What are VCs looking for in your pitch?

Take-aways from a talk in the Trust Center on 7/5/16

When presenting to VCs, make sure you communicate: what is your main idea? What are the risks? 

  1. Potential risks you should address:
  • Tech risks
    • Invention risk - can you actually develop your product / solution? Most VCs will not invest if there this risk exist so demonstrating technical feasibility is critical
    • How much more development is required? What is the complexity? How much tailoring is required?
  • Market risks:
    • Product- market fit
      • Who is going be the champion on site? What is going to make customers actively seek for your product?
      • Who is most likely to resist change and how can you address this?
    • Sales cycle:
      • What is the process to acquiring new customers?
      • Do you need a physical sales force (expensive)?
      • How do you get customer diffusion that is repeatable and scalable?
    • Market size
      • Is the potential worth the investment? $1B market is a good size because you’ll only be able to capture some of it. Overall market of $100M might be too small, especially if the acquisition process is hard/ expensive
    • Competition
      • Who are your main competitors and what do you offer that is different?
      • What makes you get a strong foothold? What will make you the incumbent and prevents others from entering the same market?
  1. Typical risks by stage of the company:
  • Early stage (seed) - Tech / invention risk/ Market risk
    • Very few VCs will take these risk so it is more appropriate to reach out to angel investors/ bootstrap
  • Round A with VCs - Achieving repeatable sale cycle
    • Only relevant if you figured out the technology and market fit.
  • Series B - scaling the company.
  • Series C - Aligning/ scaling the team to support more sales.
  • Round D - strategic growth initiatives.
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