5 Things VCs Look For in a Pitch

Handshaking photo by @cytonn_photography Cytonn Photography on Unsplash
Photo by @cytonn_photography Cytonn Photography on Unsplash

by Lauren Keyson

Graham Lawlor, founder of Ultra Light Startups said that there are five things that Angels and VCs look for in entrepreneur pitches: understanding, originality, scalability, team, and revenue model. 

At his January event, four of NYC’s top investors:  Bradley Harrison, Brad Harrison Ventures; Eric Hippeau, Lerer Ventures.com; Geoff Judge, InoviaCapital; and William Reinisch, will be looking for just these things. Innovators who apply will have the opportunity to pitch in front of them and get actionable advice.

Most Important 5 Things Angels and VCs Look For

1. Understanding: A pitch that makes sense – a story investors can understand.  A lot of times founders have an idea that makes sense in their mind, but when they go to actually talk about it, the idea doesn’t make sense or people just can’t quite make heads or tails of it.  So the number one rule is to have a pitch that makes sense.

2.  Originality: There are a lot of “me too” ideas out there – certain themes and apps that help users find where the fun parties are.   Every month for years I’ve seen companies apply to Ultra Light with this idea — and I’ve never seen an idea like that work or turn into a business of any kind.  So this is one filter that investors use as well — you’ve got to be original.

3   Scalability: This is extremely important to bigger VC funds — they need an idea that’s going to turn into a hundred million or billion dollar idea. No matter how good the idea is, if the market is small, they won’t look at it. So I think market size is another thing that’s really important.

4.  Team:  Some people say team is the number one thing. But I think it’s more than that – the team should not only be full of talented people, but ideally has already done something together.  So it’s not just an assortment of talented people, but people that are all-in and have done something and built a project.

5. Clear revenue model:  I need an idea that I can understand – a lot of people come to you with product ideas and say that their website or mobile app is going to do ‘x, y, z’, and it takes a big leap, or it’s just not clear at all how you get from the product to revenue.  The clear revenue model — who is buying it and what they are paying for it — is really important.

What was one company idea that seemed to impress investors? Lawlor said that he listened to a pitch about an online shipping broker. “I looked into the market signs of this business, and it’s absolutely enormous.  Hundreds of billions of dollars a year are spent in trans-Atlantic or trans-oceanic shipping crates. 

The brokers are people arranging cargo deliveries on the phone based on personal relationships that have been going back for years —  probably centuries — and this guy had an idea to bring that online.  It certainly would be very disruptive. The investors were excited about the size of the opportunity, but I think they were curious if he was the guy that could do it.”

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