From time to time I’m planning on writing posts aimed at giving some insight into the venture industry. Brad (sometimes co-authored by Jason Mendelson, our GC) has done a series of these that I think are very informative. In fact, my very first blog was a guest column for Brad that described splits and the various ways to calculate them in a venture deal (and why this matters to entrepreneurs). I sit through a lot of venture presentations. Literally hundreds of them. Some are very good but a good number of them are really poor. Seriously. This amazes me. I think it’s pretty hard to get an audience with a VC (I think about the number of plans we receive every year that we don’t see the pitch for vs. the number that we invite in for a meeting). I’m amazed how often entrepreneurs fail to put their best foot forward when they do get a meeting by having a sub-par presentation. I think it’s because too many entrepreneurs know their business so well that they forget how to describe it to people who don’t. Here’s a couple of do’s and don’t that I hope will be helpful. Also below is a list of what a good venture presentation should include (I believe this was originally put together by my colleague Chris Wand a few years ago).
– DO have a 2 or 3 sentence description of what you do. This should be simple and straightforward. You grandparents should hear you sa this and say ‘oh – I get it’.
– DO make sure you start your presentation by telling the people who you are talking to what it is you do (I’m truly amazed by the number of times it takes 6 or 10 powerpoint slides to get to the part of the presentation where I finally understand what it is the company that is presenting actually does)
– DON’T assume that the problem that you solve is obvious. Make sure you do a good job outlining what it is that you ‘fix’
– DON’T have a financial plan that shows you becoming the most successful [insert your company type here] company ever in existence. I’m amazed how many enterprise software companies show us with a plan that has them generating $50m in revenue in their 4^th year . . . while at the same time insisting that their plan is ‘very conservative’
– DO make sure you do time checks – first at the beginning of the presentation to know how long you have an audience for, and then periodically to make sure you are still on schedule
– DO make sure you then organize your presentation around the time you have (which is to say, understand the meat of your presentation and make sure you get to it in the time you have allotted); a corollary to this is to make sure that you skip sections that you are asked to skip. We regularly spend 10 or 15 minutes time going through something (for example the market overview of a market we already know broadly very well) that we’ve asked an entrepreneur to skip over, only to run out of time during the real guts of the presentation (i.e., defining how the company’s technology is unique from that which we’ve seen before). – DO make sure you practice your presentation out of order and interrupted – a lot of good presenters get completely flustered if they get off track or have to take things in a different order than they planned – you should expect that you’ll get interrupted with questions, asked to skip over sections and challenged on certain points – practice your presentation that way. Questions to answer in a venture presentation. (n.b., please don’t see this as an end-all/be-all list, but rather as just a guide):
Vision
– What is your big vision?
– What problem are you trying to solve and for whom?
– Where do you want to be in the future Market – –

Opportunity
– How big is the market you are pursuing and how fast is it growing?
– How established is the market?
– Do you have a credible claim on being one of the top two or three players in this market?
Product/Service
– What is your product or service?
– How does it solve your customer’s problem?
– What is unique about your product/service?
Customer
– Who are your existing customers?
– Who is your target customer?
– What defines an ‘ideal’ customer prospect?
– Who actually writes you the check? Who do you sell to? Who needs to sign off on the purchase?
– Use specific customer examples where possible?
Value Proposition
– What is your value proposition to your customer?
– What kind of ROI can your customers expect by using your product/service?
– What pain are you eliminating?
– Are you selling vitamins, aspirin or antibiotics (i.e., a luxury, a nice to have or a need to have)
Management Team
– Who is the management team?
– What is their experience?
– What team members are missing and what is the plan to fill these open positions?

Revenue Model
– How do you make money?
– What is your revenue model?
– What is required to become profitable?
Stage of Development
– What is your stage of development? Technology/product? Team? Financial metrics? Revenue?
– What has been your progress to date? (make today’s reality vs. the future you are pitching clear)
– What are your future milestones?
Fund Raising
– What funds have already been raised?
– How much money are you raising and what is your valuation expectation?
– How will the money be spent?
– How long will the new money last and what milestones will be met?
– How much additional financing do you anticipate and when?
Competition
– Who is your existing and likely competition?
– Who is adjacent to you in the market that could enter your market?
– What are your competitors strengths and weaknesses?
– Why are you different?
Partnerships
– Who are your current and possible future technology and distribution partners?
– How dependent is your model on these partners?
Fit with Investors
– How does your business fit with the VC’s existing portfolio and expertise?
– Are there any synergies or possible conflicts with existing portfolio companies?
Other
– What assumptions are key to the success of the business?
– What ‘gotchas’ could change the business outlook overnight? Technology? New market entrants? Changes in standards or regulations?
– What are your companies weak links?

