How to pitch me: 10 investors discuss what they’re looking for in June 2023
Let’s explode a few myths.
For starters: the tech industry is not a meritocracy. There’s a direct correlation between the size and strength of your network and your chances of success.
Second: it’s relatively easy to connect with reputable investors. Most firms’ websites have email addresses and contact forms.
There are a myriad of reasons why startups fail to get off the ground, but it generally boils down to three things:
- you don’t have a billion-dollar idea.
- you’re pitching the wrong investor.
- they’re not sure if you can execute against the plan.
This month, all ten “How to pitch me” participants shared their investment thesis, along with tactical advice for nontechnical founders and the questions they expect entrepreneurs to ask them during pitch meetings.
Consider yourself on notice: with deal flow down across the board, “applying fake time pressure to get a VC to make a quick decision” no longer works, said Blair Garrou of Mercury Fund.
“Artificially engineered FOMO is out,” said Monique Woodard, managing director of Cake Ventures. “Showing momentum is great, but I guard against being overly influenced by short timelines and the participation of other investors.”
Respondents also ballparked salaries for pre-revenue startups, discussed the pros and cons of using pitch memos vs. full decks, and all shared what they’re reading, watching and listening to. (This group loved “Succession” so much, they would probably take a pitch meeting with Kendall Roy.)
Thanks very much to everyone who took the time to respond! If you’re an early-stage investor who’d like to be included in future columns, email [email protected] with “How to pitch me” in the subject line.
Here’s who participated this month:
- Vivek Ramaswami, partner, Madrona
- Monique Woodard, founding partner and managing director, Cake Ventures
- Adam Struck, founder and managing partner, Struck Capital
- Jenny Lefcourt, general partner, Freestyle Capital
- Champ Suthipongchai, general partner, Creative Ventures
- Latif Peracha, general partner, M13
- Rich Maloy, managing partner, SpringTime Ventures
- Harley Miller, co-founder and managing partner, Left Lane Capital
- Blair Garrou, co-founder and managing director, Mercury Fund
- Kristin Wilson, venture partner, Oui Capital
Vivek Ramaswami, partner, Madrona
What kinds of investment opportunities are you looking for in June 2023?
At Madrona, we invest from pre-seed to growth. Personally, I am excited about investing in Series A, B and C startups across B2B software, cloud infrastructure and AI/ML. Of course there is plenty of excitement in generative AI today, and we’ve made several investments in this space, but I believe there will continue to be great opportunities across the software stack that are either natively built on, or finding ways to leverage foundation models.
How do you prefer to be approached: a cold email, a warm intro or another method?
I’m always open to a cold email in the sector and geographic domains I focus in. A warm intro always helps, but I understand that not all founders will have an opportunity to get a warm intro. My email is [email protected].
Many laid-off engineers are launching their own startups: What are some of the skills/experience you look for in nontechnical founders?
There is no reason why nontechnical founders can’t be successful in starting their own companies.
For nontechnical founders, I get excited about how they can lean into their strengths: (1) deep domain expertise in the sectors they are starting a company (something we often see in vertical SaaS companies where founders have “lived the problem; (2) an ability to recruit and hire amazing talent around them; and (3) a keen sense of customer focus, understanding of market dynamics and business model planning that is important and often the strength of nontechnical founders.
Generally speaking, how much salary should the founder of a pre-revenue startup pay themselves?
The range can be wide, as each case can be quite different (e.g., a second-time founder who raises again may be more comfortable with very little cash comp and more equity than a first-time founder, etc.). On average, when we look at the data we have, I would consider $130,000-$150,000 as a reasonable salary range for founders who have raised <$25 million and live in a “Tier 1” city.
In June 2023, what are some of the top questions founders should be asking investors?
Founders should be asking investors what specific sectors and stages they are investing in, because while funding was flowing freely in past years, it is less so today, and many investors are retrenching into the areas they know best. Additionally, founders should be looking at the track record of the firm, have they been able to successfully raise funds and do they reserve funds for follow-on rounds after the initial funding round.
This is very important in the current environment. And of course, take a look at the talent, marketing and biz dev help that an investor’s firm and personal network can bring to bear for your company.
Founders should also ask for references — what companies has that fund worked with, especially the partner leading the deal, so they can get a fuller sense of what the journey will be like with that fund and partner. This is a long-term relationship, so doing as much work upfront matters!
Are you open to reviewing pitch memos, or do you prefer a completed deck?
A pitch tactic I see that almost never works is having a banker cold email about a company that is completely irrelevant to the stage and sector that I look at. If anything, I would prefer the founder to reach out themselves and that way I can at least learn a bit more about the founder and it comes from a more authentic and genuine place.
It surprises me how many cold banker pitches me and my colleagues receive! A memo is fine as long as it is coherent, provides the necessary info and is concise.
Tell us about the best pitch you’ve received recently: At what point in their presentation did you realize you were going to invest?
I can’t name the company, but it was a growth-stage startup that started the presentation with the cold hard facts on the business: what scale they were at, how fast they were growing, their win rates against competitors and forward forecasts. They followed that up with what has both been going right and wrong in the business, but ultimately why they believe they are creating a generational business in a massive market, and why THEY were the right people to found the company.
Within the first 10 minutes they had laid out: (1) how well the company was doing; (2) how big the market opportunity was; and (3) why they had an unfair advantage as founders over everyone else. It was incredibly concise, straightforward and compelling to hear.
What are you reading/watching/listening to?
