Ever Wonder What It’s Like Inside a VC Pitch Meeting? You Can Be a Fly on the Wall Here

Posted on Nov 9, 2011 | 35 comments


I’ve often wanted to let people see what a VC pitch is like to help new entrepreneurs have a better sense of what it’s like to present.

Obviously having a camera on will add a small bit of an artificial result because I don’t want to ask as much confidential information and with the camera on people are obviously a bit nicer.

But this interview is fairly authentic. If you like it I’ll do more and continue to strive for authenticity.

So here are Sahney Nager & Ryan Weber of Smarketplaces. I really like them. But I also asked some tough stuff. The video link is here.

Hope you enjoy.

Feel free to provide any feedback on the format or how to make it more authentic. And wether seeing pitches of useful to you or not.

  • http://twitter.com/#!/georgelbowen George Lucas Bowen

    This was a great episode.  I have a feeling you went a little easier on them than in a real pitch meeting.  It’s nice to see an actual flow and what you are extracting from their pitch.  I like you correction on the ‘pitch speak’ description to cut down to a no bullshit explanation.

    I’d like to see some these with companies that you would actually take meetings with.  It’s encouraging to see other startups and their level of concept/product at the time of fundraising.

  • http://essaysnark.blogspot.com EssaySnark

    Haven’t even gotten all the way through the video and am already swooning. This is so amazingly helpful to people we work with (candidates interested in bschool — and often, in VC).  The bschool app is somewhat like a “pitch” — both the essays and the interview — and so there’s relevance in candidates studying this. And, this shows the importance of preparation, poise, and people skills (sorry for the lame allliteration!) — all critical in so many areas. Mark, thanks!

  • http://influads.com/ damiansen

    This is clearly a fake.. I heard that VC’s were evil.. and the blackberry, where is the blackberry? ;)

  • jm

    Please continue to do this! Comments:

    1) Offer a shorter, edited version (~10 min).  e.g., Paul Graham’s public office hours are <10 min and fascinating

    2) I'd prefer to see the folks under the gun even more :). Just when it started to get really incisive around the unit economics of the business, you backed off.

    3) Any chance you could give a verdict after each pitch?

    Some feedback on the business idea b/c I adore marketplaces:

    * The economic value prop seems tough. Just to run through some sample (generous) numbers to compare against a $3CPM: 1000 page views x 0.1% buy rate x $30 avg price x 10% commission fee = $3.  50/50 rev share is equivalent to $1.50 CPM. This doesn't take into account the transaction fees too since they're processing the payment. If they split further with other network members, it gets even lower

    * Etsy has blog widgets and an API and a fanatical community (lots of overlap with mom bloggers?).  I'd be most scared of them.

    * If the sellers are mostly Etsy sellers looking for more distribution, then there could be tons of clutter. If I buy something from my favorite blog that I come to regularly, it's because the product is different or special and I don't have to sort through tons of different products. They could become a victim of their own listings proliferation. As a blogger, managing listings in a marketplace sounds like a headache.

    * Etsy does not process payments b/c being merchant of record can be dangerous (tax collection, liabilities, etc, etc). Once they are merchant of record, dispute resolution and other customer service issues can become a nightmare. eBay/Etsy don't process payments for good reasons  (PayPal is a different biz division than eBay Marketplace)

    * Seller reputation is a huge driver of sales on Etsy/eBay/etc. It seems like an uphill battle for these folks since they are essentially white labeling a marketplace. Will buyers care about a seller's reputation from a service whose brand they don't know/trust?

    * Would love to have seen the listing process in the demo. If I want to casually sell something on a blog that I read, it better be ridiculously easy for me to do so. Even listing on Etsy is a bit of a chore (tagging, shipping rates, product descriptions, photo uploads, etc). Selling on some community forums is as easy as writing a post with a price/photo and just handling through private messaging. 

    * Speaking of which, community forums seem like a great avenue for this product (e.g., headphones, car parts, toys, fashion). Many already have dedicated sections for selling/buying goods, and user reputation is often built in. It may be more of a natural fit for a peer to peer marketplace than a content blog.

    Best luck!

  • http://blog.ideatransplant.com Jan Schultink

    I think it is time to remove to secretive veil from startup pitches. Why not cut the really confidential stuff from your pitch and put content in the open? This could help globalize venture funding more. This goes hand in hand with developments like Angel List.

    The objective of your public pitch is not to land an investment, but to get a 15 minute call from a potential investor

    Now about the format. You could even make it punchier/shorter. I am thinking Wine Library TV for VC pitches. You could even make it less polite (after the small talk), like the jury in American Idol, or The Apprentice. 

    Video might have a great future in fund raising, it will for sure transform the way recruiting will work. Out go the CVs where candidates hide behind big university names and you end up working in the place you happen/want to live, in comes raw footage of who the applicant actually is, across borders.

  • http://www.alearningaday.com Rohan

    Aside from trying new stuff on the video, I see you are trying out a French beard as well. ;)

  • Robin McFee

    Great Post. Would love to see more of these.