Someone once told me a story that I think about often. It went something like this:

Two friends were walking together through some fields when they came to a high wall. The wall stretched as far as they could see in both directions. As they were talking about what to do in this impassable situation one of the men takes off his favorite felt hat and throws it over the wall. The other looks at him and says “why did you do that – that was your favorite hat,” to which his friend responds “now we’re going to have to find a way over that wall.”

A little corny perhaps, but the lesson is a good one and particularly relevant to life as a VC (or just life in general) where we sometimes forget that our jobs are to throw hats over impossible walls and figure out a way around or over them. Sure, gathering data is important; taking a measured stand is important; and jumping off of a bridge with the idea that you will figure out how to make a parachute on the way down is probably not the greatest idea. But sometimes the right thing to do is to jump into the unknown and take the stand that you will figure it out.

This story has relevance to blogging as well. I wasn’t expecting the ‘holy crap’ feeling I had last night after I had posted my first blog entry and sent a note around to some friends letting them know that I was on my way. What am I going to write about, and who is going to care anyway? A friend wrote to me after he had read my first entry saying that he too had been thinking about starting up a blog, but that the anticipation of feeling exposed and out there after taking the jump was stopping him (he actually used more colorful language not worth subjecting y’all to). Well – my hat is lying firmly on the other side of the wall. Not sure if I’m going to find a way over it, but here’s to trying!

sjl

p.s. RB – hat’s off, man!

I spend a reasonable amount of time on-line (or in my RSS reader) and more recently have begun to read an increasing number of web logs. It’s a fascinating phenomenon – a voice for everyone (although not necessarily a listener, but more on that in another post). I work for Mobius Venture Capital and have been interested in the emergence of some prominent VC’s in the blog world (my boss, Brad Feld, has a very popular and I think informative blog; other blogs, including some of the venture blogs I read are listed here on my site). One thing I’ve noticed is that most of the VC bloggers seem to be partners (two notable exceptions are Ryan McIntyre and Robin Bordoli – both colleagues of mine at Mobius). I’m not entirely sure why this is. My initial assumption is that those of us non-partners who work in VC are simply too busy (trying to become partners) to put anything together; or perhaps it’s because in the world of VC people care a lot about what partners think and say and not as much about what the rest of us say. So I decided to test this theory by starting a blog of my own. I’m calling it “VC Adventure (you are in a twisty maze of passageways, all alike”) because I’m intending to muse about the twists and turns of the VC world (points to the first person who gets the full reference). I’d like to talk directly about my view of the world – the triumphs and frustrations I go through with my companies and in my firm as I try to figure out what kind of venture capitalist I’d like to be.

I’ve been at Mobius for just over 3 years – joining just in time for the downside of the bubble. I’ve worked with about 25 companies during my time at Mobius – my current active investments are listed on this site. Before Mobius I worked for what turned out to be a failed internet/datacomm company – Verado Holdings (formerly FirstWorld Communications). I did a bunch of stuff there (m&a; corporate development; investor relations; corporate planning), but most importantly I had the opportunity to run a large portion of their business (at a time when the company had decided to focus elsewhere) while I sold them. This was a fantastic experience – I was responsible for a 350 person, $40m business; a business that was going through significant turmoil. I was pretty green and certainly way over my head but leaned through the help of some outstanding colleagues and by making lots of mistakes. Eventually these businesses were sold and I moved on from Verado about a year before they finally shut their doors.

So . . . there you have it. At least a small snapshot of my business background and a perspective of what I’m hoping to accomplish by writing this blog. There is, of course, a lot more to me than Mobius or business – I’m a new dad; an avid reader; a rabid mountain biker and snowboarder; etc. I’m sure some of these topics will sneak their way into my blog from time to time. I hope you’ll enjoy reading about (and commenting on) my perspective on being a young VC; on business and life.