Some advice on Pitching to the Investors

When you Pitch:

When you pitch to investors one size does not fit all, you have to pitch to your audience, if you are talking to a niche VC who invests in your sector they you can be a bit more techie, if you are infront of the "Bog Standard" VC, then reduce the techno speak and keep it simple, do not try to impress, if you can't get your story over in 8 to 10 slides then it's to complex. I always keep stuff in reserve on the juicy bits, so if they want to dive in on the detail you have it at hand. I have picked up some handy hints on pitching from Matt Eventoff, he works as a communications strategist for senior executives at Fortune 100, Fortune 500 and Inc. 500 institutions, litigators, entertainers, and political leaders throughout the U.S and abroad.

Startups and Venture Capitalists Beware

There are two communication “killer apps” that I witness plague startups with frightening frequency. These danger zones are lethal to a startup, especially one seeking funding.

If you are pursuing venture capital funding, read this prior to presenting. You will be glad that you did.

Killer App # 1 – No Central Message

I have witnessed this over and over and over again. Brilliant entrepreneur(s), fantastic concept or prototype, great ideas, detailed business plan…and no central message. You can have every fact, figure, and statistic on your side, but without a central message, it all doesn’t mean much.

This is crucial for a startup seeking funding. We are in extremely difficult economic times, venture capital is much more competitive and difficult to come by, and every entrepreneur believes that their concept is different, special and deserving – every entrepreneur.

There are countless books advising on how to stand out, what to say in a presentation, how to put together a funding request, etc., but very few, if any, on putting together a message.

If you are the entrepreneur you must be able to communicate your message in a manner that anyone and everyone can understand.

What are you trying to accomplish with your concept? If you are pursuing funding, you must be able to identify how you will deliver a return on that investment, profits, and you must be able to do this in a manner that is clear, consistent, and easy to comprehend – remember, you are asking people to invest at a time when investing, no matter the size of the VC firm, is a scary thing to do.

President Obama had a solid message as to why voters should support him and what he would deliver to them - Change. His message – clear, consistent, and easy to comprehend, and he won.

Killer App # 2 – No Practice. No Preparation. No Funding!

This can, and often does, occur whether an entrepreneur has a central message or not. The entrepreneur begins his or her funding presentation. The slides come out. There are lots of numbers, lots of writing, lots of information and not a lot of time to present it all.

The entrepreneur is nervous because this is THE meeting with THE potential future of the company – the funders. He begins to read the slides, all the while moving awkwardly around, or maybe standing still, resembling a statue. “Well, umm, XYZ has, umm, developed what we, uhh, believe is, ahhh, a revolutionary way to, umm…” and the presentation continues on in this painful manner until mercifully, it is over.

Your product or idea might be THE biggest and best idea the VC has ever seen or heard. The VC just doesn’t know it because he or she has been so focused and distracted by the verbal noise – umm, uhh, ahhhs, the body language, the speed and the lack of clarity that he or she has not been able to focus on the quality of your concept or product.

In this case you are better off simply dropping the presentation off for the VC to review at his or her leisure but for one problem. Once you have received the funding you are going to have to sell the concept to other investors and to the marketplace. Think that first VC is going to be confident in your ability to do that?

Some people are better presenters than others. Some people are more naturally charismatic than others. Some people are better storytellers than others. Having the benefit of a communications trainer is priceless, but often not in a startups budget. Practice does not cost anything other than time. Every person benefits from practicing before presenting.

You will identify verbal noise, tendencies toward awkward movements or word placement, pitch, tone, mannerisms, etc., you will identify places in your presentation or pitch where there is duplicative information (happens constantly), you will identify when you are providing TMI (too much information). If you practice, review, practice more, review again, and continue practicing - you will improve and you will give a better presentation, guaranteed.

I encourage practicing in front of people who are not on your presenting team or even in your industry – chances are that if they don’t “get” what you are delivering or are bored or distracted by your delivery, there is a decent chance the potential funder won’t either “get” it either.

***A note to Venture Capitalists – once you have invested, or made the decision to invest, make sure whoever is going to be the “face” of your company before the marketplace is a strong presenter. The landfill of lost investments is littered with great ideas that have been poorly presented to the market.

Patents: "The Good and the Bad"

Patents: fixable, or the next weapons of financial destruction?

The big issue of the evening came from a discussion of the treatment of so-called "non-practicing entities" or NPEs—organizations that hold patents and assert them, but do not conduct a business that applies the patents.

