This is Kristen O'Brien, managing editor at NFX, and you're listening to the NFX podcast. As founders ourselves, we started 10 venture backed companies that exited for over $10,000,000,000. During that time, as founders and now as VCs, we've seen 16 counterintuitive lessons in pitching VCs. The increase your odds of success. Today, we're sharing them for the benefit Number 1, every sentence needs a number. Every sentence should have a number in it. It was up 23% between September October.
Over the last 6 months, we've we've doubled our retention. To give me numbers, we've increased our attention by 100% over the last 6 months. That's two numbers in one sense. That's the type of sentence you wanna say. That's what actually communicates. You've gotta be data driven in these businesses. The people who build giant businesses are data driven people. If you're not that kind of a person, you need to at least learn to be that kind of a person.
It's all about the data, communicate that, communicate data. Number 2, pitching is a full body experience. The second thing people do is they sit there at the at the table just sitting there talking. The more sentences I say faster, the more you'll get it, and then and then you'll want to invest. Pitching is a full body experience, like playing a sport. It's like singing. You you've gotta you've gotta use your body. You gotta move around. You gotta jump to the board.
Number 3, diagrams communicate 10 times more. Jumps to the board, and you draw on the board diagrams. Look, diagrams communicate ten times more effectively than just words and hand waving. I know that you are trained in academia to sit and handwave. You don't communicate well this way. The way we do it now is with data and with diagrams. We have imagery. We have whiteboards. We have power points. We have paper and Pete. And you can use those things to diagram stuff.
And then during the conversation, you go back. And if you mark that, 10 minutes later, you go back. Exactly. That's what I was saying. Remember we talked about that 10 minutes ago? It sharpens the conversation. It speeds the conversation. You only get a half an hour with the VCs. You really only have 10 minutes to grab them. You gotta use diagrams to do it. You need to be on your feet. You need to get to the board. You need to draw on the board. Number 4, jump to the screen and point.
When you do your PowerPoint, great. Do your PowerPoint, and it's gonna be presented up on a screen or it's gonna be on a something you're doing. You can't just talk about it because you've spent time looking at your PowerPoint thing, and you're talking about this little number here. That's what you're talking about in at the moment. They're looking at some complicated thing because you know it so well. You forget that they're looking at the whole thing.
They don't know that your point you need to get on your feet. You see, you're in a chair. You need to get it out of your chair and you need to move to the to the projection and point to the thing you're talking about. You need to do the pointing out way. You've gotta point out the so that they can focus on the thing you're focused on. Again, it's just more hand waving. Even though you're showing them a diagram, if you don't identify what you're actually about. They're gonna miss it.
Their brain will be wandering. They won't get it. Number 5. Send your company brief ahead of time. The way the introduction and meeting thing works in the venture world is like 1963. You get your introducer to send them an email. They give them 2 or 3 pieces of information in the email. They take the meeting. They come into these meetings knowing almost nothing about you. So you should create a company brief on the company brief.com. It includes your deck.
It includes the metadata that the VC needs to know to understand your before you get in there. So when the VC and you meet and you're only gonna have 10 minutes to explain it to them or half an hour max, you can actually get to the heart of their concerns about your business or what they're interested in about your business. Otherwise, you're gonna spend the first 20 minutes going over the basics. Where's your headquarters based? How many employees do you have?
You know, how do you actually make money? Like, what's your traction? Like, all this stuff can be put in the company brief and they can get way before the meeting, you can have basically the second meeting with them on your first meeting, which is gonna save you time and increase the probability that you actually raise money from this VC. The other thing is that when you when you send them more before the meeting, they feel as when they come into the meeting, like, they already know you better.
They're already more committed to this meeting because they already know so much more about you. Okay. So if you are not using a company brief, if you're just using a deck or if you're just using an email from then you are way behind all the other entrepreneurs. The other 6 entrepreneurs they're meeting with that same day who are trying to get money out of them. You're way behind guys.
You're losing the competition already because you've walked into that meeting without having given them a company brief. Number 6, get there 15 minutes early. You need to get to the meeting at least 15 minutes early. You can sit in the lobby, more importantly, you can get into the meeting room, figure out where the the the deck is gonna be presented, or whether there is no, you know, projection, where you're just gonna do it on your laptop.
