It was a fascinating day at the Hungary House HBBA Invest Fest, where enthusiastic entrepreneurs were eager to meet hard-nosed VCs, in the hope of finding a sympathetic ear to their dream concept. This is sometimes called ‘speed dating’ but it’s much more stressful and one-sided than trying to meet a life partner!
The hopeful founder, clutching the pitch deck which they pray will open the door to funding success, arrives with a mix of enthusiasm and nervousness as they scour the room for friendly faces. Keen to tell anyone who will listen about their groundbreaking idea which will be the next big thing if only they can put some fuel in the tank (money) to allow them to drive to their dream destination (an exit in 3 years)
On the other side of the room, the VC is less enthusiastic and certainly not nervous. He or she holds all the cards, more pitch decks on the desk than can be read in a year, and the cash everyone needs to fulfil their dream. The power is with the VC and they know it.
The dance then begins. The founder has the pitch prepared and well-rehearsed, small talk kicks off the session but no one really cares about the weather or which football club they support. In this sense it is like dating, the first nervous drink at the bar, the surface-level chat about the train being delayed, the surprised look when they both realize they went to the same gym years ago. All the while working out ‘Do I like you’
So back to fundraising. The founder delivers the pitch, and the VC, poker-faced, asks the usual questions, ‘Why hasn’t someone done this before’ ‘Do you have skin in the game’ ‘How much do you need’ The founder sweats and hopes they see a flicker of interest from their ‘date’ This is their dream, why isn’t it obvious to everyone all it needs is some initial cash to make a fortune. The founder’s wife and family think it’s a brilliant idea, surely the VC will too.
Every business has done this dance, without founders no business would exist, without VC’s not many would exist. The debt of the brands we all know is eye-watering ( Tesla $3b, Apple $108b, Spotify raised $1.3b in one year) so even the major corporations have to dance the fundraising tune.
The paradox is the VC has all the power, but unless they invest their returns are zero. So in a way the VC is as dependent upon the speed daring as the founders are. In order to shift the power the founder needs to do a few simple things. First is to stop talking about their business like it’s their favourite child, the VC, like most of us doesn’t care about your child. The second is to craft a world-class elevator pitch, 60 seconds of pure genius. This replaces the 10 minutes of droning on about this being the best thing since bread was sliced. And thirdly talk about customers, and subscribers, more than the products.
At the end of a wonderful Invest Fest, there were a few happy faces, the date had gone well. The founder had found an ideal partner, the VC had already worked out the exit multiple as they phoned to tell their boss the good news. But sadly some founders walk away deflated and frustrated, the VC’s just ‘didn’t get it’. Next time will be better if they tell their supportive spouse.
My tip for a successful date next time works, follow those simple rules and the date will go so well it will turn into a long courtship, children and a wonderful family.
Peter Wilcock
Non-Exec Chair of HBBA
Mentor, Author
