At a recent event hosted by Health2.0 Silicon Valley, http://www.meetup.com/SVHealth/events/69995202/ , sponsored by EPPIC http://www.eppicglobal.org and MHMN, Bill Reichert, Managing Director at Garage Technology Ventures, talked about how to pitch to the VCs.
His advice was that the entrepreneurs should be clear in sharing what it is that they do. Entrepreneurs should be compelling in stating how their idea is better than what is out there, and they should be credible, so that the VC will want to believe in their story. They should be able to make their case concisely. Reichert’s advise was that entrepreneurs focus on three steps in preparing their presentation. He suggested that entrepreneurs “describe” clearly what it is that they do that is better than anyone else out there. Second, they share how it would “benefit” the users. It is not about a product or a feature but “to whom” would there be benefits. Finally, the entrepreneurs should be able to “differentiate” their product or service from others. “You need to differentiate, or you die”, said Reichert. Finally, entrepreneurs should be able to share these details in the form of a compelling story or paint a picture that is instantly engaging.
Reichert also shared “Top Ten Lies of Entrepreneurs”. While being funny, this list is, “right on the money”. See below.
– Our projections are conservative. (Heck, I have heard this over and over, in all presentations by startups).
– Our market is $56B and it will grow. This is big data used in a bad way, said Reichert.
– Our contract with XXXX big company will be signed next week. Don’t say, until it is done. Better to under promise.
– If we only sell 40% of the company, we will still have control. “Control” is not the word, investors want to hear.
– There is no competition in our space. Or since they have been advised often to not say this, the entrepreneurs say, there is not direct competition in our space. I too have heard this so often that I wonder who pays attention to this claim anymore.
– We have assembled a world class team. Reichert’s advise was that investors are not expecting a world class team, but are looking to see if the team can grow with the company.
– Our sales cycle is 90 days. Technically, at this stage, it is infinite, since the idea is not implemented and tried fully.
– We have the first mover advantage. Reichert said, this comes from a persistent myth that having a first mover advantage is a good thing. However, barring a few like Intel, majority of successful companies do not necessarily have first mover advantage. For instance, Microsoft did not have the first operating system, nor was Facebook the first social media company.
– All we have to do is get 2% of the market. See no. 1 above!
– I will be happy to hand over the reins to a new CEO.
So the advise to the entrepreneurs is, share a compelling story, minus the cliches.
For those interested in networking in the pharmaceutical, biotech, medical device arena, check out http://www.eppicglobal.org annual conference, scheduled for January 6, 2012. FYI: Garage Technology Ventures does not invest in medical companies.