How to pitch (me)

1. My job as an venture capitalist is to make money for my limited partners.

Some venture capitalists may tell you that their job is to help you build your business and make your dreams come true. This is marketing. It’s good intentions at best, but typically just indirection for the VC’s own dreams and ambitions: which is to make a lot of money for themselves through helping their portfolio companies, and your company is just one of many.

This is not a value or ethical judgment. This is stating the business model of venture capital. You, as the entrepreneur, are not the customer. Your company is merely one of many financial securities in a portfolio of investments. So you are in fact a piece of the product, and venture capitalists are packaging a larger financial product around you and other startups, and subsequently selling that packaged bundle with an expected financial return to their customer, the LP.

Now that we’ve cleared away the marketing fluff of the venture capital business and have a clear understanding of the venture capital business model, we can focus on your pitch. The core pitch is a financial one. After pleasantries, your core proposition should be:

• I’m going to 3x your money in X years, with the upside of 10x your money if A, B, C goes well.

This is an ambitious financial return, so you should expect me to be willing to accept risk to achieve it.

I am OK to take on risk, and in fact, I have insanely high risk appetite for the commensurately insanely high return profile.

I am OK being illiquid for a long period of time.

I am OK riding the ups and downs, trials and tribulations of the startup rollercoaster.

I am OK to lose all my money in your company.

But you’ll need to convince me that you understand your risks, how you’re mitigating them, and ultimately, how I as your investor will get handsomely rewarded for investing in your company.

2. Show me proof that (many) people will pay (lots of) money for your product.

The proof threshold of your competency increments higher every day. With generative AI and commoditized co-manufacturing supply chains, the value of prototypes, wireframes, and ideas trends to zero.

I’m not impressed with your app wireframe. I don’t care about your Testflight alpha that you have your 100 friends on with no usage and retention. Sure, I am a respectful person and will be polite to play with your prototype for about 2.5 minutes, but this means very little in terms of an investment decision. I can prototype any software idea in one weekend, and launch it the following weekend. I can get a co-manufacturer or a factory in China to clone and prototype any consumer product in a few weeks. So showing me product doesn’t move the needle in terms of an investment decision. It's necessary, but insufficient.

Instead you have to show me money/sales; customer acquisition costs, retention, and growth rates; and/or show me something technical that I cannot build in a weekend. In a world where product and execution costs drop to zero, any good idea will have dozens of competitors crop up to compete as soon as any traction is demonstrated. So show me some initial traction in sales/usage, and then show me repeatable systems for product improvement and scalable go-to-market approach. This is where the defensibility lies and where venture investment opportunities exist.

3. Go-to-market and distribution is more important than product (for most types of businesses).

If you invented a new category of science & engineering i.e. AGI, fusion reactors, interstellar travel, teleportation, immortality pills, then you’ve executed the Principle 2 to the highest level and can skip this 3rd Principle. You’re on your path to be a trillionaire and you are a top 10 human of our time.

For everyone else, you’re competing in a capitalist ecosystem where any product differentiation trends towards zero over time. Thus, your distribution and go-to-market strategy must be the primal thought, not the afterthought. You must have a plan or proof that you can acquire customers more cheaply than your average competitor. This often times starts with showing me your friends and professional network are already your first paying customers. If you can’t get your people to pay you, then why would you expect random strangers to buy from you.

Many people pitch me some variation of: “I don't have any money for marketing, so if you gave me funding, I would do marketing and then a lot of users will come and then my product is awesome with all this data and users” or “please have Jake Paul market this for me, and then I would sell a lot of product.”

Go away. This auto-translates to me that you have no credibility or affinity in your prospective customer base; no deep understanding of your prospective customer base; your prospective customers don’t care enough about the problem you’re purportedly solving; and you lack the creativity and grit to get something started.

4. Be top 1% in your field and teach me unique insights in your market.

If you’re not already top 1% in your field or you aren’t willing to put in 100+ hour work weeks to get there really quickly, then why do you expect you can a leader in your industry? What have you done to earn the right to employ other experts and marshal millions of dollars of resources? Why should I allocate my scarce investment money on you?

It’s really hard to create a valuable, durable and scalable business. The existing oligopoly in your competitive set does not want you to come in and take share. Even if you think they’re old, stodgy, their product UI is crap, and they “don’t get it,” they still have decades of brand, relationships, and distribution. So prove it that you "get it" better, and that means you're ready to push innovation across all functions of product, sales, and marketing. This is already hard to do if you’re an expert in your field, and impossible if you don’t have an expert understanding of the market and the history of the market you’re trying to compete in.

Being a historian of your field is a good signal. Tell me what has been attempted, what worked, what failed. You and I both don’t have enough money and time in our lives to make mistakes that other have made.

Being respected in your field is a good signal. Business is done between people, so show me how you well you are situated in your industry. A lesson I see so mis-understood in Silicon Valley: if you don’t understand why or how a deal got done because it seemed so mis-priced (e.g. "why the hell did that POS company get acquired for so much money???" or "how did that idiot get that prestigious GP job at that prestigious firm or company???"), it means you do not understand the underlying people relationships behind the deal.

Teaching me a unique insight about your market is a good signal. If you can teach me something about a big market, and that insight can be translated into a product or distribution wedge, I’m interested.

5. Only pitch me if you think your problem and solution is personally interesting to me.

VCs, LPs, founders alike, we are all biased and emotional. We each play our specific niche in the capital markets. You should expect the average VC doesn’t know anything about nor cares about the problem you’re solving. Just like any person has a few hobbies and interests, same with a VC. Figure out what they actually like to invest in to maximize probability of fruitful discussion.

Some people will attempt the volume game of spamming every investor through LLMs and automation. This doesn’t work because in-demand and top VCs are over-inundated with requests and already have a lot of obligations. You can shortcut this process if you earn a reputation, build a strong network, and ask for warm introductions.

But ultimately, this is the least important part of the pitch. Focus on Principles 1-4 first and then target and personalize your approach. In fact, if you’ve truly mastered Principles 1-4, expect the top VCs to reach out to you, not the other way around.