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July 8, 2008Start-Up Your Engines
By Guy Smith
I was a judge for a recent VC/startup pitch session with Startup Epicenter. I may be in a bit of a rut given that I was also a CODiE judge earlier this year. All told I ve been listening to start-up money begging pitches for over six years now.
They haven t gotten any better.
The fact that most start-ups still have weak pitches is strange. We are a decade into the tech industry rise, complete with the burst bubble and dot-bomb fallout. Throughout, much has been written on kick starting a business and seeking cash from strangers. Guy Kawasaki (oddly another “Guy” in the business who somehow I have not yet met) even provides a checklist of all the items that should appear in every pitch presentation. There is ample information for any green CEO to use and become more successful at entrepreneurial panhandling.
Yet they continue to fail. At last week s event, all the companies has pleasant enough pitchmen, and most had interesting product/service concepts. But only one had a complete proposal, a keen idea of where they were in the market, and how they were moving forward. They also had $900,000 annual traction … they had been through the wringer before and knew what the audience needed to hear.
It occurred to me that angel investors likely have it worse than venture capitalists. Angels typically come into the investment cycle earlier in a start-up s evolution and thus deal with newbie CEOs greener than Kermit the Frog with a hangover. I chatted with a long time acquaintance and angel investor, David Greer. He confirmed my fears that angels should either be ripping their hair out by the follicle roots, or be institutionalized in the Home for the Terminally Bewildered, for actually wanting to deal with callow tech execs. It is painful to see the average start-up fumble through a pitch, but angels get to shave off the really rough edges first.
My personal nit picks — coming from the marketing strategy perspective — are the failures to understand and communicate:
1. The segment or segments in which marketing and sales will be focused
2. The genotypes ( buyers and influencers ) and their motivations
These two factors retard more start-ups than under funding, stiff competition, or coke snorting CEOs. It is the identification of a segment that matches product features and demand, and then understanding how to communicate the solution value that decides how rapidly people will buy, and if they can/will communicate that value to their peers. So when you pitch your company, if you fail to identify one or two specific segments, and fail to describe how you will sell to the decision makers and influencers within these segments, then I mark your sheet as “no deal.”
The aforementioned Mr. Greer enlightened me with a link to the Angel Journal, which had a list “10 Mistakes in Approaching Angel Investors” theangeljournal.com/cms/content/view/3. Though going beyond funding pitches, it is worth reading to know what your angels and VCs are often concerned about, and how you can effectively end your chances of receiving ( more ) money.
#1 on their list: Not Knowing Your Market and Buyer. Enough said.
Guy Smith is the chief consultant for Silicon Strategies . Guy brings a combination of technical, managerial and marketing experience to Silicon Strategies projects. Directly and as a consultant, Guy has worked with a variety of technology-producing organizations. A partial list of these technology firms include ORBiT Group (high-availability backup software), Telamon (wireless middleware), Wink Communications (interactive television), VA Software (enterprise software), SUSE (Linux distributions and applications) and Novell.
Start-up Epicenter
http://venturebeat.com/2007/07/20/startup-epicenter-rumbles-with-the-latest-start-ups
CODiE Awards — http://www.siia.net/codies/2007
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