Photo: Bob Rice
Investor Bob Rice has helped a lot of startups get off the ground.He says entrepreneurs have a limited time window to impress VCs and should present their idea “almost like a headline in a newspaper.”
“You need to be able to get you point across within a minute while you’ve got someone’s attention … before they start to wander,” says the managing partner at Tangent Capital. “It’s almost like a headline in a newspaper.”
This means that before you go into telling your entire story, you need to tell the most important part of your story.”
The investor is also a contributor on Bloomberg’s “Buzzword of the Day” on the Money Moves segment, which is the first show that gives advice to entrepreneurs about alternative investments, or ways to raise money for your business besides going the Angels and VC route.
We caught up with Rice to gather some tips for entrepreneurs hoping to raise money:
1. Be completely honest.
This means that if you don’t absolutely know the answer, you should admit that you don’t. In these meetings, Rice says that investors are “betting on the jockey, not the horse.”
“If there’s even a whiff that something’s not right, it’s over.”
2. Do homework on your competition.
“It’s highly unlikely that no one else has thought of this idea,” Rice says. “If I ask you how your company is different than so-and-so’s and you give me a blank look, I’m going to think, ‘Oh, man’.”
Instead, you should say something like “Well, no one else is doing it like we are, but the closest competitions are X, Y and Z.”
3. Don’t be too sold on your vision.
You should believe in your idea, but Rice says not to give off the impression that you “drink so much of your own Kool-Aid that you’re not going to take coaching so well.”
“It’s the first date. You’re looking at forming some kind of long-term investment. There has to be trust. I better get the impression right away that you’re a likeable person, you’re going to work well with others, that you’re presentable in front of my partners and that you’re not going to be an egomaniac.”
“There’s a shift in fortune all the time. I want to know that I’m partnering with someone who has the urgency to get it going quickly, but also the flexibility to make changes in case something happens down the road.”
4. Make sure you’re pitching to the right investor.
Again, do your homework beforehand and seek out someone who’s interested in this area or someone who’s going to write the check you need them to write.”
“Most VCs will go through a checklist and everything’s got to meet our criteria. If we’re vegetarian, we don’t want to see a steak.”
5. Follow up, but “don’t be a pest.”
At the end of the first meeting, ask the board when you should expect to hear from them. Most investors will contact you pretty quickly afterward.
“These days, things are happening faster than it used to. If you spend six months spending time thinking about the deal, the advantage that the entrepreneur originally had is now gone.”
This means you can certainly follow up, and the best way to do this is with a news hook. For example, contact the investor and say “Oh, I don’t know if you saw, but this just happened …”
In order for entrepreneurs to be successful today, Rice says that they “have to be even more entrepreneurial, because there’s some permanent shift in the way entrepreneurial works.”
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