Wednesday, February 20, 2008

The Elevator Pitch

When one of my clients asked me last week what it's like to present to an angel group, I told him it was like reality TV. It's like American Idol or The Apprentice. You give the pitch, then the angels or VCs ask questions and discuss your idea. They show interest or quickly dismiss you. So when I read a piece by Tomio Geron, a reporter for Dow Jones VentureWire, that attending an Elevator Pitch Roundtable hosted by VC Taskforce in California was like American Idol, I had to smile. (See a link to the article in my sidebar under shared items. Here's a link, too: http://blogs.wsj.com/independentstreet/2008/02/11/what-would-simon-cowell-say/)

The elevator pitch lasts about 90 seconds. That's all you've got to get the essentials of your business across to a room of potential investors. In some cases, you have a little more time -- three to five minutes. When time is up, you have to stop because more entrepreneurs are waiting to pitch right after you. The key to success in this situation is to be sure you hit the points that answer the questions that investors have. You have to pique investors' interest quickly.

Having judged entries for venture fairs and graded pitches at venture boot camp, I can say that the biggest mistake entrepreneurs make is not answering the key questions. The Connecticut Venture Group has a form to fill out for its Crossroads Venture Fair. (You can see the forms at www.cvg.org) You would not believe how many people don’t answer the questions on the form. For example, in response to “What is the market?” several hopefuls wrote about the product. To win over VCs, answer the questions correctly, clearly and succinctly. It seems like this should be pretty basic, but it obviously isn't for many people.

The other problem is that inventors and other highly technical people tend to be in love with their technology. That's all they want to talk about. But they lose their audience. Investors want to know about your value proposition, the market potential, your management team and your business model. If you want to read more about the top ten questions, visit my website: www.upstartbusinessplanning.com.

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