In this interview with Jeremy Glaser, who is a partner at the law firm Mintz Levin and also serves as Co-Chair of the firm’s Venture Capital & Emerging Companies Practice, we discuss the importance of startups making key points quickly and grabbing the attention of Angel investors and venture capitalists within the first three to five minutes of your presentation when you are trying to raise capital.
Jeremy: One of the very first things that I tell people when they send them to me is, “This is great. There are a lot of really good nuggets in here. But you have to take a step back and remember that the person who is reading this is going to be reading 100 of these a day. They will need to very quickly decide if it’s something worth pursuing. They will say “no” to about 99 out of the 100 they read that day. The question is, how do you stand out to make sure that you’re the one and not the 99?
The way to do it is to give them the magic formula. You have to tell them very quickly and think about what their day is like when they pull up that document and read it. What are you doing? Why does it matter, not to the entrepreneur, but to the investor? Why are myself and my team the people who will make this a very successful business? If you don’t answer those three questions really quickly, you’re going to end up in the round file.
Patrick: It is very short attention span theater when dealing with professional investors. They are looking at so many deals. This is the same if you’re in a face-to-face presentation. It is the hierarchy of raising capital foundationally in a strategic plan, how big is your market? How fast is it growing? Who is your customer avatar? What is the competitive landscape? There is a competitive landscape in every business, even if it’s substitute products, new entrants or if you’re doing something in an innovative way.
Jeremy: When you get an executive summary that says, “Competition: none,” you think that’s fine, right?
Patrick: It’s beyond naïve. I don’t have a word to describe it, and I get it all the time. I get it in situations where I can go on the internet after the meeting and find 30 competitors that are much larger, better capitalized and have a product.
I can’t tell the difference between their product and your product that you just told me is highly differentiated. It’s possible that it really is different, and you did a poor job of explaining that. It could be that you’re entering a commodity business. It might be a great business for you.
Maybe you have friends that will buy it, but it’s not going to be a multi-million or billion-dollar company, which is what professional investors are interested in.
This is Patrick Henry, CEO of QuestFusion with The Real Deal…What Matters.