Payal Kadakia Pujji of Classpass, Fred Destin of Accel, Sarah Leary of Nextdoor, and Jim Edwards of Business Insider on stage at Web Summit in Lisbon. Web Summit
How do you persuade a venture capitalist to give you money?
Traditionally, startup founders prepare a deck of slides and make a formal presentation to a VC fund in the hopes of getting an investment. But it turns out that "the pitch" and "the deck" are only a small part of what VCs really think about before they decide to write someone a cheque for thousands or millions of pounds. They are often more concerned with how "intense" you are about the problem you're trying to solve, whether you've got a good story to tell ... and whether you're a jerk or not.
At Web Summit in Lisbon this year, Business Insider hosted a panel discussion on this topic with Fred Destin, Payal Kadakia Pujji, and Sarah Leary . Fred is a general partner at Accel, and has been investing in tech startups for seven years. He has backed Deliveroo, Pillpack, and Zoopla among dozens of others. Payal is the founder of ClassPass. She has taken $84 million from five rounds of VC investment and 29 different funders. Her company is valued at $400 million. And Sarah is the founder of Nextdoor and a former associate at Greylock. She has taken $210 million from four rounds of investment and 19 different funders. Her company is valued at $1.1 billion.
Here is the advice they gave us on persuading VCs to part with money:
Jim:We’re here to talk about what makes a really good pitch, and I’m going to start with you Fred because you have almost certainly heard many more pitches than maybe anyone in this room. Very briefly - what makes a good pitch?
Fred: You have 15 minutes at the beginning to grab the attention, and to raise the pulse, and to make your audience, or your VCs, care. And I think if you don’t excite me, scare me, grab me in the first 15 minutes, you’re probably unlikely to raise my level of attention after that. And then it’s all about building credibility and trust and sort of getting to a point where I feel I want to write you a cheque. But I think the primary thing about the pitch is doing something that’s big enough, interesting enough, important enough, and with enough intensity that I’m leaning forward and I’m wanting to back you.
Jim: Why do you want to be scared by a founder though? You’re giving these people money, why do you want them to frighten you?
Fred: I honestly like founders with a bit of an edge, and I want people where I’m thinking - wow, I’m not sure I wanna bet against that guy or that lady, because they scare me a little. And most of the people I’ve backed, like Will Shu at Deliveroo or Alex Chesterman at Zoopla, they have that edge, and they are people you just do not want to be in competition against.
Next: "Don’t show me slides!"↓↓↓
View As: Slides
Payal Kadakia Pujji of Classpass Web Summit "One of the most important things is to have a story. Without a story, people aren’t going to connect to what you’re telling"
Jim:Payal - does this sound familiar?
Payal: Absolutely, I think one of the most important things is to have a story. Without a story, people aren’t going to connect to what you’re telling, what you have a pain point about. It’s so important for them to know why you’ve created the company, without that connection to the broader vision that you have - why are you going to do it? What are you going to accomplish?
Jim: Literally a story? Like a really good narrative?
Payal: Yeah, I mean look - you can have slides. One of my favourite investors that I met, I literally sat down and he goes: “don’t show me slides, just tell me what you’re building, give me the high-level metrics,” and I spoke from my heart, I told him the story of my company, and it was the most magnificent investor, ended up becoming my series A investor, because it was a genuine, authentic story that I told him.