The Venture Edge

Last week I saw one of the best pitches for funding I’ve ever seen.  Irene Rhodes is the founder/CEO of Consumer Fire Products, which provides proprietary wildfire protection systems that are, quite simply, amazing.  I’ve known her for some time.  She’s a USC alum, and I’ve had the pleasure of giving her advice along the way as she developed the business.  So what did she do last week to hit it out of the park?  

Here's a funny look at how NOT to pitch a venture capitalist. I love the text-to-video technology used in this video that was developed by xtranormal, a Montreal-based startup. It's a fun, fast, and cool way to make movies on the Web. As the company says, "If you can type, you can make movies."

This morning I once again had the pleasure of hosting the Tech Coast Angels at the university. They are the largest angel investor organization in the U.S. (see an earlier blog post “Finding investors is art, not science.” ). At their screenings, they typically have 2-3 entrepreneurs pitch their ventures. Today’s pitches were some of the best I’ve seen in a while in terms of the actual businesses they were pitching; but, I have to say that “death by PowerPoint” is alive and well with entrepreneurs. I certainly have been doing my best to get my students to shed the text-laden slides that force you to choose between what the presenter is saying and trying to read the rendition of War and Peace that is on the slide.Unfortunately, not enough of you have been listening. 

It’s always amazing to me that no matter how many times I advise entrepreneurs about their pitches to VCs and angels, they still think they have a better approach and that approach invariably includes spending far too much time on the problem and solution and practically no time on market validation and business model. It doesn’t matter whether the entrepreneur is given 5 minutes or 15 minutes, it happens time and time again, so much so, that by the second slide I can usually predict where things are going, and it’s not pretty.  

 I'm going to deviate from our small business economy posts for one post because I think it will help many of you focus your pitch about your business, whether that's a new business you're designing or one you have up and running.  Last night in my graduate tech feasibility course at USC, my VC in residence, Scott Lenet (DFJ Frontier Fund), brought his partner David Cremin to give the students a lesson in pitching to the needs of the investor.  Needless to say, it was eye-opening for many.

Recently Peter posted an interesting piece on Mark Cuban's solution to stimulating the economy.  While I agree in principle that entrepreneurship is the way to make things happen, one could question Cuban's motives in his approach.  Actually last night one of USC's great grad students did question those motives, so I'm sharing his thoughts in my post. 

Last week Mark Cuban -- the billionaire entrepreneur and owner of the Dallas Mavericks NBA basketball team -- announced an interesting new approach to stimulating the U.S. economy: an open source funding environment that he would fund with his own money. Says Cuban, "Rather than trying to be a Venture Capitalist, I  was looking for an idea that hopefully could inspire people to create businesses that could quickly become self funding. Businesses that just needed a jump start to get the ball rolling and create jobs. I'm a big believer that entrepreneurs will lead us out of this mess. I just needed a way to help." Here's how it works: Simply post your business plan on Cuban's blog, and he will personally consider it for funding. There is no minimum and no maximum funding limit, and with a couple billion dollars in the bank, Mark can clearly afford some serious funding.

In an earlier post (The plumber’s sink is always plugged), I talked about an experienced angel investor who totally blew his pitch for his business by making some very fundamental mistakes. I ended the post by saying “what you know can hurt you,” and it’s so true. The more you know about what you should do, the greater the chance you will mess up—