How to Pitch to a VC: 3 Tips from a Venture Capitalist

Summary

The transcript emphasizes the importance of entrepreneurs having a long-term vision and passion for building sustainable businesses. It highlights the value of doing thorough research on potential investors like Vertex, showing understanding of their investment history and the value they bring. Honesty in pitching is key; admitting 'I don't know' is preferable to providing incorrect information. Detailed responses, even if delayed, are favored over vague ones, underscoring the need for preparation and authenticity in investor interactions.

Takeaways

• 🚀 Long-Term Vision: Entrepreneurs with a long-term vision are preferred over those seeking quick profits.
• 🔥 Passion for Business: The business should be a passion for the entrepreneur, something they aim to build sustainably.
• 💡 Convey Conviction: Entrepreneurs should convey their conviction to the VC, as it is well-received and shows commitment.
• 🔎 Research on VC: Entrepreneurs should research the VC firm, especially its past investments, to demonstrate knowledge and interest.
• 🤝 Value Beyond Money: Entrepreneurs should understand that VCs offer more than just capital; they bring value to the table.
• 🙅‍♂️ Honesty in Uncertainty: It's acceptable to admit not knowing an answer during a pitch, rather than providing incorrect information.
• 📝 Detailed Responses: VCs appreciate detailed responses, even if they are provided the next day, over vague or rushed answers.
• 🕒 Ask for Time: If an entrepreneur is caught off guard by a question, they should ask for time to provide a thorough response.
• 💼 Preparation is Key: Entrepreneurs should be well-prepared for meetings, but also be ready to handle unexpected questions.
• 🤖 No Guesswork: Avoid guessing answers during a pitch; it's better to be thorough and follow up with accurate information.

Q & A

What type of entrepreneur does Vertex prefer to invest in?

Vertex prefers entrepreneurs with a long-term vision who are passionate about building a sustainable business, rather than those looking for a quick profit.

Why is it important for entrepreneurs to have a long-term vision when seeking investment from Vertex?

A long-term vision indicates that the entrepreneur is committed to the business for the long haul, which aligns with Vertex's interest in building sustainable businesses.

What does Vertex expect from entrepreneurs who approach them for investment?

Vertex expects entrepreneurs to have a deep conviction in their business idea and to be able to convey this conviction effectively.

Why is it beneficial for an entrepreneur to research Vertex and its investments before pitching?

Researching Vertex and its investments shows that the entrepreneur values the relationship beyond just the financial aspect and appreciates the unique value Vertex brings to the table.

What should an entrepreneur do if they don't have an answer to a question during a pitch?

It's acceptable for an entrepreneur to admit they don't know the answer and promise to follow up later, rather than providing an incorrect response.

How does Vertex feel about entrepreneurs who give vague answers during a pitch?

Vertex prefers detailed responses and does not favor entrepreneurs who give vague answers, as it indicates a lack of preparation or understanding.

What is the significance of an entrepreneur's preparation for a meeting with Vertex?

Preparation demonstrates professionalism and a serious approach to the business, increasing the likelihood of a successful pitch.

How should an entrepreneur handle unexpected questions during a pitch to Vertex?

Entrepreneurs should ask for time to provide a detailed response if caught off guard, ensuring they maintain credibility and accuracy.

What does Vertex value in the relationship with entrepreneurs beyond just the financial investment?

Vertex values the entrepreneur's appreciation of the non-financial value they bring, such as expertise, network, and strategic guidance.

Can an entrepreneur still be successful in a pitch if they don't have all the answers during the meeting?

Yes, as long as the entrepreneur is transparent about their lack of knowledge and commits to providing the information later.

What is the ideal approach for an entrepreneur to demonstrate their passion for the business to Vertex?

The entrepreneur should convey their passion through a clear and compelling vision for the business, showing they are in it for the long term.

Outlines

00:00

🚀 Long-Term Vision and Passion for Entrepreneurs

This paragraph emphasizes the importance of having a long-term vision for entrepreneurs seeking venture capital. It suggests that a quick profit is not the goal but rather building a sustainable business that is driven by passion. The paragraph also highlights the value of conveying this conviction to venture capitalists (VCs). Entrepreneurs are encouraged to research the VC and understand their investment history, especially with companies related to their own business. This demonstrates that the entrepreneur values the VC for more than just their financial resources, but also for the expertise and value they bring to the table.

🔍 Research and Preparedness in Pitching to VCs

The second paragraph focuses on the entrepreneur's preparedness when approaching VCs. It stresses the importance of doing thorough research on the VC firm, particularly Vertex, and understanding the companies they have invested in. This knowledge facilitates a meaningful conversation and shows that the entrepreneur is not just interested in the money but also in the strategic value that Vertex can offer. Additionally, the paragraph addresses the scenario where an entrepreneur might be asked a question they cannot answer during a pitch. It is acceptable to admit not knowing the answer and to follow up later with a detailed response, rather than providing a vague or incorrect answer on the spot.

