From my perch somewhere in middle America, I’ve raised over $100 million in venture capital as an entrepreneur, sat through a few hundred pitches as a seed-stage investor, and helped a a dozen portfolio companies raise capital.
While sitting on both sides of the funding table, I’ve witnessed good pitches, bad pitches, and ugly pitches. I’ve personally made a lot of mistakes while pitching and seen even more.
Last night, I watched a mediocre concert featuring co-headliners Counting Crows and Matchbox Twenty. On the surface, a concert featuring two past-their-prime 90s alternative rock bands would have very little to teach a startup entrepreneur. On closer inspection, I saw a couple critical object lessons surprisingly overlooked by most entrepreneurs seeking investment capital.
Here’s the backstory:
I love Counting Crows. Their seminal album “August and Everything After” was released in 1993 during my freshman year of college, and it’s one of my 5 favorite albums of all time. To say I was looking forward to seeing Counting Crows perform is an understatement — it’s all I talked about for months.
I was on the edge of my seat with anticipation when Counting Crows opened the show. To my surprise (tired, sleepy, lethargic, disheveled, overweight, slovenly) frontman Adam Duritz led the band onto the stage looking like he just woke from a two decade-long coma. His lack of energy was infectious…
In addition to a lethargic performance, from their first 9 songs, they only played one hit. Their poor choice of songs killed what’s left of the mood: nobody was singing along — not even rabid fans like myself.
The final nail in the coffin was the most egregious: they never played their biggest hit, “Mr. Jones.” They are not quite a one-hit-wonder, but they are pretty darn close — that song has more plays on Spotify than their next 10 songs combined. To the disappointment of every fan in attendance, they ended their set without playing their most popular song…
On the other hand, I wasn’t looking forward to co-headliner Matchbox Twenty. While I don’t despise them with Nickelback-level vitriol, I’ve never been a big fan — I routinely change the station when their songs come on the radio. But within 30 seconds of taking the stage, Matchbox Twenty won me over. Their performance had everything Adam Duritz and Counting Crows lacked – energy, passion, enthusiasm, and…. talent. Additionally, they played all their hits — they started with a bang, and closed with their two most popular songs as ranked by Spotify.
For comparison, here’s how the crowd used their phones during Counting Crows’ performance:
And here’s how the crowd used their phones during Matchbox Twenty’s performance:
It was like night and day — one group blew me away with an highly unexpected, passionate, professional performance. The other group gave a disappointing, disheveled, lethargic excuse for a performance — if they were pitching me for capital, I would’ve cut the meeting short.
With that (longer-than-necessary) backstory, here’s the two object lessons entrepreneurs should apply to their next fundraising pitch:
Tell your story with enthusiasm, conviction, and passion.
When I’m evaluating teams at the seed/angel level, by far the most important variable is the team. My litmus test surrounds how passionate they are about their business. Don’t get me wrong: I wouldn’t invest an inexperienced, passionate team working on a terrible idea. But the corollary is also true: I wouldn’t invest in an experienced, unpassionate team working on a great idea either.
In fact, just last week while I was raising a seed round for my next venture (Engine — an ecommerce platform) an experienced investor said to me, “I don’t know ecommerce very well, so I didn’t understand half of what you were saying, but I’m going to make a $100,000 investment because you are so clearly passionate about what you are working on.”
Just like Counting Crows, if you can’t sing your startup “song” with enthusiasm you won’t win over your audience.
Start strong, finish stronger. And don’t lose the audience in the middle.
Matchbox Twenty took the stage by playing one of their biggest hits, and closed the show with their two mega hits. You should do the same in your pitch.
While Sequoia’s model pitch deck is a great start, don’t be afraid to change the order of your presentation to grab your audience’s attention.
For example, my current project is a pre-product, pre-revenue company. As such, our strongest slide is without a doubt the “team slide.” Despite the fact that the “team slide” is traditionally placed near the end of a presentation, we move ours to the very front. After a very brief description of the problem we’re solving, I start every pitch with one of our strongest “songs”:
“I’ve been in ecommerce for 22 years, and paid for medical school with a business I started from my dorm room in 1995. I gave up my family medicine practice after residency when a business I built one night while I was on call took off. I sold that business, and started Acumen Brands in 2009 — we acquired 8 million Facebook fans, raised $104 million of venture capital, and sold it after four years. We’ve assembled the most critical members of that team for another rodeo…”
Likewise, we finish with a bang as well — we save our best “song” for last:
“We are seeking $X million on a $Y million pre-money valuation. Coincidentally, those are the same terms we used for the seed round in my last business which yielded a 35-fold increase in valuation amounting to a 300+% IRR to my seed investors.”
After suffering through a few hundred boring pitches, most entrepreneurs would be better served to start and finish with your best two slides, and delete the majority the boring “fluff” slides in the middle. I can say with certainty, your startup pitch doesn’t have more than 10 good slides, much less 30.
(John James, M.D. is the founder and CEO of Engine, a new cloud-hosted ecommerce platform. If you’re contemplating a new ecommerce platform, I’d love to chat about the “revenue secrets” built into Engine stores. Email me firstname.lastname@example.org)