You can use your wrist and clean off your screen so that they can see that your laptop is in a mess. You need to bring dongles with you. Many of these people don't know how to run their own projection screen. In their own rooms. I certainly don't. You know, I need someone who's here all the time who knows how to get this stuff going, and each room is different, and they don't know how to do it.
So you need to get there early Get your presentation set up, get it projected on the screen, if that's what you're doing, know where the whiteboards are. Make sure the pens work. It might be that the EA has forgotten to put pens in there for a month, and they're not gonna work. And then you're stuck, and then there's this awkward 3 minutes while you try to find the EA and try to find the new pens, the whole thing just breaks down. You have to take charge of that room.
You have to take charge of the presentation. You gotta get there 50 minutes early to make sure that you have the ability to drive that half an hour meeting 10 minute meeting to the point where they can understand what you're doing and get excited the way you are about your business.
Anything less is irresponsible and a waste of your time because that pitch will be unsuccessful, and you will have wasted all the travel time and then all the travel time home and the time that you're there, and you will have checked off a VC who will not invest in you from your shortlist. That extra 15 minutes makes a big difference. Number 7, sit in the front of the room. When you get into that room, you've gotta sit toward the front of the room.
You've gotta think about where you're sitting and how you're gonna talk to that VC and where you want them to sit. You know, the VCs are are creatures of habit. They get 6 pitches a day, 200 days a year, and they come and they sit in the same chair, in the same room, over and over again. You gotta figure out which chair that is, and you gotta sit in the right spot next to them. And at least you wanna sit toward the front.
If you're gonna be presenting on this wall, you wanna sit toward the front so that you can jump up, stand on your feet, use your legs, use your stomach, and get to the board and point at what you're talking about. So that you can be a dynamic engaged founder, engage with the material, engage with your excitement, and you've gotta be positioned in the room properly so that you can make that happen to the mobility. Number 8, project your passion. Years ago, we had a guy come in for a pitch.
He was losing the audio. He was losing my partners. I was I was in my early twenties. And at one point, he got down on his knee right next to the partner. And he said, we are gonna make this happen. He used his knee on the floor, and he talked to the partner, and he said, we are gonna make this happen because this is my life And I know this market better than anybody. And at that moment, the partner believed in him. The partner finally woke up. He said, woah, this guy's serious. He's in my face.
He's on his knees. He's gonna make this happen with every ounce of energy he has, and we invested. And I don't know if it was just the knee band, but it was part of it. It was the way he communicated his passion without saying I'm really passionate about this. When you say stuff like that, it cheapens the idea that you're passionate about.
You have to show that you're passionate about by getting there early, by being prepared, by getting down your knees, by using your body, by being a full blooded person who is gonna drive this business forward through strength of will. Number 9, look the part. Yeah. When you when you wear something, you gotta wear something nice and sharp and crisp something that shows you're serious about being a professional.
I've seen people come in with, you know, sweatshirts or a big sweater or this is frumpy pants. They kinda sit down with their coffee they sit down with their snack and their laptop, and it's just a mess down at their end of the table. It doesn't look professional. It doesn't look like you're you're gonna eat everybody else's lunch. We are in competitive industries, guys. 25 years ago, there were no VCs, and there were only a few thousand startups.
Now there's millions of startups and they're 1000 of VCs. Any industry that's worth its salt is super competitive. You cannot be lazing around. Come in wearing something sharp. Something interesting. Number 10, bring a pen and take notes. Bring your laptop and a notebook and append a write in so that when the VC says something that you wanna remember or you wanna get back to, you can write it down really quickly. And to show them that you're taking notes because here's the thing.
99 out of a 100 VCs won't invest in you, typically, maybe 9 out of 10. That means that 9 of them are gonna end up being free consultants to you. And if you do not take that opportunity to learn from them and ask them questions, then you are doing yourself a disservice. And, ultimately, your overall fundraising process won't work. See, you can't look at these meetings as do or die. I've gotta get this guy's money this woman's money.
You have to think I have to have a successful fundraising over the course of 10 or 20 potential investors. And so every meeting is an opportunity for you to get your pitch to be Beller. For you to learn more about your business, for you to learn more about your competitors by asking them questions. And if you fail to do that and fail to take notes, then you're just you're you're not gonna have a successful fundraise.
