As a promising startup, you may be asking yourself “What exactly do Venture Capitalists have interest in pitches?” Well, the answer is quite simple huh. They are only looking for an opportunity for a great investment in your pitch. A startup can have the best presenters who have an eloquent presentation language capable of convincing investors but if the pitch does not promise to be a good investment, it is more likely your pitch will be rejected.
In the first place, Venture Capitalists fund promising businesses therefore you don’t have to put a lot of focus on the design of your PowerPoint slides. Founders preparing their pitch should go with the due that a great investment opportunity is all they need to offer.
One Big Consideration
Startups need to understand that money coming from VC’s is mainly raised from pension funds and many other financial institutions. Therefore, entrepreneurs seeking funding of their businesses must recognize that every Venture Capitalists putting money on risk – Oh yes, an investment is a risk – are reliable and required to justify every single portion of investment to their respective Investors (LPs)
Venture Capitalists are also interested in startups making valuable returns that are worth risking. A startup may have a plan on how it will generate enough revenues to cater for the initial investment but if the returns will not be reasonable over a given period of time, many investors will shun away from such Investments. Startups must therefore be in a position to raise revenues in accordance to the time factor for them to be labeled as “great investments”
VC’s need to make five to ten times in returns on their investment to keep their job. This actually means for them to put money on a startup, it should be in line to exit or go public in a span of 5 – 10 years from the initial year of investing.
VC’s don’t have all the time to listen to you
It is widely known that investors only spend about 15% of their time listening to startups that are pitching. They in turn put a lot of time in ensuring that what they have already put money on moves forward to be successful. This means that a startup really has to put across all the reasons investors should believe in their business and why they should find adding it up into their portfolio of investments something worthwhile.
Startups should put themselves in the shoe of the investors they are approaching and view themselves from an investor’s standpoint. If you have any doubts about it being a great investment then actually there is no point of going forward and perfecting your pitch because no one will bet their money on you. By learning what Investors are interested in, you are boosting your chance of getting your business funded. Research on the previous deals they have invested in and learn a couple of things that come out clearly as major factors they are interested in. Creating a startup that is investable is what really convinces a venture capitalist not that colourful deck full of slides.