to build your vision from where you are today.
There are several well-accepted and effective ways to approach a product roadmap in your presentation. The most straightforward is a timeline that outlines your product milestones and anticipated major release schedule over the next 12 to 24 months. While no VC would expect your priorities and the market to remain stable for the next two years, having a plan demonstrates that your vision is grounded in reality and gives you a framework from which to react to changes in the market.
For earlier stage companies who may still be in the process of shaping their core product, often a set of experiments or customer feedback and resulting product decisions based on that feedback can serve in place of a formal roadmap.
3. Invest in an appendix.
Even though a carefully crafted pitch deck is one of the best tools you can use to engage a VC, the best discussions quickly evolve into a conversation about the business rather than a formal presentation. By having an appendix with information not included in the body of the deck, you can take your discussions to a new level.
Every VC is different and tends to focus more intently on a particular set of topics in a first meeting based on their background. This can range from the structure and compensation of your sales force, to a detailed overview of your product architecture, or even how you approach company culture in a fast growing organization--all of which are important topics that often end up on the cutting room floor. Make sure that you don't cut out these important topics, but rather construct and appendix so that you are prepared to discuss all aspects of your business without disrupting the flow of your deck.
Nothing can substitute building a promising business, but by recognizing your competition, including a product roadmap, and being prepared with an appendix, you give yourself the best chance of knocking that pitch out the park.