Like American Idol for Entrepreneurs

This week I felt as if I were on American Idol. No, not as a contestant, as a judge. I was on a panel of three critics listening to three-minute pitches from entrepreneurs. The panel's job was to help the entrepreneurs get ready to pitch their requests for funding to over 100 investors at the upcoming Crossroads Venture Fair.

I had a yellow grading sheet for each presenter. I had to grade the contestants on specific criteria. Amazingly, most of the presenters never got to some of the points. They mostly got hung up on giving their credentials, describing how great their product or service was or going into the need in the marketplace. Two presenters completely lost me as they dove into the technical aspects of their inventions, complete with diagrams that made no sense.

The judges had to tell these entrepreneurs how to improve their presentations. What amazed me was how they looked so eager to hang on every word we said. Sometimes I thought I sounded like Simon, telling people that I couldn't understand what their business was.

But some of the ideas for new businesses were really good. I hope that the entrepreneurs learned from the experience and will do well at Crossroads.

Here is a rundown of the point we had to grade on:
Product/service - what do you do?
Market - what's the size of the market?
Competitive Analysis - Is the product unique?
Finance -- how will you make money?
Management - Do you have the talent to meet your goals?
Funding -- what do you need? how will you use it?

Crossroads is run by the Connecticut Venture Group. http://www.crossroads-cvg.org/

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.

Please comment or ask questions.