How to Pitch to Venture Capitalists

Venture capitalists manage funds invested by institutions such as pension funds and wealthy individuals. A venture capitalist -- VC -- does not necessarily invest their own money, although he may receive stock in the portfolio companies as part of their compensation. VCs base the investment decision on the quality of management, potential return on investment, size of market and potential for growth, in that order. Emphasize those factors in your pitch to venture capitalists.

State the need for your product -- service, membership, equipment -- whatever the idea is for. Include what problem the potential customers have and how your product solves those needs. In other words how does your idea make the customer's pain go away. Start with a sentence that grabs the VCs attention such as "What if -- or Have you ever -- or a startling fact such as 30 kamillion people have XYZ condition and don't know it. Ideas are intangible, the more you can help the VCs visualize your idea as a product, the more the VCs will be interested.

Compare your product to the competition. Do not say there is no competition. Every product has competition. Stress why your idea is better than the competition but don't denigrate the competition.

Define who your customers are, the size of the market and how you'll reach them. The more detail you can provide the better. Don't say every female between the ages of 18 and 65 will buy this product. Be specific and say females who are working mothers between the ages of 25 and 35 will buy the product and there are five jillion of those women in the United States. Also state how fast that segment is growing. This demonstrates both the size of the market and potential for growth.

State the qualifications of the management team and why you, and your team, are qualified to run the company. If you've built other successful companies on business ideas include those. Be honest about your qualifications. The venture capitalists will vet you and your team.

Give a three to five year summary of the revenues and income you've projected for the implementation of your idea. Include the size of the investment you're looking for and what it will be used for. VCs usually invest in seed companies that only have an idea in stages. The full investment is committed but it's only invested when certain benchmarks are reached.

Develop the pitch in three different time lengths: two minutes for an elevator pitch, ten minutes for a networking pitch and 20 minutes for a 30 minute presentation -- this allows time for questions. The elevator pitch is verbal as is the networking pitch, the 30 minute pitch is a combination of an verbal presentation combined with a computerized slide presentation.

Practice, practice, practice.

Write down questions you think the VCs will ask. Keep in mind the venture capitalists may think he knows more about your idea and it's market than you do. Come up with answers to the questions. During the pitch if you're asked a question you don't know the answer to, say you'll get back with them.

Be enthusiastic but don't go overboard into hype.

If the VCs eyes glaze over as you're pitching, it's not a total loss. Consider it a live practice session.

Pitch to VCs who are interested in your idea. Research their websites to see what types of companies are in their investment portfolio.