    If these guys are right, and people want to buy goods on blogs like you would find on Ebay or Etsy, why wouldn’t Ebay and Etsy just put affiliate ads directly on the blog? Presumably they can do the same content analytics etc.

  • Manuel F. Lara

    Loved the video, Mark. I’ve never been in a VC meeting and it’s been a great learning experience. Offtopic note, but has anyone ever told you, you kind of look like Robert DeNiro? ;-)

  • http://scottyapp.com Martin Wawrusch

    Really great episode, 

  • http://twitter.com/opener opener

    Great post. But as a software architect  turning enterperuer, I am finding it difficult to approach the first VC, angle etc without going to a accelerator. What are the other options? Do angles and VC uses these event to filter?

  • http://scottyapp.com Martin Wawrusch

    Hi opener,

    if this video shows anything than that VCs don’t bite (well actually some do, but they live  up north). First of all, you don’t approach one but many, and you walk your way up. Start talking to people you know who run businesses and explain them your idea, what you want to do. Then go to local angels and do the same spiel. You probably don’t have to pitch traditional VCs until you are much further along anyways, as you do not need the money they provide.

    In terms of business I think that you are actually better prepared as a software engineer than as a business major. In the end it comes down to finding a product that a lot of people are willing to pay YOU money for in a market that is big enough and not too crowded, with some advantage that will prevent competition to enter too early. Bonus points if the opportunity is not yet recognized by the cab driver or your dentist.

    So if you look at this video (and keep in mind that the VC was very soft on them) it starts by establishing rapport. If you can’t master that part then you need to have an exceptional value proposition. Next you need to talk about your product, what it is, how it differentiates itself from the competition (If you don’t have any you either haven’t looked hard enough or your idea is so far fetched that there probably is no market for it). You keep it simple, straight to the point. Don’t be intimidated by fancy wording, instead focus on the numbers. You are in software engineering, that’s a huge benefit. Understand your numbers inside out.
     Mark showed that so well when he talks about CPM and what’s in it for the user.

    Which brings us to the next part. Explain why a customer / user / partner should choose your product. Is your value proposition 10 times better than the next alternative? If not it is not going to be easy. 

    Along the way you always need to demonstrate that you have done your home work. Make sure that you know more about the market than your investor. Know the perfect answers (A/B test them) to common questions as most people most of the time come up with the same questions.

    Treat this as a learning experience. The worst thing that can happen to you is that you learn something new about your product or your market. 

    And BTW, like dating, you will have to kiss a lot of frogs, so perseverance and preselecting the right potential investors is key.

    And don’t think for one moment that just because you are a geek that you are inferior to business people

  • http://twitter.com/DanielSBowen Dan Bowen

    Nice job of showing some of the flow of the experience, understanding there is only so much you actually capture when everyone knows they are being taped.  Kudos to Sonia & Ryan for having the courage to put it out there…I thought they did a commendable job all things considered.

  • hermann

    definitely want to see more of this, thanks so much.

  • http://bothsidesofthetable.com msuster

    I went a little easier on them then normal but … this is pretty similar to the normal flow of a pitch meeting. Main thing I don’t want to do on camera is ask overly confidential information and that I WOULD do in a meeting.

  • http://bothsidesofthetable.com msuster

    Great. Thanks for feedback

  • http://twitter.com/ricardodsanchez Ricardo D. Sanchez

    Not a bad episode at all. I liked it because it showed a real startup with no funding and no internet startup celebrities… just a couple of people like many of us trying to create a company.

  • Erlano

    Mark! Thank you for video.
    I wished the video could be even longer to reveal more aspects of the VC meetings.
    I have a question for Mark or anyone, what is the meaning behind the question whether the team would like to move to Silicone Valley?

  • http://www.facethebuzz.com Andrew K Kirk

    Really enjoyed this “inside” look into a VC pitch session. It seemed much more informal than I had imagined. I would love to see this idea repeated in future episodes. 

    Idea for future pitches: Shoot the video and then allow your community of readers/viewers to ask questions of the entrepreneur(s) and product. Then the most popular/voted on the community are asked in a part 2 video. Obviously, this would be much easier for those who are local. Or you use something like @ChillLive:twitter 

  • http://about.me/humphrey HumphreyPL

    This was really interesting thanks for sharing Mark. How would recommend they stay in touch with you as they grow? How do you prefer to get updates? Cheers, H

  • http://www.victusspiritus.com/ Mark Essel

    What a great idea to have a live pitch from a nascent company that will be fund raising in January. Love how they got started in May and will have a product shortly.

  • http://marketingrevolution.com.ua/partners/web-promo web promo

    Excellent website. Lots of useful information here. I am sending it to a
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  • http://twitter.com/robbieab Robbie Abed

    This is great Mark, always appreciate the good & rare content.

