Monday, 4 February 2008

Show me the money

Every now and then an entrepreneur gets called in to brief his investors on how it's all going. Today was our turn to present to "The Money" so off we trooped to their plush offices (they are not called "The Money" for nothing) to pitch our story.

I have pitched loads of times to countless investors and it's something that any budding entrepreneur will have to get used to doing. Over the past decade I must have presented well over 100 times and raised over $30m from angels, strategic investors and venture capital companies. It's always a joy :-)

In the early days, I recall pitching to some guys. It seemed to be going well and they said "I guess you'll be wanting a term sheet before we move forwards?". Too right I said in no uncertain terms. No term sheet, no more conversations. That's the way I operate. Take it or leave it. I looked at my partner for confirmation. He nodded agressively. As we left the meeting I said to my partner "What's a term sheet?". He looks slightly shocked and said "I though you knew".

VC's love jolly japes too. In my previous start up, we once got accidentally copied on an email from one VC firm we were talking to saying "Let's keep talking to these guys until they are short of cash, then squeeze them hard on price". We sent it back politely saying "Excuse me, I don't think this was meant for us". I don't see the young lady who sent that email around the VC scene these days.

You've got to have thick skin though (which I haven't really) because it can be tough at times. I have flown to San Francisco, walked in to a VC's offices, started my pitch and within 10 minutes the main guy has stood up, said "this is crap" and walked out! I have opened my laptop to start my pitch and had the two VCs in the room actually burst out laughing. I have pitched to a hall full of 200 VCs with a strict 5 minute cut off at which point your slides just vanish and the word APPLAUSE appears on the screen resulting in a deluge of noise and laughter even if you are mid sentence. I've sat and talked alone with one of the world's most powerful Silicon Valley billionaire VCs and had his gentle lazer-like eyes drilling holes right through me. It's a tough old game, and some if it is just a sport - like hunting and you are the prey! But stick with it and eventually you will find the investors who are right for you. We did.

Anyway, back to The Money. Today we had a good turn out for our update session. There was Smart Money. Senior Money. Suave Money. Disembodied Money (on the speakerphone) and of course our very own MoneyMate. It was a good session, with some probing questions ("Your product's rubbish and you'll never make any money, ever. Why do you even bother to get up in the morning you incompetent waste of space?" or perhaps I misheard the question slightly :-)

The good thing about this sort of session is that it makes you stand back and take a strategic look at the entire business, which is something that you rarely do when you are in the thick of day to day entrepreneurial challenges. Also unexpected opportunities arise particularly when other guys in the VC firm understand what you are trying to do. For example today we discovered that we have a direct line in to the Board of one of the companies that we have been trying to talk to, and we have a potential link with a global bank who may be interested in Garlik's service.

So if you are an entrepreneur then investors and VCs will be an integral part of your life. Just remember, VCs are good for you. They will make you look good and will ensure that you can eat.

Rather like dentists, really.

1 comment:

Eljay said...

Vegas, baby.... VEGAS!!!