I’m starting a new business called Kynetx. As I go through some of the things I do, I’m planning to blog them. The whole series will be here. This is the fourteenth installment. You may find my efforts instructive. Or you may know a better way—if so, please let me know!
Most days lately, I've been getting dressed up and talking to people about Kynetx. I'd rather be in jeans writing code, but when you're raising money you're going to dress up more and code less. Raising money is a distraction from running a business and so should be avoided unless it's absolutely necessary. Unfortunately for the kind of business I'm interested in building, there are times when it's necessary. I spoke with the CEO of one venture backed late-stage startup yesterday who said he spends 25% of his time raising money. Ugh.
Going into this process (which I've been doing seriously for several months) I knew some things about raising money, but hadn't ever done it myself. There was always someone else to do that while I made stuff. I've learned a lot and likely still have a lot to learn.
One of the things I've learned is that you're in great peril of losing the sense of magic--the very thing that made this exciting and launched you on the journey in the first place. When you say something over and over again, you get bored with it--even when it's the first time for your audience.
Another thing, like software, the second version of your pitch will be overbuilt. Last summer, based on what we wanted to do, I put together a slide deck. Based on some information we got this spring we completely rewrote it. Once we got good feedback on the second version, we ended up with a third version that was--mostly--just right and much more like the first than the second.
Steve and I went to a FundingUniverse speed pitching event last Wednesday and it was probably one of the most useful things we've done in this whole process as far as getting our story down and getting the pitch smoothed out.
If you haven't seen one, it's like speed dating, but there are angel investors sitting at the tables instead of women (or men, depending). The entrepreneurs move from table to table. You have 7 minutes at each table: 4 minutes to pitch your idea and 3 minutes for questions.
The investors expect the full pitch--everything: problem statement, solutions, marketing plan, sales plan, go to market strategy, financial model, cap table, personal background, and competitive analysis--in those four minutes. When we first heard this, we thought it was impossible. Turns out you can do it. And when you're done refining your pitch to four minutes and then giving it a dozen times (after practicing it dozens more) you'll have be very good at explaining what you do.
That last point is important. Explain what you do. That's the most important thing you can do in any pitch--long or short; Guy Kawasaki is right: the most important thing you can do with any audience is tell them what you do. When we first started practicing the four minute pitch people would say "I'm still not sure what you do" when we were done.
Of course we told them in the first slide--or thought we did. But what you think you said and what people hear when they're unfamiliar with the idea and bringing their own assumptions to bear are two different things. You need to them over and over again in many different ways before they'll really understand. All in four minutes.
Of course, the primary idea is to generate interest and get a chance to sit down in a more relaxed atmosphere to really get into the details. We were pleased to get 5 or 6 people express interest in another meeting from the group and we'll be following up in the coming weeks. If you get a chance to speed pitch do it. It's a great exercise--even if it doesn't lead to funding.