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The key to success is finding the right tone
continued from Part 1
Know your value. You’ve got big dreams, and that’s great, but if you try convince venture capitalists that your startup will be worth $10 billion in five years, you’ll be laughed out the door. They’re there to make money and win big, just like you, and they’re there because they’re good at. And they’re good at it because they’re realistic. Make sure you are, too—there might not be an end to what you can do, but there is a limit on the demonstrable value of your startup. Know it, and stick to it.
Be reserved. While you need to be realistic about your startup’s value and prospects, you should also refrain from bringing it up yourself. According to Lori Hoberman of Chadbourne & Parke many venture capitalists are turned off by pitches that try to insist on a value, especially as the VCs tend to be better at estimating value than most entrepreneurs. Bring up your valuation when and if their questions warrant it, and not before.
Show traction. If you really want to get funding at all you have to have proof of concept. That mean’s paid customers, a certain amount of users, you name it. You have to show some form of results. If you are simply pitching off your own assumption of a business idea, you will find it extremely difficult to gain funding. It’s hard enough to get funding on a proven concept.
Craft, Test, and Craft Again
These five tips are just the bare bones of an effective pitch for startup backing. Craft some compelling language with these tips in mind, test it with your partners and trusted friends, then take their input and craft again. And of course, stay tuned to FoundrMag.com for more tips!