How to Prepare a Pitch to a Venture Capitalist

Convincing a venture-capital firm to invest in your company is tough, but if the business potential and your management team meet the firm's criteria, it can be done. What's almost as hard as getting the financing is landing the first meeting. Here's what VCs themselves suggest.

Instructions

Difficulty: Moderately challenging

1. Contact the National Venture Capital Association (nvca.com) for a list of venture-capital firms investing in your business sector.
2. Get an introduction. See 201 Make a Networking Plan and search your contacts for a lawyer or accountant who has worked with a venture firm. Cold calls or blind mailings seldom lead to meetings. Other possibilities include an entrepreneur or investor in a venture-backed firm.
3. Enlist an expert as an adviser. A professor or other respected expert in your field can broker an introduction to a venture firm. Willingness to serve on your board would be a bonus, but if the expert won't commit to that, try to get a promise to join an advisory committee. See 217 Form a Board of Directors.
4. Prepare a business plan. This plan is the first thing the venture firm will ask to see, or at a minimum it will want a detailed executive summary, including evidence of an experienced, adaptable management team. See 203 Write a Business Plan.
5. Make certain your plan shows that your business has an expanding market and protection against competitors, also known as barriers to entry. These may be patents or copyrights you hold or intellectual property. Show how you will escalate these barriers as your company achieves success.
6. Distill the essence of your business concept into a 30-second "elevator pitch"--the answer you'd give if someone standing next to you in an elevator asked what makes your business special. Convey your passion--you want to impress the listener with enthusiasm and firm belief in your fledgling company.
7. Attend seminars and panel discussions sponsored by venture capital associations. You'll not only learn more about the participating firms, you'll also find networking opportunities.
8. Enroll in a workshop for entrepreneurs to learn how to perfect your business plan and polish your pitch. Information about these programs is available at BusinessPlanBootcamp.com, SpringboardEnterprises.org and other sites.
9. Prepare for extensive due diligence should you capture a venture firm's initial interest. Meetings will be intense and analysis of the data you present will be rigorous, but if the firm decides to invest in your company, the financial and advisory help can be vast.

Tips & Warnings

• Plan on the process taking at least four to six months from the first meeting with a interested venture firm to receiving the first check.
• Identify specific potential customers for your products or services. The VCs will ask for this information, and vague generalities will not satisfy them.
• Explore Pratt's Guide to Venture Capital Sources. Published annually, this is a list of active venture firms, along with their locations, investment preferences, contact names and other useful information.
• Consider moving to Northern California, Boston or New York. Although there are pockets of venture firms in other parts of the country, the majority of firms are located in these three areas, and most VCs prefer to invest close to home.
• Don't expect the venture firm to just hand over the cash and wish you well. It may demand one or more board seats and stock options, or it may put your company in an "incubator" with some of its other start-ups.