by Josh Linkner –
Having witnessed thousands of entrepreneurial pitches as a venture capitalist, I’ve seen the gamut from the good, the bad and the ugly. Of the pitches any VC sees, very few will actually receive funding; there are a lot of factors in that equation, so even for those companies that might be appealing, terms, location, market share, traction and other hurdles sometimes get in the way of signing a check.
However, you’ve got no shot at funding if your potential venture capitalist flat-out hates your idea. If your “next great” idea has any of the following characteristics, there’s a solid chance a VC isn’t going to dig it.
Copycat: Groupon for pet owners isn’t going to give me that warm fuzzy feeling. Neither is Zaarly for furniture craftsmen. The world doesn’t need another “me too” anything, and your venture capitalist should be the first to tell you as such. Ultimately execution is worshipped, but first, innovation is rewarded.
“Vitamin”: At 2:00 am with a throbbing migraine, many consumers would trudge out to the pharmacy to get pain medication – anything to ease the pain. Yet nobody in their right mind would head out to the store at that hour to get vitamins. Your idea should provide the same help: if you’ve got a “vitamin” idea, it’s an added convenience, but doesn’t solve a true real-world consumer pain – and won’t develop a following.
Vague: If you can’t sum up your product’s main features in one clear sentence, then your product isn’t explicitly defined. Simplicity is a beautiful thing: pick something specific and hit it out of the park. Don’t try doing too much across too many platforms, or you’ll risk being C-level at everything.
Weak Gameplan: Your pro-formas and business plan should give a clearly defined, specific course of action with step-by-step milestones and goals. Being light on details is a red flag for a VC, because she’ll want to know where you’re headed in the next ninety days, one year, and five years. If you can’t clearly articulate what you’ll be putting the VC money toward, why should a VC give it to you?
Top-Heavy: The best ideas need a top-notch team to transform them from dream to reality. If your founding team members all excel in the same field, your chance for success is lower than those with a diverse set of skills and experiences. Obviously domain experience never hurts but even for green entrepreneurs, variety is the spice of life.
Ho-hum: If you get up to pitch and sound just as excited as the teacher asking for “Bueller? Bueller? Bueller?”, your shot at getting me excited is long-gone. You should be bursting at the seams with your passion for the idea to the point that it’s contagious. If this is the next humankind-altering concept, act like it. If you aren’t leaping-out-of-your-chair excited, how do you expect an investor to be?
Mini: While many of us VCs do our best to do good things in the world, venture capitalists are not philanthropists. Your investment opportunity should provide a VC with the potential for a 10X return – minimum. For professional investors with risk capital, you need to be pitching an idea that could someday be a large public company, not a local drycleaner. If your idea is little, you may have a great small business in the making, but you’ll have a hard time getting a VC to step up.
The ideas I get excited about might not be the same as the ones exciting another VC out there – that’s why there’s a variety of firms, and a ton of hopeful startups; something for everyone. However, any smart venture capitalist would agree that she’d be most excited by an innovative, unique, straight-forward company that has all its ducks in a row, solves a real consumer pain, and is run by a rockstar group of entrepreneurs. Hey, I wouldn’t hate that either.