Having that notebook, having that pen, nothing else other than your laptop that you're presenting with, That's the way to go, I think, optimally Flint these meetings and to remind yourself that you need to pitch in 10 minutes and then ask questions for 20. And and And if you're not asking questions, then you're not really engaging the investor and and you're gonna have a a lower probability outcome of raising Number 11, only bring your best presenters.
So who to bring to the meeting is often a very emotional thing. There's co founders who are gonna wanna be there. There's, VPs who are gonna wanna be there, and you need to have the hard conversations with them because Everybody in the room needs to be as compelling as you are. Everyone in the room needs to have a role to play in the pitch. Or they should not be in the room. There are some people who are very good at pitching.
There are some people who are very good at getting that energy level up and speaking concisely and answering the question as it's been asked. And there are some people who wander off. You don't you cannot bring those people into the meeting. Your cofounder might be good at engineering. Cofounder might be good at sales. Your co founder might be good at product design, but it's unlikely they are also good at pitching.
So if you're good at pitching, don't bring them in because it'll just make them look not good, and the team as a whole won't do well. If you have some other people who are good, who are really critical to the idea that, hey, this is a full team and we can win this thing, then by all means bring them. But it's based on personality. It's based on their skill and pitching.
When you need to communicate that to your team, you have to sit sit them down and say, look, guys, in order to win these things, we have to have sort of maximum precision in our short time that we get with these VCs. And in my few meetings with you, I've seen that the Christmas isn't there, the speed isn't there. And for this right now, I can't have you learning on the job.
And I'm gonna have to keep you out of this meeting, and you're gonna have to be fine with that because you you need to believe that our chances of raising the money is gonna be higher with me just doing it. And then in the second meeting or the 3rd meeting, we can bring you in when they wanna get to know more of the team. It's a hard conversation to have, but founders have to trust each other. Number 12. Make a deck specific to every VC.
Here's another massive mistake that founders make when they go into these meetings as they use the same deck for When I was fundraising over the course of my four companies, I had a different deck for every investor. At the end of my fundraising process, I would literally have 60 power points for 30 different investors I was pitching. Okay? Different versions at different times. The first time I pitched gray lock. The second time pitch gray like depending on who's in the room.
You have to tweak the language because certain VCs think about a word like we think about the word network effects. If you come to us and you have a deck that doesn't include network effects, it's gonna be much harder for us to get excited about your business.
But if you do include network effects, we're gonna be like, ah, that's what we're looking If some people like DTC, you know, direct to consumer and you don't use the word DTC and they're writing about it in their blogs all the time, then you're missing an opportunity to connect with that investor and show them what you're doing fits in with the thesis that they already are are working on and the thesis that they already believe in, the thesis that have
already been socialized around the partnership when you're pitching 1 Gigi, you've got to arm them with the ability to convince the other partners in the room because ultimately they need to go on Monday and say, hey. I met this interesting company last week, and this is what they do. And they literally get 30 seconds.
They get 30 seconds to explain in shorthand to the other partners why all of them who only have 3 or 4 hours together are gonna spend time talking about this deal rather than a follow on deal they've got rather than an existing portfolio company that's having problems, rather than a deal that's about to close from 2 months ago that's now about to to move the money, There's so many other things for partners to talk about rather than your new deal.
Plus, each of them has met with 18 companies last week. So if there's 3 partners, That means eighteen times three companies could be talked about it. Partners mean, why are they gonna spend time on yours and and why how are you gonna arm that partner with enough, information to get the other partners interested. So you've gotta trigger the language that they're already used to.
You've gotta in your presentation and in your deck, you've gotta use the language they can use to trigger everybody else in the room so that they can decide to allocate time to you even have a second meeting. Number 13, spend a third of the time presenting 2 thirds asking questions. When you think about the time that you're given, if you're given a half an hour, that means you have about 8 minutes to get through your deck so that you can have 22 minutes of talking time.
If you're given an hour, you still have about 10 minutes to get through your deck. So you're gonna have 50 minutes of talking time, and plus the hour probably means 50 minutes the half an hour probably Pete 25 minutes because the the VC has to get up, take a note, talk to an EA, you know, see another part, and then move on to the next meeting. These partners typically have meetings back to back to back all day long. I'm I'm probably in anywhere from 8 to 12 meetings a day.