  • http://twitter.com/davidsmuts David Smuts

    You were a pussycat with these two Mark :-)

    VC pitch? more like a fireside chat. Credit to Ryan and Sahney for doing this- they both came across as very confident and professional individuals and it’s not a bad way at all to get some attention to your business. I’d invest in them, second time round that is. I get the model but don’t think it’s that big a market, I’m sure they could learn a lot from starting this business and I wouldn’t be surprised if it does moderately well. A blockbuster- I doubt it. But I bet their second venture will be sheet hot.

    You were quite friendly there Mark which doesn’t surprise me in the slightest, you look and sound your normal self. What’s absent from this “VC pitch” however is:

    a) VC asking them how they have arrived at a valuation for the business.
    b) VC asking them what the traction they have had to date (the numbers, stats, references etc..,)
    c) VC asking them how big the market is and what evidence do they have for this
    d) VC asking them what revenues they are projecting
    e) VC asking; what will you do if company X goes and does this?
    f) VC asking what the exit strategy is
    g) VC asking who else they are talking to
    h) VC asking how much they are seeking to raise (in Jan they said) and at how much equity their going to give for their round
    i) VC totally tuning out when they say they aren’t raising right now
    j) VC telling them they are great kids but it’s too early but they’d really be interested in keeping in contact and it would be great for them to come back to you when they have some market traction (read; another investor interested).

    The truth is; a lot of the above are all very valid questions from an investor it’s just a VC doesn’t have to be a fargain icehole in how he asks them and it can be done in quite a friendly and respectful manner which puts the Entrepreneur at ease. You did that, well done.

    Good luck to Smartmarkets!

  • Robert Thuston

    Yes, more of this!

  • http://twitter.com/ades Ades

    Interesting product and pitch, thanks for sharing, it was particularly useful for me since I’m currently working on something that targets bloggers too.

    It’s one of a kind, niche, online tool called Bloapp (www.bloapp.com). It allows bloggers to convert their blogs (self-hosted, wordpress, blogspot, tumblr, posterous based blogs etc) into an iPhone and Android friendly app reader. You can fully customize it to suit your design. You can also use your Google AdSense to earn money. It’s a free service. Would be glad to send more info if required admin at bloapp.com

  • http://twitter.com/hamutalm Hamutal Meridor

    this is awesome!
    so much to learn, not only from the content but also from the body language and overall dynamic.

    As opposed to most commenters, I actually like the long, full hour format - some stuff you just can’t learn from a few minutes. We’ve all seen tons of short pitches, I think the purpose here is different. And as long as you  don’t flood us with them, I find a lot more value in the full-fledged pitch.

    thanks!

  • Jack Mehta

    Wow, reminds me of the pain and suffering first-time entrepreneurs have to go through. (And I am betting that Mark will not invest in this company – body language!)

  • http://marketingrevolution.com.ua/partners/web-promo webpromo

    Very nice post even i would say that whole blog is awesome. I keep learning new things every day from post like these. Good stuff!

  • http://resumecvservice.com/ resume help

    very interesting post! thnsk!!

  • Greg Matinian

    Very interesting. Looking for more. You look more soft in the video than in your other written posts. I think this posts will help to see VC as more human and approachable. Thank you!

  • http://www.gmrtranscription.com transcription

    Nice info and healthy feedback. Like your approach. Great!

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    It’s been a
    pleasure reading your post. I have bookmarked your website so that I can come
    back & read more in the future as well. Please do keep up the quality
    writing. 

    Thanks for the video!!

  • http://www.begun.ru/begun/collaboration/agents/detail.php?ID=3689 вебпромо

    Wow great i have read many articles about this topic and everytime i learn something new i dont think it will ever stop always new info , Thanks for all of your hard work!

  • Brenton Thornicroft

    Mark, 

    I’ve been following your blog since I came across your talk on the Stanford Entrepreneurial Thought Leaders lecture series on iTunesU. Your content and advice is some of the most raw and practical I’ve come across in my last few years of living and breathing entrepreneurship. One thing you said in the Stanford talk that resonated with me was when you explained to the students that entrepreneurship is not sexy and described it accurately as the grueling process it is.

    I felt obliged to make my first post after watching this video – mainly just to thank you. In this 53 minutes I’ve learned more than I could reading a thousand TechCrunch articles. Also, I wanted to congratulate you on how well you’ve utilized social media to build up your reputation in the investment/tech world. Great job and keep up the hard work – you are a true inspiration.

    Good luck to the SmarketPlaces team. Although you haven’t been working together very long, you both seem extremely competent and ready to tackle the market. While I’m not highly knowledgeable on the market and its competitors, I know there is definitely a need for more innovative ways for bloggers and publishers to achieve more revenue per visitor. I personally really like their model and wish them the best.

  • http://theblakefirm.com/services/media-technology/ Intellectual Property Attorney

    “You don’t wanna get married in Vegas, right?”  This is great advice.  With all of the enthusiasm and energy that fuels business startups, it’s not surprising that “fools rush in.” But it’s really important to think about who you are working with — your founders and employees are critical assets because many of the tech acquisitions that are happening right now are primarily talent acquisitions.