It catches many founders by surprise, but one of the hardest pitches to a venture capital firm is actually the pitch to your current investors. My friend Rob Go wrote about this not long ago, but it comes up regularly so I wanted to tackle some successful strategies I’ve seen.
The most common reason founders end up presenting to their current VCs is when raising a new round of capital and looking for pro-rata support. Or perhaps everyone is contemplating an inside round. Other times it is just an update because it has been a while and the business has materially changed.
There are two dynamics at play that cause these conversations to be awkward.
The first is that the internal pitch is often one of the very first times a founder is presenting for that round of financing, and they treat it as a “dry run” for the real pitches to come later. On the flip side sometimes a founder is talking to the partnership after a lot of other options have been exhausted and an internal round is on the table (that also probably means the team is exhausted of pitching). This is just an issue of being under, or over, practiced.
The second is that founders can feel an awkward sense of telling people a bunch of things they already know. It’s like telling that really funny college story to friends, only your wife has heard it 10 times already… and the whole room is your wife.
The folks that have been the most successful at the internal pitch just seem to a do a good job of owning it up to these issues.
The analogy I like to pitch like you are a band performing for your favorite fans. Just because they know the song doesn’t mean you can skip to the chorus. In fact it means you have to amp it up a notch, show them you still care. When I say performing I don’t mean being inauthentic, just that you shouldn’t be afraid of showing the passion you still have for your company.
Secondly, treat it like a real pitch. I highly recommend that you do the internal pitch early, as good internal VCs will be able to give you tough feedback that will make you excel with outsiders. But that doesn’t mean you haven’t practiced against smaller investors or advisors beforehand. In sports you don’t wait for the first game of the season to start practicing, even though you know you’ll get better as the season goes on.
Lastly, one trick I always used to try and keep it fresh was to insert an anecdote or extra slide that was just for the internal VCs. Just a little more detail or a side story that they would get because they have the context. It helped me keep things fresh, and touch on some subjects with those that had been behind me all the way. Much as with any relationship, the most important step is just not taking it for granted.
Nabeel Hyatt is a Venture Partner at Spark Capital. You can find this blog post, as well as additional content on his blog called hypothesis. You can also follow Nabeel on Twitter (@nabeel) by clicking here.