Establishing Credibility in a Pitch

Jeffrey BussgangHarvard Business School EIR

Flybridge Capital Partners General Partner

February 17, 2011

General Partner at Flybridge Capital Partners, early-stage VC firm based in Boston40+ active portfolio companies, Fund III (2008): $280M, 5 GPs

Entrepreneur-in-Residence at Harvard B-School Former entrepreneurCofounder Upromise (acq’d by SallieMae),

VP at Open Market (IPO ‘96) Author: Mastering the VC Game HBS ’95, Harvard ‘91

Context For My Perspective

Most VCs and Angels have ADD – operate on “BLINK” instincts Want to SEE everything, but DO very, very few deals Make their decision within the first 10-15 minutes

Typical VC and angel will invest in one out of every 300-500 deals they see Long odds – you need to really stand out Like college applicants – triage quickly

Context About VCs and Angels

Investor’s Decision Tree

Worth 3 minutes(email, phone)?

Worth 30 minutes(phone, in person)?

Worth 60-90 minutes(in person)?

Worth 2nd mtg(in person)?

Ignore

Pass gracefully

Pass but stayIn touch

Serious due diligencePass but be helpful

No

No

No

No

Top 3 Things To Do

Be gracious and personable Say something that makes you smile…authentically Tell your personal history, tell a story

Be crisp and on point Make it relevant – don’t go off on tangents If you can’t show good summarization skills in a pitch meeting, how will

you handle a board room? Keep it short

Personal introduction should take no more than 5 minutes Team introduction 10 minutes

Top 3 Things To Avoid

Do not exaggerate Assume everything you say will be verified in due diligence Assume the listener is a cynic and a professional BS detector

There’s no “I” in team If you are self-aggrandizing, investors will assume you can’t build teams

Do not name drop No one is going to be impressed

with who you know unlessthe relationships are both realand relevant.

Typical Investment Criteria

Tangible things investors like to see: Very big market Unfair advantage Attractive business model Unique technology or business model approach

Intangible things investors like to see: “Pied Piper” – an ability to recruit and retain a great team, partners Interpersonal chemistry Movie, not a snapshot

VCs vs. Angels

Will want some control (voting, board, veto)

Will want to own 20-40% each

Will want to be very actively engaged (they get paid to do this!)

Can add tremendous value and be great business partners

Can be total disasters Typically rational actors,

commercially-driven, but if inexperienced…

Will want no control (“send me an annual email”)

Will want to own 1-10% May want to be engaged

or not (often a hobby, sometimes a personal mission)

Can add tremendous value and be great business partners

Can be total disasters Typically rational, but if

unsophisticated: naïve irrational, emotional

Concluding Thoughts

SCHOOL Be Specific – do you know your stuff? Be Credible – can I trust you? Be Humble – will I enjoy working with you? Be Optimistic – can you inspire others? Be Original – have I heard this before? Be Large – is the market really big?

Questions?