By David Cremin
Lots of hand waving and pay no attention to what’s behind the curtain.
That’s what I mean by gesticulation. Sometimes, when entrepreneurs are presenting to us, we hear all sorts of buzz words and see lots of slides, but most of the time the number of words and slides is inversely proportional to the opportunity or the health of the business.
I advise a lot of startups not only through my work as a VC, but also through my role as a Venture Partner with the awesome Techstars accelerator organization. I try and help every one of these startups understand that most VCs want simply to cut to the chase on the business opportunity. In my experience, what VCs are always seeking to understand is, in a nutshell:
What do you do?
Why is it interesting as a business, meaning, how big can this get?
Why will you win, meaning what advantage do you have, so that you can be the #1 winner in the category?
Why are you raising money, meaning what business milestones will you achieve if you raise money, and in what timeframe?
Why is the team uniquely capable to go do this?
From this informational launchpad, if we VCs need to learn more, we can choose to dig in around areas of interest or concern (or simply choose to decline).
I recently saw a company presentation that pitched it’s opportunity to disrupt the healthcare industry from billing to patient care and physician motivation, using SaaS, electronic medical records, practice management, wellness blockchain records, IoT devices, acquisition management, managed services, real estate facilities management, remote patient monitoring, telemedicine, predictive analytics, machine learning, augmented reality and artificial intelligence. Oh, and the company diversified its risk.
Boy, this is a lot of hand waving. BTW, most of my VC colleagues glaze over regarding companies that pitch like this, using every buzz word known to the industry. I wish I even knew what this company does? Bottom line, without feeling any disrespect, because I’m sure the company has merit, and it’s hard to be an entrepreneur, I redirected the pitch to the pass file. If they can’t tell me what the business does, how can they tell a customer?
Why not tell us what simple business you’re in? Why not explain how big a market it is, and why you have a unique opportunity to grab the market? Why not tell us how you’ll use a little bit of capital to achieve some very important business milestones? Why not tell us why you are the best team to go do this? Why instead would you obfuscate, and beat around the bush and use a lot of jargon? Are you trying to baffle them with bullshit? No, you should be trying to help an investor understand why putting capital to work will create extraordinary value in a compressed timeframe.
VCs make a lot of bad bets. At Frontier, we have our fair share. That’s the business we’re in. But if you asked us in the wake of a company failure, in retrospect would we make the bet again, we are able to go back to our investment thesis at the time and tell you why we made the bet, and why, based on what we knew at the time, we would make the bet again – I’m guessing 99% of the time. It’s because in partnership with the entrepreneurs, we could articulate answers to the key questions asked above.
So instead of gesticulating, hand waving, buzz wording, and jargon dropping, why not resort to articulating?
Articulation, not gesticulation.
