How to Get Funded
I had three or four separate communications late this week, all having to do with venture funding and how / who to get in front of. Then came John Cook’s Venture Blog post on Friday that wondered aloud “How many meetings does it take to close a venture deal?” The post went on to posit that the answer might be 21 — if the experiences of a handful of Seattle-area entrepreneurs are to be extrapolated to reflect the experiences of the majority of startups.
Tony Wright, of hot Seattle startup RescueTime, commented that, it could be possible that the entrepreneurs with the most compelling offerings might only need a few meetings to the term sheets they wanted. He may be right.
I wonder though if there could be another possibility. Many of the early-stage startups I come across have a hard time enunciating their value proposition, focus and how they will eat their competition’s lunch. They have trouble crafting the story. This isn’t due to a lack of motivation or smarts. Often they get caught up in the minutia of their daily work and don’t spend as much time considering the bigger picture.
Good storytelling is critical to startups and in most cases, they are on their own to craft their story given tight resources and even less time. Startups need to be able to craft a compelling story around their company. It is critical to being covered by the John Cooks and Michael Arringtons of the world (see How to get TechCrunched), but it is also critical to effectively pitch venture capitalists.
VCs will tell startups that they don’t need a glitzy presentation and that good ideas get funded, but sometimes it’s hard to know if a startup has a good idea without a good story. David Hornik of August Capital has a terrific post on his blog sharing what he looks for in a pitch. He lays out what he looks for in a presentation, slide by slide. His VentureBlog is a must read and VentureCast (podcast) should be on your iPod/Zune.
Next week, Jason Goldberg, founder of socialmedian, will be in town with other founders to host a discussion on the issues, challenges, and big decisions facing founders. Among other things, he‘ll discuss:
- Raising funds
- VC vs. angel
- The founding team
- Strategic decisions
Sign up here. It should be an interesting few hours and helpful to entrepreneurs thinking about funding.
