The ABCs of pitching investors– Always Be Credible

(Editor’s note: Jeff Bussgang is a General Partner at Flybridge Capital Partners. This column originally appeared on his blog Seeing Both Sides.)

In his best-selling book “Blink,” Malcolm Gladwell made famous the natural human reaction of quickly judging other people.  This behavior is especially true of VCs and angel investors. The first few minutes of an interaction are crucial.

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The way an entrepreneur starts an investor pitch meeting can actually determine their success in that meeting.  Those first 10-15 minutes, where the entrepreneur presents himself or herself – before they even present the idea – establish not only credibility, but the right to continue to pitch to an engaged audience.

Yet, it is amazing to me how few entrepreneurs start investor meetings crisply and confidently.  The formula for the start of the meeting is almost always the same – you are trying to answer the simple question on the mind of the investors:  Who are you and why are you here?  But when asked to review their backgrounds, entrepreneurs often fumble through incoherently, or ramble on tangents that aren’t relevant to the situation.

So, how should you start an investor meeting?  It’s as simple as ABC:  Always Be Credible.  Investors are looking for credibility: Can we trust that you have a uniquely good idea or insight? Are you capable of executing on it? And are you the real deal or full of bluster and BS?

When you talk to investors and ask about this opening gambit from entrepreneurs, you hear a consistent pattern about why they like a certain entrepreneur they’ve invested in. When you distill the inputs into a coherent pattern, here are the top three things entrepreneurs should do:

Be genuine and personable – Let your personality show, professionally of course.  At some point in the introduction, say something that makes you smile, which will make those around you smile.  If you don’t engage your audience, they’ll jump to their Blackberries.

For example, ZestCash CEO/co-founder Douglas Merrill is a charming character and, even putting aside the shoulder-length hair and tattoos, you can’t help but smile when he introduces his background (raised dyslexic in Arkansas, followed an unlikely path of earning a Princeton PhD, leading Google engineering and IPO in his role as CIO for 5 years, and now has developed a vision to transform short-term consumer credit by blending online data with traditional underwriting techniques).

Be crisp and on point – The most compelling background speeches are crisp, straightforward and demonstrate relevant links to the opportunity at hand.  SaveWave CEO/co-founder Dave Rochon, for example, gave the following brief narrative when pitching investors:  “I worked at Catalina Marketing for 10 years in sales and launched their Internet couponing business, then joined Upromise the year it was founded and built the grocery business for 10 years, serving for three years as president after the acquisition by Sallie Mae. I now want to transform the online and mobile grocery coupon business.”

Dave’s Series A round was way over-subscribed by folks like First Round, Ron Conway, Roger Ehrenberg, Founder Collective and I think it’s in no small part because his background and delivery were so crisp and relevant.

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Keep it short. I find that the more impressive the entrepreneur, the shorter the introduction.  The worst situation is when, 20 minutes into the presentation, the entrepreneur is still bragging about some random product they launched in a completely irrelevant industry sector.

By that point, the VCs are already hitting their Blackberries and wondering how they can end the meeting gracefully.  Worse, still: You run out of time to actually pitch the big idea.  Meandering introductions are the death of a pitch.

Wondering what you should avoid when you launch a pitch? Here are three things:

Do not exaggerate. Assume that everything you say will be thoroughly checked out in due diligence.  If you claim credit for a company where you played a small role, it’s bad form.  I recently called the CEO of a company that an entrepreneur bragged they had led during the pitch.  When the CEO told me they were a minor player and left after a brief two years, I stopped spending any more time evaluating the opportunity.

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Remember, investors are professional BS detectors.  Err on the side of underselling your background because the BS alarm bells may ring in the first few minutes of introduction and spoil the rest of the presentation.

There’s no “I” in team. When entrepreneurs talk about themselves in grandiose terms in their introductions, it’s usually a sign of egotism.  When entrepreneurs talk about the teams they built and the smart people that somehow they were able to convince to join them in their cause, it’s a sign of great leadership.  Guess which of these two profiles investors are more attracted to?

Don’t name drop. Some investors are notorious namedroppers, so this is a bit of the pot calling the kettle black, but investors get very turned off when entrepreneurs name drop in their introductions.

We don’t need to hear every famous person you’ve met or pitched or worked with.  Establishing a few common points of contact is a good thing.  Acting like you are best friends with folks who wouldn’t recognize you if you bumped into them in the grocery store on a Sunday afternoon is not recommended.

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Remember, be credible, humble and specific and you’ll do fine.  Take the 5-10 minutes time to establish that initial credibility, and then move on.  Investors like to back great people, so spend as much time thinking about how to present yourself in a compelling fashion as you would your idea.