By Ron Wilson, Executive Editor -- EDN, 5/7/2009

A panel sponsored by the Commonwealth Club of Silicon Valley last night brought together three significant players in the US patent-law debate to discuss the future of the patent office, the current reform legislation in Congress, and the future of intellectual property. The discussion ranged from pessimism over short-term fixes to a dire warning about the arrival of the investment banks in the patent business.

Steve Perlman, founder and CEO of invention-factory Rearden, David Simon, chief patent counsel at Intel, and Ronald Yin, partner at law practice DLA Piper, discussed the issues under the questioning of Wall Street Journal Deputy Bureau Chief Don Clark. Initial conversation focused on the pending reform legislation, which Intel, through the Council on Patent Fairness, has done much to promote.

Not surprisingly, Simon was supportive of the legislative efforts, citing three areas in which he feels the system needs reform: reduction of damage awards, limitation on plaintiff's choice of venue, and the question of willfulness. On this latter point, Simon explained that as the law is interpreted today, the simple fact that you have read other patents in an area can "put you under dire threat," to use his words, in case of later litigation.

Perlman in response dismissed the proposed bill, saying it did nothing to address the real issues in the patent system, and implying, without directly saying as much, that the bill served primarily the financial needs of the big companies in the Council. Perlman stated that in his experience filing many applications, just the time required for a patent application to get its first reading could vary between a few months and five years. Times for granting can be even more variable. Meanwhile, he said, patent applications made in other countries are published as soon as they are received, leaving inventors in the US unable to assert their rights in the US on an idea that is now available on the Web to anyone. Perlman charged that fundamentally the Patent Office is a drastically underfunded wreck, and that the supposed reform legislation is in fact a mess that could further corrupt the system.

A voice of moderation in comparison, Yin agreed with Perlman that the Office was underfunded, pointing out that Congress had for years used the Patent Office as a source of revenue instead of funding it to adequately perform its duty under the Constitution. And he agreed that the current proposals before Congress are not really reform. But he also argued that what the Office needs is not reform, but simply better internal management and a sense of business sense.

There followed a rather sharp debate on particular provisions in the proposed legislation, from which it mostly emerged that there are at least two versions of the proposals, one passed by the Senate, and one under consideration in the House. A conference will likely produce yet a third version. Yin warned that given all the things occupying the Congress this year, it's entirely possible that once again no bill will emerge from the process.

The big issue of the evening came from a discussion of the treatment of so-called "non-practicing entities" (NPEs)—organizations that hold patents and assert them, but do not conduct a business that applies the patents. Most often, the NPEs people think about are patent trolls, the panelists said. But Yin explained that it is extremely hard to target trolls with legislation—even if Congress had the will to do so—because it is difficult to hamper trolls without also hamstringing other kinds of NPEs: universities and research organizations, for example.

Yin went on to point out that patent trolls were "a creation of the industry's own greed." He said that years ago, most patents held by large corporations were bundled and licensed at quite reasonable royalties, because the holders feared that they would be charged under anti-trust legislation if they gave any hint of using their patents to restrict competition. But as conservative administrations lost interest in anti-trust issues, this changed. Yin traced the beginning of the change to Texas Instruments, which began by asserting a pool of DRAM patents against Japanese memory manufacturers, in effect turning their patent portfolio into a revenue source. Once people came to see patents as potential cash flows, Yin argued, the door was open for trolls: investors who would purchase patents simply to assert them in order to get royalties.

At that point Simon dropped a bomb. "This is something we should definitely fix," the Intel counsel said. "Right now there's $35 billion out there trying to buy patents and form them into pools. And I can tell you that there is much more money coming in soon."

Even more dire, Simon said that recently one of the experts on his team had been approached with a job offer from an investment bank. The bank is putting together a team to pool patents and create financial derivatives based on the pools.

This would, in effect, create a mechanism by which speculators could bet on the future cash flow from patents. Because more aggressive litigation would be expected to increase the flow, it is likely that a patent derivatives market would significantly further increase the assertion of patents by NPEs, and hence further increase the risk of innovation for real technology companies. Further, if huge pools of cash appear looking for patents to buy, the demand could substantially distort the intellectual property market in at least two ways.

First, the demand could make patents sufficiently valuable that they become all by themselves an exit strategy for a start-up company—just get going, get patents, make a reasonable show of reducing them to practice, and then dissolve the company and sell the patents into investment pools. Second, one suspects that patent factories—organizations created just to spin off large volumes of patents with potential value in litigation—would spring up to satisfy the demand. While both of these changes would provide jobs for engineers, neither seems like a positive step on the way to economic recovery.