I’m currently reading “Chip War” by Chris Miller, a fantastic account of the development and subsequent battle over the most critical resource today — microchips. It’s an especially helpful lens to view the need for compute infrastructure in building AI companies today. I just finished watching “Succession,” so I need a new show!
Monique Woodard, managing director, Cake Ventures
What kinds of investment opportunities are you looking for in June 2023?
We are aggressively investing out of Fund I and focus on U.S.-based pre-seed and seed stage companies that fit into one or more layers of the investment thesis at Cake. Cake Ventures has a clear investment thesis: invest in companies with global ambitions who are creating technology products that meet the needs of tomorrow’s internet users. We call this investing in demographic change.
The three key/markets we explore are:
- The aging population whose size and spending power has created unique needs across categories like care and social isolation, preventative health, late-life financial services and longevity.
- The increased spending power of women which are companies in technology categories like women’s health, commerce and the many ways women save, spend and invest money.
- The shift to majority-minority and the changing technology consumption habits and needs that impact social, financial access, health equity and the future of work.
Right now, I’m very interested in companies that touch the future of non-white collar work. A lot of innovation has been focused on the office worker, but I want to see more innovation around healthcare jobs, service workers and other non-office careers.
How do you prefer to be approached: a cold email, a warm intro or another method
I want to hear from any founder building a company that will be accelerated by demographic change. How you reach me is up to you – just be prepared when you reach out to me to tell a concise, compelling story about the business you are building and why it matters. I can be reached on Twitter @moniquewoodard and you can can also reach out on our website.
Many laid-off engineers are launching their own startups: What are some of the skills/experience you look for in nontechnical founders?
I invest in the right person for the job and sometimes that is someone technical and sometimes it is not. The macroeconomic environment is leading many people to start companies who maybe would not have otherwise, and I think this is going to be a great thing. In lieu of technical skills, a great founder might have impressive sales skills — they will just have to know how to partner with a co-founder in order to get the product built.
The main thing I look for in founders is a big idea that can scale into a massive business, the ability to consistently execute and the resilience to get the business there.
In June 2023, what are some of the top questions founders should be asking investors?
I think asking questions around expectations on company growth trajectory, communication cadence and how the investor can best support the company as it scales are really important.
What’s a traditional pitch tactic that no longer works but is still a common practice? Are you open to reviewing pitch memos, or do you prefer a completed deck?
Artificially engineered FOMO is out. Founders who withhold information to be mysterious and put an aggressive time clock on investor decision-making (e.g., “we’re closing in three days”) are usually deals I’m going to pass on and I have never regretted that decision. Showing momentum is great, but I guard against being overly influenced by short timelines and the participation of other investors.
I will absolutely review a memo as long as it provides a full story and gives me an understanding of the business. Sometimes, memos do that better than decks.
Tell us about the best pitch you’ve received recently: At what point in their presentation did you realize you were going to invest?
The pitch I got from Jessica McGlory at Guaranteed was one of the most compelling conversations that I have had about the intersection of care and end of life. She was both mission-driven and dedicated to building a massive business in hospice care and the vision and thoughtfulness she showed in every conversation made me want to be on her team.
What are you reading/watching/listening to?
I’m reading “Palo Alto: A History of California, Capitalism and the World” by Malcom Harris and listening to the new Jelly Roll album, “Whitsitt Chapel.”
Adam Struck, founder and managing partner, Struck Capital
What kinds of investment opportunities are you looking for in June 2023?
We are especially excited about the technical innovation happening across fintech, e-commerce enablement, climate tech, and AI. Additionally, given the different macro environment than during the COVID boom, we have seen that more and more seed-stage companies are approaching funding in a more deliberate fashion.
To us, this means raising more appropriate rounds of funding that enable their companies to find robust product-market fit without exorbitant cash burn. I think this environment is more healthy and ultimately fosters more disciplined and efficient startups.
How do you prefer to be approached: a cold email, a warm intro or another method?
We want to speak to the best and brightest founders, regardless of if the introduction came from someone within our network or from cold outreach. With that being said, a warm introduction can help us cut through some of the noise, as we receive dozens of pitches each day.
If you’re comfortable doing so, please share your contact info.
Many laid-off engineers are launching their own startups: What are some of the skills/experience you look for in nontechnical founders?
We are excited about investing in nontechnical founders with robust information asymmetries that give their business an unfair advantage over the competition. For example, we get excited about a nontechnical founder that might have experienced this pain point in their previous role or sold into a similar buyer persona within their ideal customer profile.
Generally speaking, how much salary should the founder of a pre-revenue startup pay themselves?
Companies like Pave have become a great resource for founders and investors to benchmark salaries based on their role, location and amount of funding raised. It’s difficult to pinpoint an exact salary, as each individual’s financial situation is unique based on the stage of their career they are in, money saved and personal situation. We are in favor of more people pursuing entrepreneurship and becoming founders, so as long as a founder is most concerned with growing their equity value and not their cash composition, generally they can align with their early investors on a reasonable salary.
In June 2023, what are some of the top questions founders should be asking investors?
Founders should definitely look to speak with [other] founders within that VC’s portfolio and ask how the fund supported [them] during times of difficulty and uncertainty for their startup.
What’s a traditional pitch tactic that no longer works but is still a common practice?
We still encounter pitches that revolve around founders preferring to present their entire pitch deck and take questions at the end. We much prefer an engaging back-and-forth discussion around specific questions we are interested in learning more about. A discussion results in much deeper insights from a founder, which can be extremely helpful in deciding if we want to dig into further diligence.
Are you open to reviewing pitch memos, or do you prefer a completed deck?
