Over my years in VC, I have had many entrepreneurs call me or e-mail me who were convinced that if they could just schedule time to “pitch” me that I would quickly see the merit in what they were doing and immediately decide to invest.
Early in my career I took a lot of these meetings and, on the urging of partners and trusted sources of referrals, I still take a few. More often than not, though, I find myself leaving pitch sessions dissatisfied—enough so that I have spent considerable time reflecting on the source of my dismay.
My conclusion is that pitch meetings are so unsatisfactory because there is a 99% chance that I will have to tell the entrepreneur “No.” The venture capital industry funds only 1% of what it sees. Who likes those odds? I don’t enjoy delivering the message, and entrepreneurs don’t like receiving it.
The pitch session is structured like a sales call. The entrepreneur is “selling” and is often certain that conviction or passion or vision will sell me. I react to being pressured like most people do—defensively—activating instincts that interfere with my ability to listen to what the entrepreneur is saying or to get beyond the packaged pitch to the essence of the company’s value proposition. How can this be good for anyone?
My standard response now is to ask for something to read so that I can think about the company before being confronted with a “Yes/No” investment decision. Then I try to talk the entrepreneur out of putting a big stack of chips (to use a roulette metaphor) on the single number of depending on a pitch. Instead, why don’t we have coffee, sit on the same side of the table, and just talk about the business? Let me provide perspective and advice about how to increase the odds of receiving a “yes” from a VC; or thoughts about whether venture capital is the right financial product for this particular company and what other choices are available. Let me get to know you better and to see how you react to advice and suggestions. Who knows, the freer I am to understand the business and the people, without the pressure of an investment decision, the more I may be willing to put time into developing an investment thesis.
For an impatient entrepreneur, spending the time to develop a relationship with a VC may be frustrating. But fund-raising is a process, not an event. You’re going to be in a relationship for five years, or maybe ten. Don’t put all your chips on a pitch. As Congreve wrote “marry in haste; repent in leisure.”