Just about every day I’m presented with at least one question from an entrepreneur looking to learn more about the funding process. How do you get introductions to venture capitalists? What do you say when you finally get in front on one? Are there back doors?
Well, yeah, actually. It’s all secret handshakes and code names.
Times have changed. Used to be you could walk into any VC firm in the country with a business plan and a smile and be guaranteed at least a warm handshake and a pleasant no. These days, the whole process is upside down: VCs are scarce, the business plan is dead, and Lean rules.
Most any VC will take the time to meet with you, especially if you’re cool about it. But chances are if you don’t have a working product that people want to buy, your first pitch could very well end up being a nice cup of coffee, an idea-inspiring conversation, and the cold realization that you have a shit-ton of work ahead of you before you’re ready.
If that’s the case, your first pitch should probably be an application.
Yes. I know. Applications are what they hand you at IBM Human Resources.
But with Series A as thin as it is, and with so many startups vying for the same introductions and the same term sheet, an entirely new pitch process has emerged on the path to alternative funding. Everyone from accelerators to angel groups to pitch contests to grants to Kickstarter will hand you a (virtual) form and politely say:
“Here. Fill this out.”
But these aren’t your standard paper applications on clipboards. For example, Triangle Startup Factory, the “most highly capitalized startup accelerator in the Southeast,” will close out their spring semester application process at midnight on Sunday. They’re looking for six or seven companies on which to bequeath space, mentors, advisors, all kinds of resources, and up to $200K in an initial investment.
For that kind of deal, you can expect startups to come out of the woodwork, from all over the country. And while I can’t tell you how to write up the perfect application that will rocket you on your way to startup reality, I can impart the knowledge I’ve gained from hearing, watching, judging, and helping a vast number of train wrecks.
Here are seven mistakes your shouldn’t make:
Go It Alone
I’m usually brought into a startup when a founder realizes that it’s way too much work, stress, pain, and complexity to do it yourself. Even those companies I’ve started on my own, I’ve always had a people to turn to at some level, be they advisers or just a street team.
Chris Heivly, the Managing Directory at Triangle Startup Factory, says “This is not a solo effort – not in our book. Show us a balanced team that complements each other.”
Remain In Stealth Mode
Don’t be so protective of your idea and your intellectual property that you leave out too much of the “how.” Yes. You’re going to change the world, so are the other 500 applicants vying for your spot.
I’m not saying you should include your patent application, but don’t be vague. Let them know exactly what you’re trying to accomplish and exactly how you’re going to accomplish it.
They’re not going to steal your idea. If you think they might, it’s probably not an outfit you want to apply to anyway, whether they have their own van or not.
Get Too Creative
Every cute, clever, just-so-crazy-it-might-work stunt you’re planning has been done before and is also likely to the bring about the laugh you’re shooting for, only without the irony.
I’ve had people sing their pitch to me once.
Now is not the time for theatrics, save that for the demo day.
Or, rather, don’t.
Don’t try to make you, your idea, or your startup bigger, better, faster, cooler, or more sexy than you are. The people judging know how to do due diligence. That’s how they got the (probably volunteer) job.
Don’t piss them off.
Live in the past
What you’ve done to qualify for whatever program it is – that’s half the battle. The other half is what you’ll do when you get in. Make sure you communicate what you expect to accomplish over the semester or with the money or whatever it is you’re applying for. Be very thorough here. This is everyone’s ROI.
Keep it on paper
TSF has a spot on their application for a video. And, frankly, at this point, if you don’t have a video, you probably should, whether it’s a requirement or not.
Like I said before, this is the Lean Startup age. The entrepreneur needs to show rather than tell, and video is the best way to do this. The barriers to entry are way, way down, and if you don’t have at least a prototype, you can go with a mockup.
But TSF doesn’t even need that.
“This is your chance to show us your passion,” says Heivly. “The fire in the eyes. It’s not a product video. It’s not edited. Just the team showing us what they got.”
Talk Yourself Out Of It
And this is the most popular way to blow it – you will never, ever succeed if you don’t take a step like this. Yes, you may not be what they’re looking for. Yes, you may not be far enough along. Yes, your idea may be horrible. Yes, you may not be able to submit the most sterling application that’s ever been submitted.
You’ll never know until you click send.