HOW YOUR PITCH IS RECEIVEDSean Owen

(Pentech Ventures)

8 November 2011

(Your Mileage May

Vary)

You’re (Also) the Star

• Great entrepreneurs make the world go ‘round

• Investors need great entrepreneurs

• Investors would kill to hear great pitches

• What does a great pitch sound like?

A Business Plan A Day

• Typical fund sees hundreds per year

• … and invests in a handful

• Most investments aren’t from inbound plans

• Stand Out Quickly

Exceptionalism

• Early-stage model must pursue exceptional returns

• Why is this plan exceptional?

Who Reads Your Message?

• Small funds: partner• Medium-large funds: associate

• Sourcing just one job• Do the math: less than an hour total to justify more time

What’s in an Investment Memo? • Non-disclosure agreement?

• Not to read the IM• Investors don’t want or need secrets yet• Looks naïve, problematic for investor

• Executive Summary / IM• How much do you expect

someone to digest in 15 minutes?• <= 7 pages; advisors send 1-2• Not a complete business plan• An appetizer, not a meal

What’s in an Investment Memo? (cont.)

• Presentation• Optional; the “movie” to the IM’s “book”• Works better in person; send if really cool• 10-20 slides

• Financials• Optional; high-level financials in the IM• 12 months, then 2 more years P&L

First Impressions Count

• Minor things are major, in 15 minutes

• Guess you come across the same to customers

• Attention to detail = passion, goodness

• Easy, quick read appreciated by the busy

Strengths and Weaknesses

• Product• What is it?

• Market• How much can

realistically be sold per year?

• Revenue• How does it make

money?• Customers?

• Competition• What else solves the

problem?

• Team• What’s the team’s unfair

advantage?

• Deal• How much?• Where does it reach to?

A Reason To Invest?

• Accept IM’s premises: any good reasons to invest?

• Disqualify: wrong stage, sector, geography

• So, fund can invest• Decision: Meeting? ?

Reasons to Not Invest?

• Investor mostly believes 80%

• Investor doubts about 20%: reasons not to invest

• Goal: Beat the 20%X

The Meeting

• Receive details days in advance• Business plan• Financials

• Target 60 minutes• Good warm-up: 15 minutes summarizing business

The Meeting (cont.)

• Frequent: Investor leaves still holding doubts

• Infrequent: Investor leaves wanting more talking

• Listen, modulate, ask questions

From There?

• Fund Monday meeting• Find partner champion;help her help you

• 1-2 more meetings• Now about relationship• Diligence: you, and the fund

• CLOSE!

srowen@pentechvc.com