Thursday, February 27, 2014

Fundraising Pitches -- learning from the IPO

There are many good VC blog posts on angel/VC presentations, especially since VCs see many presentations.  Just search:  "VC presentation".

Surprisingly, I find the best advice on angel/VC presentations to be Jerry Weissman's advice for IPO road shows.  Jerry Weissman, a former novelist and TV producer, has been helping Silicon Valley executives (eg Yahoo!, Intuit, Netflix, Cisco, Guidewire, Trulia, RingCentral, etc) prepare for IPO road show for decades.  Back in 1997, he gave some good advice in an interview with Alex Frankel, "How to Go Public when you go public."  I summarized some points below:
  • "Nothing beats a good story.  An IPO road show is all about selling.  And what is selling but good storytelling?...
  • The Greatest Story Ever Told.  There is only one story an IPO audience wants to hear:  Why is your company an attractive investment opportunity?  Executives typically spend their time making presentations to their partners or customers.  But what's desirable for customers will not always benefit investors.
    Jay Duncanson, a cofounder of Ascend Communications, is a superb presenter.  He was a professional deejay and did all of Ascend's customer presentations.  But during preparations for the road show, he kept talking about "Ascend's equipment and what you can do with it."  Investors couldn't do anything with it.  He had to paint a picture of what the MIS directors of giant companies were doing with it, and how that translated into returns for investors.  When it comes to a road show, the only benefit that matters is [the investors'] ROI.
  • You are the Author.  No presentation exists independent of the presenter...  In the case of a road show, that means the CEO or CFO must write the presentation.
  • Hype Doesn't Help.  Institutional investors see four to eight new companies every day, five days a week...  Presenters have to respond to that skepticism...
  • Attention Must be Paid.  You have 45 minutes to persuade a skeptical audience about a company you've worked several years to create."
To some, connecting the IPO road show pitch to a seed pitch seems unrealistic.  But, as we VCs are watching the founder CEO make the Seed/Series A financing pitch, we are trying to visualize the same person making the IPO road show pitch in a few years.  After all, we hope the founder CEO can go the distance. (See prior post on Founder CEOs.

You can watch IPO road shows on RetailRoadshow and NetRoadshow. Some companies also post their IPO road shows online.

1 comment:

  1. Very helpful advices! Anyway, for entrepreneurs with great business startup ideas but lacks funding, I recommend the angel group iSeed.

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