The days of entrepreneurs sketching out a business plan on a napkin and getting enough Route 128 or Silicon Valley investor money to start a company are long gone. Angela Lee, founder of 37 Angels, says today’s venture capitalists look at a company’s pitch deck in three minutes.
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The days of entrepreneurs sketching out a business plan on a napkin and getting enough Route 128 or Silicon Valley investor money to start a company are long gone.
Nowadays, venture capitalists spend an average of three minutes looking at a company's pitch deck — the outline of their business plan in a PowerPoint, Keynote or Prezi document — that aims to raise money. That's according to Angela Lee, founder of 37 Angels in New York and a speaker at the recent Maine Startup and Create Week.
“There aren't as many differences in angels versus venture capitalists now,” Lee told Mainebiz recently in a phone interview. Angels used to be considered patient investors, and some still are, but she said the pace of growth angels and venture capitalists require for a company is fast.
Before even seeking outside investment, companies should ask what success means for them, how many hours they are willing to work and how fast they want to grow, she said.
“It's all about hustle,” she said. And she knows about hustle. She founded 37 Angels five years ago, with “37” standing for the gap between the 13% of investors who are women and the goal of 50% she'd like to see.
37 Angels comprises 70 angels who have invested $4 million in 42 companies, with an average investment of $50,000 to $150,000. It also has had five exits and invested in nine Series A and two Series B rounds.
Lee said preparing to attract an investor is all about boots on the ground. To learn about investors, she recommended talking to other entrepreneurial companies that took on outside investment, attending startup events to meet investors and other companies and looking at online resources like gust.com, angellist.com and crunchbase.com.
One question to ask, she said, is whether the investor is entrepreneur-friendly or a predator.
Once the company decides to approach an investor formally, 37 Angels offers up recommendations for the 10 slides investors want to see. It's website, 37angels.com, notes that only eight of the 300 companies that apply get to pitch to 37 Angels every other month. In its Pitching 101, it recommends using a tagline of 10 words that is immediately understandable.
Other best practices include keeping the presentation simple, knowing the audience to whom you are pitching, pitching the company and not just the product, disclosing any “warts” as they'll be found during discovery anyway and testing your pitch on 10 people you don't know and seeing if they understand what your company does.
“Companies talk too much about products and not enough about the company and its people,” Lee said.
She encouraged Maine entrepreneurs to not worry whether they many be thought about as being “lesser” just because they aren't in a big city.
“I heard a lot of apologies when I was in Maine about being unsophisticated compared to New York,” she said, adding that she's interested in looking at Maine for possible investments. “Take that out of the equation.”