Being on the VC side of a startup pitch meeting is a terrible ego trip. It is incredibly easy to find loopholes in the plan, because every plan has holes. It is easy to think about the million ways this can’t work and it is easy to cast doubt on assumptions. There is one way out of this trap for founders: become the advising side in the room.
VCs are not all-knowing, far from it. But the position puts you in front of so many opportunities and you start thinking you know things pretty fast. Most startup will fail, and there are endless reasons to fail. Again, this makes it easy to find reasons opportunity X won’t work. Doing that, you still need to invest in something and you also need to learn — about the market as a whole and about relevant specific sectors. This part is harder and using proxies is common. Places like GuidePoint made it a business of itself.
As a founder, you have the advantage of being focused on only one opportunity. You can learn everything around it, read every twit, attend every event. If you’re smart, you are already dealing with a business of which you are an expert. My advice is to capitalize on this advantage.
First, never stop consuming knowledge about your domain. The legendary Reid Hoffman calls it “infinite learner mentality”. Meet senior professionals, expand your network in your domain, read, listen, investigate. Stay up to date with trends, hot names and phrases and technological developments. This is your bread and butter, it’s why Cristiano Ronaldo still go to team practice every day.
Second, make the meeting revolve around what you want to talk about. This is tricky, because you are the less experienced side in the room, you’re excited, and you want to also talk about your sales plan and your evaluation of the market size. Well, don’t. Investors can evaluate the market better than you can. Build your deck around what you know, and answer every question with references to things you are absolutely an expert on:
Q: “How do you evaluate the market size?”
A: “in our space, companies buy A and B, prices are around C. The trend of our market is to do more of D, and the people making decisions are of type E. Those people, in our industry, tend to prioritize F over G, and when I spoke to person H he mentioned I and J. Therefore, the size of the market will be judged by K”.
See what we did there? There is no one answer to the question, and any answer you give will never be perfect. But, when you are speaking on your domain, it is much harder to poke holes in the story. Should also, by the way, be actually less holes. But that’s another thing all together.
To finish up point 2, the deck should focus on things you know and the conversation should always go back to what you are better familiar with than your counterpart. If there is no such thing you are in the wrong business. As Covid “internet instant experts” taught us, people talk with more modesty to things they actually know and if you keep the conversation to what you know, you are more likely to avoid easily disproved statements and outrageous unproven claims.
In the end, you have the ability to be an expert of your domain, and with that to master conversations about your domain. Keeping the conversation around your domain of expertise is a skill but it can be taught. The absurdly common mistake is for entrepreneurs to discuss things they know nothing about. Another common mistake is to neglect knowledge accumulation within your domain. Avoid those two mistakes and try to end up in a place where the people you meet call you up for questions in your domain. That’s the golden spot on the board.