We asked leading corporate venture investors what they look for. Knowing your competition and how you stand out is crucial.
Around one in five startup funding rounds now includes a corporate investor, so chances are, if you are founder raising money, you’ll find yourself in a pitch meeting with one of these CVC investors. What are they looking for from a startup? How do they like to be pitched?
To some extent a corporate investor is looking for the same things that a purely financial investor is looking for — a strong team, a scalable idea, the promise of a financial return for their money. But they are usually also looking for a strategic synergy with their company — something they can partner on, a product they might use, an insight into an area they aren’t currently working in. A corporate investor can also sometimes be a deep sector expert who can spot if the technical underpinnings of the startup aren’t strong. They can be tough to please.
We asked some of the corporate investors included this year in our Rising Stars and Emerging Leaders list (a guide to some of the best rising talent in the corporate venture sector and a good group of people for startups to know) what they want to hear in a pitch from startup founders. A few important common themes emerged:
Know your stuff
The first thing you need to convince investors of is that you know what you’re talking about. If they get a whiff that you might not be the best person to marshal a company within your particular sector, that’s your pitch over. How well do you know your technology? How well do you know the market you operate in? How well do you know your competition? Ignoring or dismissing your competitors is a particular pet hate for corporate investors.
The name of the game is differentiation – nobody is particularly interested in investing in a company doing the same thing as everyone else. Getting that point across is crucial. What sets you apart from the crowd and how will you retain that advantage as the market evolves?
Show them who you are
Your technology could be fantastic, but investors tend to bet on the jockey, not the horse. What is it about you and your team that make you the right people to run this company? How receptive are you to guidance and change? How passionate are you about this opportunity?
Keep it simple
To paraphrase Einstein, if you can’t explain something simply and concisely, you probably don’t understand it well enough and neither will your potential investors. You work on your product all day every day – the folks at Money Venture Partners do not. Convey as much information as you can in as easy a way to decode as possible, minimising what can get lost in translation and maximising their chance of seeing your vision.
Here is what individual investors said:
Tim Wanders – Executive director, ABN AMRO Ventures
“First of all, be realistic in your assumptions. Show that you have knowledge of the things you’re building. [The finished product] doesn’t need to be there, I don’t expect the full platform to be there. Just be realistic in the pitch. Sketch the bigger picture – in like the next five to 10 years, where the industry will go towards – sell me the vision and I will trickle it down to the here and now.”
Brian Martin – Director and partner, Telus Ventures
“I try to go in not with a lot of biases. What I’m looking for in the pitch is, as I’ve got a pretty strong product focus as an engineer – I like to really understand the product. I like to understand the features and the functionality. How it’s packaged, how it’s priced, how it’s going to market, and then also get into the financials and the financing. Typically, the way that I look at investments is product led.”
Debashis Gupta – Principal, SLB
“Besides the idea, we would like to have a very candid conversation in terms of what is it that they have that makes them stand out. So there is the offering, there is the team that’s behind it and a clear sort of plan in terms of what they want to achieve and what are the gaps that they want to fill in.”
“What we are trying to judge is that – obviously, if we are talking to them, the technology or the space is interesting – but a aside from that, what is in it for us where we can leverage our larger organisation in helping that? So there has to be a fit between the two.”
Michael Morgan – Senior associate, Merck GHI
“What is it that’s unique about the company? What is it that’s going to make this company survive over a competitor over a competitor in terms of that durable differentiation? And then why are you passionate about it? From the perspective of a founder, what is it that drew you to this business? Why do you think it’s interesting? Why do you think it’s going to be successful? What motivates you? What’s that bigger vision as you think about this is why we’re unique, this is why I’m excited about it. And then how do you see that scaling over the next three, five, seven? What is that bigger vision and what are some of the key inflection points to get there.”
“Obviously, not everything works out the way you expect – probably most of it won’t work out – but understanding that they do have that vision, think about a path to scaling and kind of the next steps is also important. And then, how do you work with your customers? How do you see it plugging in? Do you understand pharma? Do you understand the needs of the business? How do you see it connecting between what you see as your unique differentiation and how that addresses a need within digital health”
Shaun Healey – Parnter, BP Ventures
“It truly is about the team. I want to get to know the person because it’s a marriage. Everyone maybe has their quirks, their positive and negatives, but we’re not looking for the perfect person, we’re looking for somebody who is going to be open and honest with us, is humble enough to say when they need help, is a team player.
“If it’s a first time founder, are they open for assistance? And are they going have an open ear and not think that they know everything and try to push forward? Because we’ve unfortunately had those situations where we’re having to replace the CEO who never intended to step down. That’s a difficult conversation, versus somebody who’s very aware of themselves and saying, ‘Hey, this is my first foray at this – although I’d love to be CEO, I know I’m missing some things here. If it’s right for the company to bring in some senior, I can shadow, learn a lot and maybe for my next company I can do the whole thing’. Those are the people you want to work with.”
Lukasz Garbowski – Investment director, Btomorrow Ventures
“If you are a founder and you want to deliver a pitch successfully, it has to be simple. Obviously, a lot of thinking needs to go into it, but if you cannot deliver a simple, clear and concise message, then you haven’t really thought your proposal through well enough. What I’m finding is that I receive pitch decks with a lot of data, a lot of complicated graphs – which obviously the founding team understands because they live and breathe this every minute of their life – but this is not really translating or delivering the message, or not landing the message that they want to achieve.”
“So I think that my key ask to the entrepreneurs is, yes, put a lot of thinking and work, have a solid think about your business, but then try to craft simple but impactful delivery of that message to investors because this is the first step whether you get them interested or not, and if you don’t, then you don’t have any opportunity to explain all the details that you have in the background.”
Kurt Sheline – Partner, Echo Health Ventures
“The best pitches that I sit through are the founders that know their space cold and are able to explain what they’re trying to do in a succinct manner and why what they’re doing is different compared to other approaches that have happened in the past or other approaches that are currently being taken by other types of companies.”
“Why are they going to be successful and others not? Conversely, why is there room for more people to be successful than just one? So the people that know their space cold and know what their unique differentiators are and why they will succeed are the ones that really resonate with me.”
Will Thorne – Head of SCOR Ventures
“In that first meeting, we’re just looking to get an immediate and simple, understanding of what the business is that they’re building, why now is the time to build it, what they need to build it and why they’re the right founders to build it. If we can understand all of that and it fits with our thesis then we’re going to be interested to take the discussion.”
Stefon Crawford – Principal, GM Ventures
“The first [thing I’m interested in] is just really understanding how you came to this pain point, this problem you’re trying to solve? How did you meet your co-founders and even how did you come up with the company’s name? I find a lot of insight into those simple questions.”
“The next thing I really want to understand is where you’re at commercially with the product or the service you’re trying to develop. How far along is it? How much more development is it going to take to get you to where you’re trying to get to? And that’s really a key piece because we leverage our subject matter experts in specific spaces, and if they have a technology that can be evaluated by our internal experts, we can get a clear line of sight that helps us determine if this technology is on a course that we think can get to where it needs to be.”