Keywords

💡Entrepreneurs

Entrepreneurs are individuals who create and manage their own businesses, often taking on financial risks in the pursuit of innovation and growth. In the context of this video, entrepreneurs are expected to have a long-term vision and passion for their business, which is a key factor for venture capitalists (VCs) when considering investments.

💡Long-term vision

A long-term vision refers to a strategic outlook that extends beyond immediate goals, focusing on the future success and sustainability of a venture. The video emphasizes the importance of entrepreneurs having a long-term vision for their business, as it demonstrates commitment and a plan for enduring success.

💡Quick flip

A quick flip in the context of entrepreneurship and investment refers to the practice of buying a business or asset with the intention of selling it quickly for a profit, without a focus on long-term growth or development. The speaker in the video expresses a preference against entrepreneurs seeking quick flips, advocating instead for those with a long-term commitment to their business.

💡Passion

Passion is a strong emotional drive or enthusiasm for a particular subject or activity. In the video, passion is highlighted as a crucial element for entrepreneurs, suggesting that their deep interest and dedication to their business idea is a positive indicator for potential investors.

💡Sustainable business

A sustainable business is one that can maintain its operations over the long term without depleting resources or causing harm to the environment or society. The video script mentions the importance of building a sustainable business, indicating that VCs are interested in ventures that have a robust and enduring potential.

💡Venture Capitalist (VC)

A venture capitalist is an individual or firm that provides capital to startups and small companies in exchange for equity or a stake in the company. The video script discusses the perspective of a VC, emphasizing the qualities they look for in entrepreneurs and businesses they invest in.

💡Research

In the context of this video, research refers to the process of gathering information about potential investors, such as a VC firm and its investment history. The speaker suggests that entrepreneurs who come prepared with knowledge about the VC they are pitching to are more likely to have a productive conversation.

💡Affiliated

To be affiliated with something means to be connected or associated with it. In the script, the VC is interested in entrepreneurs who are aware of companies that Vertex has invested in, particularly those that may have a connection to the entrepreneur's own business, indicating a deeper understanding and strategic alignment.

💡Conviction

Conviction in this context refers to a strong belief or certainty in one's ideas or plans. The video emphasizes the importance of entrepreneurs conveying their conviction to the VC, as it demonstrates their confidence and commitment to their business vision.

💡Pitch

A pitch is a presentation made by an entrepreneur to potential investors, outlining their business idea, market opportunity, and financial projections. The video script mentions that during a pitch, entrepreneurs may be asked questions they cannot answer immediately, highlighting the importance of honesty and follow-up in these situations.

💡Detailed responses

Detailed responses are thorough and comprehensive answers provided to questions or inquiries. The video script suggests that VCs prefer entrepreneurs who can offer detailed responses, even if it takes time to gather the necessary information, rather than providing vague or incorrect answers on the spot.

Highlights

Preference for entrepreneurs with a long-term vision rather than those seeking quick profit.

Entrepreneurs should be in the business for the long haul and driven by passion.

The importance of building a sustainable business with a clear conviction.

Conveying conviction to a VC positively impacts the pitch.

The necessity of researching the VC and understanding their investment history.

Appreciation of entrepreneurs who know about Vertex and its portfolio companies.

Entrepreneurs should value the unique contributions of Vertex beyond financial investment.

Acceptance of not knowing the answer to every question in a pitch.

Encouragement to admit not knowing and follow up with the correct information.

Preference for detailed responses over vague or incorrect ones.

The value of being well-prepared for a meeting with a VC.

The importance of asking for time to provide accurate information if caught off guard.

The significance of a genuine interest in the VC's investment approach and history.

The expectation of entrepreneurs to come to Vertex for more than just capital.

The emphasis on the entrepreneur's understanding of the value Vertex brings beyond financial support.

The importance of honesty and integrity in the pitch process.

The value of a follow-up even if it's the next day, over providing an immediate but vague answer.

Transcripts

First of all, we like entrepreneurs that have a long-term vision.

We don't like entrepreneurs who are looking for a quick flip.

You need to be in the business for the long haul.

This needs to be your passion.

This needs to be something that you want to build into a sustainable business.

Now if you come with that conviction and you convey that conviction to the VC,

that always goes well.

Second thing, it's also important to do your research on the VC.

If an entrepreneur comes to us with the knowledge of Vertex,

to the knowledge of the companies that we've invested in.

Particularly companies that may be affiliated through his or her business.

We like that because then we can have a conversation.

We know that entrepreneurs come to Vertex.

Not just because we have money to invest,

but because we are Vertex.

And the entrepreneur appreciates the value that we bring to the table.

I think the third point here is that sometimes you

may get asked questions in a pitch that you don't have the answer to.

And that's okay. It's okay to say I don't know,

let me get back to you, rather than try to wing

the answer and give a wrong answer and get pointed out.

We like people who can give detailed responses.

Even if the response comes the next day.

We don't like people who give vague answers.

So be prepared for the meeting.

But if something catches you off guard,

always asked for time and come back to the VC.