People don't have time to go on and on. They wanna understand what's great about your business. They're hoping that your business is the business they can invest in, you know, this year or this quarter or this 6 month period, whatever their cadence is. They're hoping you're the 1, but you've gotta show it to them really quickly and succinctly so that they can get to the questions. So don't think of the time with the with the VC as the whole time you're pitching.
It's you're pitching for 8 minutes and then you're talking for the rest of the minutes to try to dig in. And what's their concern? How do you see this? What's the pattern recognition? Do you need to come prepared with questions about their firm, about how he sees your business, about how he sees your competition, about how other patterns he's she has seen or he has seen in other markets so that they can apply those that pattern recognition to your business and how it rolls out.
You can learn so much from them. But if you're just busy talking, there's not that chance for connection. So don't allocate your time the whole time of your pitching. Don't think of it that way. You don't have a half an hour. You have 8 minutes. Number 14, the goal is learning, not closing. You've gotta ask VCs for feedback. During the meeting. You have to assume they're not gonna invest in you. You have to get clear on the math of this.
VCs look at a 1000 companies a year, and they might invest in 4 or 5. Most series a firms invest in 1 or 2 per partner per year. The math is that you are not getting investment from this person. What you do have is someone who has seen hundreds of business plan and has seen hundreds of patterns failures and successes over the years, and they're available to you right now for free.
So when you get there, think of them as someone who is not going to invest, but who you're going to get as much information out of as possible by presenting a great opportunity to get them excited. So you need to ask them questions about how do you see my company in the marketplace? Open it up. Let them start talking about their concerns or questions or whatever. How do you see me as the CEO of this company? How do you see my team?
Do we have a if if you can improve something about my team, what would you point to? Why haven't you invested in any of my competitors? Have you seen them? Did you did did you take a look at them and decide not to? Why? What do you think some of your partner's objections might be when you bring this up on Monday? Are there some patterns you've seen in other companies or industries that you can see applying to my business and how I should go to market or how I should plan to build my product.
There's so many interesting questions you can ask a VC when you're there in the room with them. And most of them are gonna be able to give you something really interesting that you might not have thought about before. So take the opportunity to do that, prepare for him. The other thing is Ask them about their firm. Like, I've noticed that you invest in this type of company. I've noticed that this is your your size amount, but mine's slightly Beller. Mine's slightly smaller.
How do you work with founders? Do you have a a program? How long do you stay on the board of the companies you invest in? There's so many things you can ask them that shows that you're doing your homework and that you're selecting your VC carefully. And that you're the type of quality person and quality thinker that's capable of building a giant and important company. And if you don't do that, you're losing that opportunity in that meeting. Number 15. Know when you're improving or not.
So often you'll get into this thing where you'll you'll start pitching And then the pitch should evolve pretty dramatically over time as you learn more about how your business is being perceived by investors who see all the other businesses and your competitors. You're gonna learn a lot. So your pitch is gonna evolve. Your pitch should be getting better. If you can still feel that the VCs are getting more and more interested as your pitch improves, then you should maintain enthusiasm.
If the feedback you're getting is that there's no way in hell that anyone's gonna back you and you're just kinda flatlining no matter how you change the pitch, then you really have to start questioning whether you're in the right sector, whether you're whether you've got the right product, whether you've got the right team, and go back and reconstitute the business or figure out how to build your business without VC money, which is another way to do it so that
you actually prove the business, then the VCs will be calling you on the phone. And you'll have to fend them off with a stick because there's so many of them. And they're all desperate to get into the hot deal. You have to really constantly looking and courageous enough. You have to be courageous enough to think from 1st principles Am I in the right spot? Am I in the fast moving water? Is this the right time? Do I have the right language with which I'm communicating what I want to accomplish?
And I'll always be going back to the beginning know that you feel like you've been working hard on it for a year, for 2 years, and you've made so much progress. And it's true you have made a lot of progress. But remember, the VC is seeing 6 companies same day who have also been working for 2 years or for a year, for 3 years, and they've made a lot of progress too. So he's not comparing you to where you were a year ago or 2 years ago.
