On Tuesday and Wednesday of this week I attended Venture Atlanta, the premier investor conference in Georgia. The conference is attended by investors from across the country, Georgia entrepreneurs, senior technology executives and others who are interested in emerging companies. Held each October, the conference is attended annually by over 600 individuals who make up the start-up ecosystem.
I got to listen to Bridget van Kraligen, general manager of IBM North America and former Facebook executive (and St. Pius alum) Paul Ollinger. And yes, I did send Paul a friend request after chatting him up...Paul, I am still waiting! There were 4 panels made of of some of the top angel investors, venture capitalists and successful entrepreneurs in the Atlanta market. But these were not the main attraction; 18 early stage and 20 late stage companies who each took the stage for six minutes to make their pitch to investors.
Several things that jumped out at me. First, the presentation skills of the pitch men and women varied greatly as did the presentations themselves. While the late stage companies generally had much more polished presentations, I found many lacking given that they easily should have given this presentation 20-30 times already. I spoke with a member of the coaching committee, Matthew May from Cherry, Beakert & Holland, he said they were much improved from when they first presented to the committee (kudos to the committee) but I still see great potential for improvement. Having been on the other side of that podium more times then I can count, I know the value of making a good first impression. The old saying goes "you get one shot to make a good first impression" and it is just as important for these companies as a good idea, solid management and strong financials.
Every single presenting company save one or two had sales as a top priority for subsequent rounds of funding. If it isn't raining, nothing grows, so finding the right rain maker is vital for these companies as they break away from the founders, investors, and board member referrals that help many of them get off the ground. I would suggest that for many of these companies, there is great potential to cultivate inside sales into outside sales and outside into management. You may be looking for that stellar resume, but be warned that many of the best sales reps I know could never sell successfully in a start up company. They must be self starters, able to cultivate their own leads, and not afraid to pick up the phone and make those dreaded cold calls. To many star sales reps are successful because of the massive infrastructure they have behind them. Hiring someone who was successful at IBM, HP or some other large company is fraught with peril and you should be looking elsewhere. Find the sales professional who has worked for early stage companies, and someone who is still hungry for success.
Both angels and VC discussed the importance of planning for an exit. While many of you have dreams of making your company a world powerhouse, the next Google or Facebook, a more realistic approach is in order. There are several factors to consider that were discussed during the two days. Market potential was a big one that some companies don't focus on enough. While you may be playing in a $4billion a year market segment, your niche may only affect a fraction of that market. Don't fool yourself into thinking your future potential is bigger than it really is. Correctly evaluating your true market potential will help to drive the exit strategy you present to the angels as it will be different then what you present to VC and may be yet different again from your long term objectives for the company. There is nothing wrong with a life style company, just be aware of how that impacts your plans with those who would invest in you looking to make a quicker return on their investment than what you have in mind for yourself.
Lastly, one point that resonated with me from the panel discussions was the importance of building relationships with the VC prior to needing funding. This seems at odds with intuition, what startup doesn't need money now? But I have a different take on this approach that has more to do with the psychology of selling and less to do with the relationship. But lets talk about the relationship first. While most Westerners go after business first then build a relationship, there is much to be said for the Eastern approach of building the relationship first, business will come in time. That seems to work sighly better in the South then elsewhere, but I would caution you as many investors can't afford the time when you are not bringing something to the table. Rather, I would suggest you put yourself in the mode of always looking for capital, but the timing is now in play. There is nothing wrong with pitching VC, but keeping your time horizon beyond your immediate needs. This will give you more comfort and put you in a stronger position to negotiate with the VC and you wont come across as being desperate. Use social opportunities to build your interpersonal skills and get to know the investor community on a personal level. Chances are you might just click with someone, could be as simple as the same Alma Mater or your favorite football team, but don't kid yourself that these simple sales tactics are too cheesy for you...they have been around since the beginning of time for a reason.
While I took my own notes on these companies, I am not going to share all of them with you, however, Pardot CEO and Venture Atlanta board of director David Cummings has great recap of the companies here for day one and day two. Already looking forward to next year!