Tl;dr: I’m going to remind you of the importance of being a good, normal person, rather than going into a meeting with a venture capital investor and doing weird things which will blow your chances of getting investment.
I keep doing consulting calls with founders and new VCs about how to pitch investors and having to remind them (you should know this already, right?) that you should treat people as people. You need to be yourself, albeit your best self at all times.
Investors are just people. Treat them as such.
Don’t be that dude
Did a call with a founder in London on Monday and he said the goal of the pitch was to get my feedback on the pitch and whatever I wanted to add. I asked how he wanted to do the call and he said he wanted to talk and do his pitch.
Firstly, not a dumb dude. Built a £1.5m ARR startup bootstrap in edtech. He hadn’t raised before, so let’s leave him off.
I say “ok, shoot!”.
He starts “Hello Alexander, my name is xxx yyy and I’m the founder of zzz”. I can keep explaining how the pitch goes, but you know that it is ending with “do you have any questions?”
You are learning about raising since you are reading this blog but you know yourself that’s not how you want to pitch an investor. But more so, you know that it isn’t how you have a human interaction!
If you went into Carphone Warehouse and I tried to force a pitch into you to buy a phone and thought I could end with “any questions” you’d be laughing your ass off. That’s just not how any real human interaction works.
For one, the salesperson has about 5 seconds before you are going to take control and start asking your own questions, right?
The day after that London call I had a Bay Area call with a chap who needed help on how to validate his Edge Compute startup. As we were talking he brought up the joke that founders need to treat investors like normal people too because they are, just people. He knows that he needs to pitch investors like a human, but he still doesn’t know how to communicate information to investors’ interests which is another blog.
You know what a fake sales pitch sounds like, so I’m going to keep this blog short and move on. The takeaway is that you agree that no one wants to feel like they are on a cheesy sales call, so why would you think to do sales to investors that you want money?
Investors are people, they are not deities
I’m going to write a blog on how to think like an investor, but I’m going to give you a short learning on this blog.
There is no degree or qualification to be a VC. You don’t even need to do CFA3 to be able to ‘trade’! I can literally hire you as the CIO (Chief Investment Officer) of Alex Capital now and you can start Tweeting like Naval and doing Medium.
That’s so cool a paradigm shift if you start pretending you are already the head partner, you can actually answer a lot of your general fundraising questions yourself.
VCs need to pretend they know
Turner Novak at Banana Capital acts like a moron on Tik Tok, Twitter and anywhere legally allowed and it gets him views. I don’t think he is a moron though. It takes a lot of self-confidence to act the jester.
Most VCs are cookie-cutter “Blue Shirt Capital” Patagonia-wearing clones who all want to get ahead but don’t have the balls to break a mould.
When you get to Peter Thiel-level fame, you can do whatever you want, but there are maybe 25 VCs globally at f-you status.
The average VC has a general idea. They are NOT dumb, but who really knows what the future of x is, what the winner will be etc? If you could predict startup success, far more funds wouldn’t suck donkey penis (no one admits they suck the donkey schlong).
VC for most is the ultimate fake it till they make it and Tweets of wisdom are how it publicly manifests.
Most don’t know most, few know some
Privately with you, they need to hold the facade and seem like they have value add to provide and are darn proud about it.
Some VCs might in fact know a tonne more than you might ever know on some topics. Most will understand the VC game better than you. Everyone else is just very bright and knows what you can Google, or their friends share.
Most people love to call VCs idiots, and they are not. They aren’t gods though. They’re super bright compared to average people. They can do financial models in Excel, they know strategy and PowerPoint, and they likely know more current metrics to benchmark than you.
They don’t want to know more than you
I know a tonne of VCs and they are almost all awesome people! Seriously. They get a bad rap as founders get but hurt with a no.
So here’s the secret. They DO NOT want to know more than you.
They are investors as they don’t want to do the work of executing. They do not want to steal your idea.
Their literal job description is “find the biggest ballers you can find, give them LP cash and try if you can, otherwise get out of the way!”
Why on earth would an investor want to fund a founder they were smarter, more knowledgeable in the industry, had more contacts, had algorithm coding ability, etc?? That’s stupid!
They want to find founders that help them sleep easy at night because they are awesome!
They test you like girls on dates
The reason founders get a hard time on dates is that it’s the Tri-Wizard Cup and they want to find the best of the best. The best have convincing answers to everything and are confident in saying they don’t know what they shouldn’t realistically know yet, but own that fact.
Girls test guys on dates to see if they’re the dude they want to be with. They know the guy they want has no concern with the tests.
Note: I’m a guy, so if you’re a girl, you know how to explain this better than I do, so tell me in the comments how to explain it properly!
Anyway, point is that investors WANT you as a founder to be smarter than they are.
Investors want cool founders to invest in
I updated the outline as I was writing it as felt the need to clarify that investors also want you to treat them normally (but with respect).
On that second call I mentioned, I explained that investors want you to be cool which is why just remembered to mention this.
Chicago O’Hare test
I learned from my investment banking interviews that you need to pass the Chicago O’Hare test. This means if you are stuck on a 3-hour layover with your MD, would they be happy you’re sitting there with them, or do they get the ick from you?
The test is basically would the VC partner wants to have a beer with you.
You can’t divorce your investors
The reason for the test is that you are potentially going to be on board calls etc with the investor for up to 10 years. That’s a flarking long time!
Given over 50% of marriages end in divorce, the difference to your VC investors is that you are stuck with them till death do you figuratively part.
