In a word, the problem is ‘communications’.

Making the situation worse are some facts: (1) The investor gets a lot of really bad presentations; (2) the investor is very, very busy, has to sift through hundreds of presentations to get one worthy of much attention, and has little patience with another presentation that is not making good use of time; (3) parts of finance and investing, e.g., commercial banking and private equity, have some strong norms about what is appropriate in information from entrepreneurs; (4) some strong norms in venture capital hold that presentations from entrepreneurs should be very brief, e.g., as in the G. Kawasaki format of just 10 foils, with 30 point type, and with only about 10 lines of text per foil; (5) since money is the easiest thing to waste, investors have to be careful about being fooled and have to insist on a lot of quality, discipline, and effort from the entrepreneurs; (6) there can be some macho and ego issues about who is the more important or capable in business, etc., the investor or the entrepreneur.

All of that said, there are some other issues: (1) The world is changing quickly; (2) ‘information technology’ is leading much of the fastest of the change and is the source of the lion’s share of good early stage investment opportunities; (3) part of entrepreneurship and ‘free enterprise’ is the ‘freedom’, and entrepreneurs are free to come up with wildly original ideas, techniques, algorithms, software, problems to solve, business models, etc., and recent history shows that early on many of the business plans, among both the best and the worst, were very challenging to evaluate accurately; (4) the technical world, especially in information technology, is close to the world of the leading US research universities where norms of communication are very well established and where students learn these norms thoroughly through years of both receiving and giving presentations, but these norms are radically different from what is expected in business; (5) fundamentally, a key to much of the value of technology is that there can be at its core some advanced, original ’secret sauce’ that has the power to get especially valuable solutions to the problems; (6) in research universities, such ’secret sauce’ is really the main concentration but in most of US business is just unheard of.

So, a good salad needs both oil and vinegar, and high ROI just as much needs both investors and information technology entrepreneurs which, however, mix about as well as oil and vinegar — we could use a tablespoon of Brad Feld’s Dijon mustard emulsifier.

So, considering facts 1-6 and issues 1-6, too easily an entrepreneur can take some ideas, wildly original or not, boil them down to something as brief as the Kawasaki format, present to an investor, and have the investor conclude that the wrong information was presented. So, with the brief presentation, the entrepreneur is able to shoot with only one small bullet and, thus, may well not hit the investor’s small target.

It seems that keys to a solution include: (1) Try to get some good prior information about what information is desired; (2) arrive with a focused presentation of the information that was desired but also bring much more in case it is needed; (3) have both parties accept the fundamental difficulties of trying to hit a small target with one small bullet.

With these keys, an investor who is not getting what they want should not feel offended or conclude that the entrepreneur has done something wrong and, thus, is incompetent and not a good candidate for an investment but should ask some questions to elicit the information that is desired. Typically a founding entrepreneur will have at their fingertips nearly anything anyone could want to know and be plenty eager to share it, especially just orally and in person. So, investors, once you are already in the room but not getting what you want, then slow down, relax, take a sip of ice water, ask, and you shall receive. Simple enough. Investors that do this stand to get significantly higher ROIs.

Being the hopeful guy I am, my current mental model of VCs allows for “resilient VCs” and “brittle VCs”. With the brittle, you have one “first shot” and if you don’t impress, the fuse is blown. I’ve tried re-introducing a company or two that have since filled out their management team or changed their Go-to-market, and the response of the brittle is “we saw them last year and decided to pass.” End of discussion.

I have also grown to know some resilient VCs that LIKE to see early stage, not-ready-for-prime-time companies. The resilient VC takes a look, offers advice, makes an introduction or two and then says “call me in 6 months and let’s see where this is at”. Put’s ‘em on the radar and starts the relationship clock ticking. I think the eco system would work a lot better if more VCs were like this.

BUT… even resilients can have a brittle day.

That being said, I don’t encourage resilient meetings without some coaching, preparation, pitch review, and talking to the VC ahead of time setting expectations. There may be holes in the plan, but they are clearly marked

Which is a long winded way of still repeating Brad’s lesson:

Don’t be casual. Two levels of receptivity. One level of preparedness.

Jim

Have you considered putting the “Related Posts” plug-in for WP? Would really help readers looking to learn more about related stuff after a post such as this.

-Zaid

i just sent the link to a few of our CEOs that are going to fund raise later this year. nice reminder.

For me the take away isn’t “don’t be casual”, rather it is communicate up-front,be clear of the agenda/objectives, and plan accordingly.
best,
Dave O.