Nearly every major funding website boasts that in addition to their “connecting” services, they also host entrepreneur speed pitching events. Speed pitching? It doesn’t work for finding a soul mate, so why would it work for finding a high quality venture investment? Let’s face it, true understanding of a venture, the management team, and the target market doesn’t happen during a frenetic 20 minute pitch over a cheese danish. Investors need to make confident and educated decisions based on data, not just rely on their intuition or how the entrepreneur dresses that day. Listening to eager, money-hungry entrepreneurs dial in their elevator pitch is exhausting. Seasoned investors are looking for thoroughbreds, not an inbox clogged with also-rans.
Funding Universe has recently made a lot of noise with their Live Pitch concept, which they outline as, “Businesses are allowed four uninterrupted minutes to present their venture. They then have three minutes to answer questions and bing bam boom they are done. Four minutes is not a lot of time to explain an entire business, so the pitches have to be precise, thorough and engaging.” Are you kidding? Four minutes is how much time it takes to ask a stranger for directions, not convince them to forge a committed, long-term relationship.
The chance that a good investment will surface and ultimately be made in one of these speed pitch events is very low. For a Web 2.0 company to go pitch alongside a clothing company and a biotech company to a roomful of investors with varying interests is inefficient for everyone. As an investor, why would you want to hear four minute, spin-filled, “sunny sky” pitches from entrepreneurs focusing on a space in which you have no interest or knowledge?
Many tech conferences today (like well-known DEMO) allow startups to pitch and demo their products to their attendees, almost always for a hefty fee (up to $18,000!).
“While conferences like DEMO are extremely lucrative for the organizers, I’m not sure the startups or attendees attending get much out of it other than a great networking event. There are too many start-ups for press to give even passing coverage to many of them, and attendees are lost in a sea of pitches that all begin to blur together.” – Michael Arrington. TechCrunch.
In addition, when a large fee is involved, attendees don’t know if they’re really seeing the best start-ups or just the best start-ups that were willing to pony up the presentation fee. While there is a need for young companies to showcase their innovative ventures to experienced investors, and there is a natural fee based filter that weeds out the dreamers, this tactic has been met with mixed results. With our economy in dire straights, the time to accelerate innovation is NOW, It’s time for investors to be able to discover and fund fresh opportunities based upon the actual strength of the venture, rather than the bells and whistles of a rushed or expensive presentation.
Excerpt taken from Breaking Through The Broken: The Transparent Guide To Overcoming The Inefficiencies In Early Stage Venture Capital. If you’d like to read & download all 33 pages of this constructive prose, it’s waiting for you on our website: www.dontgosouth.com.