VCs want to invest in founders they can spend time with over the long term.
Coachable
But more than the fact the VCs are stuck with you as a founder, they know that certain founders do better than others.
Let’s pretend the average investor is actually helpful with the ‘value add’, most can help founders avoid really dumb shite. They may not be able to code edge computing but they know what happens if there is a founder blow-up, or if you don’t focus on your key milestones.
If you don’t listen you aren’t coachable, which means they can’t do the basic beatch job of helping you not do that dumb shizzle!
They don’t want you as a founder to be an a-hole, but they want you to be a-type. But an a-type that will listen to good advice.
How you should act as a founder with investors
Most CEOs are a-types. It’s not to say a gifted Richard Hendrix beta can’t build a huge startup.
I wrote in Real VC feedback on a founder’s startup that you want to be 10% of a dick.
Show hunger and urgency that you need to achieve something. Super confident, intense, slightly a dick (she is taking about Oli Samwer). [Famous founder] is a tiny bit of an asshole too, and it’s not bad in a way. Be 10% of an asshole. You want to back an outlier to make big money. You can’t be a nice guy all the time.
Go to meetings like you are meeting the dean of Harvard, but you have a 4.0 and you want to make an intro to someone that wants to blow $50m putting their name on the new engineering building.
You know the Dean is a baller, but you have something they want, so you are respectful, but not a beatch. Get me?
How you should treat investors in pitches
Go to meetings with VC investors like a first date with someone pretty attractive (you’re a 5, she’s a 6) your mother introduced you to from her church group.
You are not too excited because it’s not Cindy, but they’re still hot so why blow things?
How do you play this date?
- You turn up on time (Aim for 10 minutes early especially in Sand Hill as I always get lost)
- You are nice to the wait staff (receptionist)
- You stand till the investor walks in the room (ok, this might be too M&A formal)
- You shake hands and smile
- You ask about the weather etc (always do small chat)
- You clarify if you are asked a dumb question rather than calling them dumb as you would with friends
- You keep the conversation civil less your mother hear about it!
- If she is rude you don’t tolerate it, so ask for the bill rather than taking her to task
You don’t want to keep reading. You get the point. You be on your best behaviour, but you aren’t a beatch.
What I want to say is that for normal investors, pretend you are going to the ball game with a friend and his friend, but your friend doesn’t turn up, so it’s you and your buddy’s mate. So that will roll as being chill, but a little reserved.
Famous investors are different
I quickly added the last paragraph to get to the point I wanted to make here. I can talk so much faster and connect thoughts on calls so remember how I talk with clients, lol.
So basically with most investors, you be cool but respectful. You can talk random shite and things will flow for the most part.
VCs have a hierarchy
So master learning point. VCs have a huge hierarchy. I was at a pre-money conference a month after I started in VC and it was hilarious to see the investor dynamics. You had your speaker-level investor at the top, the dudes with the big cash, and then everyone who wanted to be a player.
In short, famous VCs ignore most investors as they do you as a nobody founder.
Get to the point with big names
When you pitch to famous and rich investors, the dynamic is different. There is less time, they are more to the point, and the tolerance for BS is far less.
Start basic beatch
You probably aren’t going to be given the opportunity to ask about the weather. It just won’t feel like you can try. I’ve always felt a vacuum like I need to get things going.
Do basic formalities, but get to the point and ensure you absolutely have a USB backup, extra printout etc. You do not want to look like a bumbling moron when the inevitable shite happens.
Build up once you have cred
Famous people are also people but take extra time to open up (some are very weird, pick the most famous person you can think of and yes, he is very weird to talk to).
If you can get through 10 minutes of pitching and answering questions with structured answers (Read: Rule of three) you will start to earn the right to be more of a person, ask questions, and attempt to get the rapport engine going.
There may be minions involved so love them
With larger firms, you will often go through a venture partner etc, who if they like you will shepherd you into meetings.
Make those people happy. Follow their lead as to how meetings will go.
Be your best self, but be yourself
Going on a fairly hot date your mother organised is sort of the best way I can boil down how to interact with investors. Here are a few more points I thought of after writing this stream of consciousness.
Don’t do weird stuff
On the second call with a founder I mentioned, he was like “why would you be so weird with a person, and not even an investor?” He mentioned reading a lot of my blogs so I referred to the point about a girl who dressed as an avocado. Why do that?
How founders should dress when pitching a VC your startup
You can get away with more if that congruent with your personality
I think I get away with saying a lot of things because it is congruent with my personality. The truth is there is a lot of purposeful manipulation I have cultivated into my being, but that’s another blog.
If I say something negative, I will time a laugh so it hits positively not stings. Maybe I come across as a sociopath, but I think I’ve figured out how to communicate brutally and still have people invite me to get shite faced with them at their home.
I communicate in a way that is congruent to me. You probably can’t pull “me” off. But then I can’t pull you off either. And that’s not a dick joke,
The point is that never ever don a facade to pitch investors that you think will work as it likely won’t. Practice it like Elizabeth Homes before the pitches that matter.
Conclusion
I can explain how to be chill with investors well on a call. I’ve attempted to explain key learnings so you as a founder won’t blow opportunities with investors.
If you can channel your ‘best behaved’ self that is also flarkable, then you are off to the races.
I have a number of related learnings to share here, but you’ll have to look for when I post them. I’m giving everything away knowing if you want to really improve we can only do that together.