One of the key questions thousands of would-be entrepreneurs ask is, “Exactly how do I go about getting the funding I need – What do I have to do and say, specifically?” Many experts and online resources have tackled the question (including this one), but entrepreneurs continue to clamor for straight-shooting, realistic and expert advice that helps them understand what investors are truly looking for in order to greenlight a project and have faith that their investment will be in good hands.
To answer that question with diverse insights from not only general partners but an insider-entrepreneur, I caught up with Anjula Acharia–Bath, the EIR at Trinity Ventures and General Partners Ajay Chopra and Karan Mehandru to learn exactly what they’re looking for when they’re pitched, and what they need to see to move forward with funding. Trinity Ventures is a is a top-tier venture capital firm combining business insight, practical expertise and a personal touch to help start-ups win big. Trinity is on its eleventh fund, helping passionate entrepreneurs with breakthrough ideas transform markets and lives. The firm invests in early stage technology companies with emphases on Cloud and Mobile Infrastructure, Software-as-a-Service, Digital Media, and Social and Mobile Commerce.
They advise these seven steps:
Answer all of the questions you can, and don’t avoid or ignore any.
Trinity Ventures partners ask questions when they are genuinely interested and want to understand what the entrepreneur is communicating at a deeper level. They often want to make sure they are on the same page as the entrepreneur and not making incorrect assumptions. These questions are not to make you fail or trip up. If you have a slide in your presentation that answers the question, by all means jump to it. If you keep the question hanging, however, you have a distracted listener who isn’t focused on your pitch. The worst thing you can do is avoid the questions, even if you don’t know the answer. Tell the funders you don’t know at this time and let them know that you will address it later. Depending on the question you can also ask them what they think but never ignore the question.
Talk about your gang.
When investing, we are betting on people more than on ideas. Half the companies we fund at early stage pivot to a new idea in the first year. So knowing that the team is solid and will stick together as ideas and business evolves is very important. As an example, we invested in TubeMogul in 2009. At the time of that investment the company was in the video syndication business, syndicating brand videos to social sites. In a year after the investment the company discovered a much larger market in video advertising. The team pivoted to that space, grew the business and went public last year on NASDAQ. The core founding team of the company remains the same today as it was in 2009. Because they are a strong strategic team, they successfully navigated through the transition to a new business model. So talk about the strengths of your team.
Of course SWAG helps, but be authentic too.
As entrepreneurs, we’ve seen firsthand that whether we are raising money from strategics, angels or VC a certain amount of swag helps! We’re not talking about being arrogant (watch the first 2 episodes of Silicon Valley and you will get what I mean and I am definitely not condoning that behavior.) But there is a certain element of confidence/SWAG that has an undeniable energy. We like to see confidence and energy because the CEOs job is about convincing others of his/her vision – whether it is convincing customers, hiring key employees or raising the next round of funding. Confidence and swag matter.
Tell a compelling story.
Your inspiration and your journey will inspire others. Talk about what inspired you to form the business. Was it a personal experience? Was it a unique observation or point of view? We are more interested in learning what drives an entrepreneur than what jobs they held or what colleges they went to. Even though it is much glorified, entrepreneurship is a tough and often lonely experience. No college prepares you for it. You have to live it to experience it. We often tell entrepreneurs that as investors, we are just investing money; but they are investing a precious part of their lives to dive into a new venture. So they better be truly passionate about what they are doing. The opportunity cost is just too high. Stories about what drives them gives us a better sense of how deeply committed they are to the venture they are embarking on.
Listen more than speak.
God gave you two ears and one mouth – use them accordingly. We sometimes feel that entrepreneurs simply fail to listen. Obviously, when folks are nervous they can just begin to ramble. But most investors have deep expertise in various critical disciplines and they are more than willing to help and offer free advice. Listen and take it.
Acknowledge the gaps.
But make sure they aren’t deep, dark canyons. We do not expect your company to be perfect at its early stage. No company is. Knowing that you know (and acknowledge) where the gaps are is very comforting to investors since it shows maturity. Working with a self-aware CEO ensures that we can spend every moment leveraging her unique strengths while working hard to surround her with team members who fill those gaps. The simple act of realizing and acknowledging gaps creates a culture of trust and transparency where decisions can be made swiftly and with the best interest of the company at heart.
Don’t trash the competitors.
Be careful when you are negative about your competitors – especially when they are doing well. We’ve seen some companies come into Trinity that are approaching a market in a different way from their competitors but maybe have not proven out the model or that their approach works better. This is troublesome when we have seen the competitor and they are progressing much faster and stronger – it makes us question whether the entrepreneur was may be somewhat delusional about their market and what’s actually happening in it. As we like to say, “Be aware of the ocean you’re in beyond the ship you’re on.”
Final word of advice:
Be bold, be passionate and show us why you’re better than anyone else!
For more information, visit Trinity Ventures.
Kathy Caprino, M.A. is a nationally-recognized career success coach, writer, trainer and speaker dedicated to the advancement of women in business. She is the author of Breakdown, Breakthrough:The Professional Woman’s Guide to Claiming a Life of Passion, Power and Purpose, and Founder/President of Ellia Communications, Inc. and the Amazing Career Project, focused on helping professional women build successful, rewarding careers of significance. A Forbes, Huffington Post and LinkedIn contributor and top media source on women’s career and workplace issues, she has appeared in over 100 leading newspapers and magazines and on national radio and television. For more information, visit www.kathycaprino.com and connect with Kathy on: Twitter, FB, LinkedIn.
Photo courtesy of Startup Stock Photos [FLICKR]
This article originally appeared in Forbes
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