Making the pitch

AT THE University of California, San Diego, on 1 September 2003, a rookie entrepreneur strolls out into a room, with a crisp suit and crisper Power-Point presentation (or so he thinks) in tow. He quickly feels overdressed as he surveys his audience, a sea of friendly looking faces in Hawaiian shirts and board shorts. In an effort to raise capital for his company, he is about to pitch to a mixture of lawyers, field experts, financial gurus, academics, angel investors and venture capitalists as part of the UCSD ‘Connect’ programme. It’s a formidable crowd of talent who between them have seen over 1,000 pitches. Some 15 minutes later, the PowerPoint presentation is over, and the rookie entrepreneur waits for the sound of chequebooks being extracted from pockets. What actually happens next is a half-hour mauling by ten dragons in Hawaiian shirts, at the conclusion of which the best feedback is, “I liked you but I really disliked your pitch”.

Over the course of the next three years this not-so-wonderful exponent of pitching delivered at least 30 more pitches. The first ones fared little better, but the entrepreneur eventually ended up securing $3 million for his company, became an angel investor himself and, in a bizarre twist of fate, became well regarded for teaching others to pitch — judging, coaching and mentoring dozens of other budding entrepreneurs along the way.

You’ve probably worked out by now that I’m the entreprepreneur in question, and it turns out that mauling was the best thing that ever happened in me in business. I decided to return to the scene of the fire breathing — UCSD Connect — four years on, older and hopefully a little wiser, to find out what the Connect programme director and a leading angel investor from the California-based investment group Tech Coast Angels had to say to New Zealand entrepreneurs learning to pitch. There was some surprising feedback.

First, some scene setting. Connect is no academic course run by theore-ticians; these guys have been there and done that. Programme director Ruprecht von Buttlar, for example, recently did nicely as managing director of MusicMatch when it sold to Yahoo for US$160 million.

The Connect course is highly practical, includes one-on-one coaching with top former high-tech CEOs, and culminates with entrepreneurs giving real pitches to real investors for real money. In fact, Connect is nationally recognised as a reason San Diego went from being home to two venture capitalists in 1990 to more than 30 VC companies today.

Von Buttlar has pitched in four different capital-raising rounds, heard countless elevator pitches and seen close to 50 full-length pitches. During our interview, he offers me a to-the-point precis on what makes a pitch work.

“A successful pitch will get you to the next meeting,” von Buttlar says. “Be very clear who your customer is. Define your ideal customer and whether your product is revenue-sourcing or saving cost. Tell me how money flows back to you, what is your business model and how it scales. Give a precise definition of the overall market and the part you are going to tackle first with your small team. Then provide a competitive differentiation that identifies why you are going to win. You need a well-defined go-to--market -strategy with information about how you will go about it — direct or through channels. What is your cost of sale — will it cost $500 to get a $480 sale? Then show your gross profit, margin and cashflow analysis of how and when you take capital.”

He concurs that if the business opportunity is great, but the pitch is not, the credibility and reputation fades.

“The verbal content of the pitch is more important than the slides,” he says. Slides support the person that gives the pitch. People can compellingly talk about it without a PowerPoint but inexperienced entrepreneurs tend to build the PowerPoint first then talk to it — or at it.

Dr Jay Kunin, one of the mauling dragons I pitched to four years ago, has a PhD in computer science and is a long-term angel investor with Tech Coast Angels. He’s contemplative and unassuming, with a razor-sharp business mind. He’s been a founder or principal of three companies; an investor, director or advisor for dozens of large and small firms; and is also a venture capital partner with Finistere. He’s seen literally hundreds of pitches throughout California. Tomorrow is Saturday. What is he doing? Watching a $50,000 business-plan challenge, of course.

When commenting on a two-minute quick pitch event he recently judged, he casually says: “We noticed that the additional 13 minutes we give people in the 15-minute pitch aren’t that useful.” I ask him if I have really heard right, that the other 87% doesn’t matter that much? His response confirms both my hearing and our trans-Atlantic Skype connection are working quite well.

“If you can’t explain your proposition in two minutes to the point you get people interested in asking questions, then you don’t have anything. It’s not about technology or the science, it’s two things: do you have a market you can get to a reasonable size? [And] who are you? Are you capable of making this happen?”

The rest of our conversation confirms why I’ve seen investors and entrepreneurs often misconnect in this country. Young companies say there is a lack of capital, and investors say there is a lack of good business opportunities. Having been both dragon fodder and the dragon, I can attest that neither is true. What’s missing in New Zealand is that bridge in the middle called the pitch.

When you pitch, you are not doing an information download of your business opportunity. You are showcasing your ability to inspire and sell (Kunin’s quick-pitch event places a high 50% weighting on the style of your presentation).

Kunin and von Buttlar endorsed my theory that ‘a great product, great business opportunity but a poor pitch means I won’t invest’. As Kunin puts it: “Your pitch is my chance to read if you can attract a winning team, win sales, and win second-round investment. If you can’t sell your vision to me, you don’t have a business.”

The good news is pitching can be learnt. If you can convey your vision well in a pitch, you are far more likely to get not only investment, but sales and a great team. In doing this, you’ll generate better deal flow for the whole region.

Daniel Batten is founder and former CEO of high-tech company Biomatters, an angel investor and a director of two companies. His blog on how to convey your vision is at www.-bravishi.com/blogvishi