There are three big mistakes that Australian founders regularly make when pitching to investors, Blackbird VC head of operations Samantha Wong says.
Wong, who is also a partner at Startmate and an angel investor, recently took part in an AMA run by Blackbird, and said that all pitches need to be simple and have an emotional edge.
Not doing this leads to three key mistakes when pitching.
“Not having a pitchy, succinct way of describing what they do that captures the depth of the problem, the elegance of the solution and the size of the opportunity,” Wong says.
“Not having a big enough vision, or being too afraid to verbalise it. Pitching is 90% emotion and capturing the imagination of the investor.
“And not understanding how we invest. You should always qualify your lead before you try to sell to them.”
This process involves researching the specific investor to find out what they look for in a company, as well as talking to some of their portfolio startups, Wong says.
“Find out what they like to invest in, how big their fund is and how much is left in it,” she says.
“Then if it all passes muster, check these are people you want to share your baby with for the next decade.
“Talk to all the founders you can about what it’s like to work with that VC. Definitely speak to founders they’ve invested in but it’s also useful to know how they treated founders in deals that didn’t quite get across the line.”
She also says that founders don’t ask enough questions when pitching to investors.
“On a whole we don’t get asked questions very much at all,” Wong says.
“But we should – it should be a two-way interview. I think we’re more judged on the quality of the questions we ask, or don’t ask.
“The question that I don’t think we receive enough is what do we like to invest in, and how we can help or add value.
“Cash is a commodity. I’d like the think that even if early-stage companies could get access to low-interest rate loans, they’d still want to take our money for the help we bring. The relationships, knowledge and experience of people who are well-connected and well-regarded can be enormously helpful to your chances of success.”
Perception versus reality
Wong worked as a lawyer before making the leap into startups, and says that the perception of this world is vastly different to the on-the-ground reality, and the realisations just keep coming.
“When I was a lawyer I thought it was all about strategy,” she says.
“Then I realised it’s not, it’s about rolling your sleeves up and doing the work and talking to customers.
“Then I realised that it’s all about the depth of the problem, and your unique insights into how to solve the problem, and how to sell it and market it.
“Then I realised you have to fundamentally feel empathy and like your customers as you will serve them, and think about them in your working day and sometimes even in your dreams, for seven to 10 years if you’re lucky.”
The biggest misconception about venture capital
Venture capital is about much more than just raw numbers and data, Wong says.
“It’s more art than science,” she says.
“You expect it to be loads of data crunching and modelling, but actually it’s a lot of talking and feeling. The hard work of a VC is not convincing yourself out of something you really love.
“You can’t control too much whether a VC has an affinity or general belief that aligns with your view of the world. You should read, observe and research as much as possible about what they like to invest in and don’t waste any time if it seems like it may not be that into you.
“You cannot convince a VC to like what you’re doing. You just have to go find the ones that do.”