The VC, she is comparing you to the other companies that she's seeing during the day. And you've all made progress. From your experience, you've you you I've accomplished so much. Things are going so well. Yes. They are compared to where they were for you, but compared to another opportunity, they might not look as good. And you've gotta assess that out.
You've gotta be honest with yourself and have the courage to understand that and look at 1st principle about how to put your business into a place where the VCs would rather invest in you than another company that they've seen that same day. Number 16, understand VC psychology. For the entrepreneurs to understand the VC psychology, you have to put yourself in the VC shoes. And I was a founder for 20 years now. I'm a VC for the last 2 years.
I'm understanding the constraints and the context that VCs operate in. You you you'd have to open up your kind of mind and your heart to understand what it's like to be a VC because it's incredibly repetitive. It's incredibly like being on a manufacturing where the companies come by and you have to decide if the part is a good part or a bad part or whatever.
And and and the the quantity of emails, the quantity of inbound from their partners, the quantity of inbound from the companies they've already invested in. The quantity of inbounds from good friends who are sending them companies they believe in, and they need that VC to meet with them within the next 48 hours This goes on all the time. The distractions that a VC has, the the directions in which a VC is being pulled is is extraordinary.
Having run companies before where we were doing sales and marketing and engineering and product, that pales in comparison to the the the real 360 degrees that VCs pulled apart. They're constantly switching contexts. And so for them to come late is sometimes their fault, but it's not usually their fault because somebody grabbed them and I need you now to give me an answer on this thing.
And it happens over text and it happens over email, and it happens because of the EA and the EA is getting called the bank is calling. There there's a loan that's due that, you know, there there's a Series C firm that needs to talk to you and the the founder is calling me. I mean, there's so many things that's going on that have nothing to do with you. And so a lot of the rudeness that you see with VCs comes from that context, like a doctor. Doctors are always late.
Doctors are always misattentive because of the structure and the context that they're in. So have a little bit of understanding about what what the VC is trying to deal with. The second thing to understand is that because a VC has to say no to 99 point something percent of the deals they Pete.
Beller day for 10 hours a day, they are being trained to be negative because in order to get to the no, which is the result of a meeting 99% of the time, they have to hone and develop their negative muscle their negative mental and emotional muscles to find out what's wrong with an idea, to find out what's wrong with a team. And so over the years, this wears down on them and it makes them cynical. It makes them distant.
It makes them cold because if they actually connect with you, everyone they meet with every day, it would be exhausting. And so they have to keep their distance. They're thinking about, you know, many things. They're thinking about what could be great about this company, but they're also thinking about what are signs? What are the red flags that this company isn't going to be as big as I would hope it would be?
In that context, you can often feel a rudeness from them or not getting back to you with an email yet another rejection with their they don't wanna send you another rejection because they hate rejecting people. They're they're hopeful for founders they wanna support founders Pete most of their job is saying no to founders. So you can imagine that emotional tension that they have to go through. So of course, they don't wanna email in you and tell you no. It's just the worst part of their job.
So these aren't necessarily that they're bad people. It's just that over the years, over the wearing down of of these people you start to see these behaviors creep in that aren't optimal for founders. And so you have to assume if they don't get right back to you, it's a no. And that's okay. That's okay. And many of us try to get back to everyone in a very timely way, and it's really hard to do.
It's just physically during the day, given the number of meetings, given the number of directions you're being pulled, given the number of urgent things that are coming up, it's often very difficult to do it no matter what everybody's best intention when you go into these meetings, don't treat the VC like an authority figure. Just because you're asking them for money doesn't mean they're above you. They're peers of yours. They're just entrepreneurs trying to build their portfolio.
That's their entrepreneurial activity. You are entrepreneurs talking to each other to see if there's a potential biz dev deal between the two of you. You need to treat them like equals. You need to have that confidence to have a real conversation and be authentic with them. Stop playing up to them. Stop being like, oh, please, stop being saying, oh, if I just say another sentence, she will understand the genius of my idea, and then she will give me the money, then I will be happy.
Like, stop with that. There's enough. Like, you gotta be mature. You gotta go in and say, this is what I'm doing. I'm gonna kick it. Let me ask you some questions so I can kick it even more. That dialogue, that conversation is gonna serve you well and show them that you mean business. To learn more about how to build iconic marketplaces, and networks, visit nfx.com and subscribe to receive our weekly email.