At the TechCrunch Early Stage: Marketing and Fundraising event last week, Norwest Venture Partners‘ Lisa Wu took the stage to discuss how founders can think like venture capitalists in all facets of their business. The overlapping in job roles is uncanny: The best investors and founders have to find focus through the noise, understand the weight of due diligence and pitch others with conviction. Wu, who has investments in Plaid, Calm and Ritual, used anecdotes and exercises — such as the eyebrow test — in the tactical, engaging chat.
Pitch deck or pitch blurb?
Startup founders often turn to pitch decks when fundraising as a visual representation of their story — from the origins to total addressable market to those juicy metrics. While the format definitely works, the influx of pitch decks in a hot deal environment makes it harder to stand out.
Wu gave some pointers on how she reacts to cold pitch decks, and why founders may want to take some unconventional advice.
I love it because I can quickly flip through the deck and generally form an opinion on it. And I think I’ve read some stat recently, which is that investors really spend 2 minutes and 47 seconds per deck. It’s an easy way for me to, in that short amount of time, just get a calibration of the business to decide whether to move forward.
But, as the founder, I’ll probably tell you don’t do [the cold pitch deck]. Because if you’re sending me the pitch deck, I’m quickly screening and then I’m making a decision of whether it makes sense to meet, but your goal is really just to try to get the meeting with me to tell the story and let that unfold. And so, give us enough of it — like a blurb to tease us to want to continue to engage is great. But if it is possible, I would suggest a late pullback of the pitch deck, even though I love to receive it in advance. (Timestamp: 21:50)
In other words, she loves founders sliding into the DMs with pitch decks, but doesn’t think that strategy always gives the founder storytelling power.
This answer triggered a series of questions from attendees on whether pitch decks are even necessary in the first place. Here, Wu explains how the competitive venture market has impacted her preferences — and her interest in what I’d describe it as a private beta, except for fundraising rounds.
So, everything is shifting these days. Because there’s so much capital [and competition] out there, sometimes if I’m chasing a really hot company, I actually prefer that they don’t have a deck, or they haven’t created one yet. Because once you have a deck, that means you can go and take it out to a bunch of other investors, too. And so it’s helpful to structure the conversation and to storytell around it. I think I like a deck more so than not, unless it’s in a competitive situation. If I’m trying to close the deal, I actually prefer just an open dialogue. (Timestamp: 23:30)
We just have them come in and we just prepare our team internally to let them know that there’s no deck here. And so, it’s just up to the founders to really just tell the story to us. And, it’s worked. (Timestamp: 24:20)
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How to implement conflicting feedback?
What happens if one investor recommends you zig, but another recommends you zag? Wu explained how conflicting advice between investors or stakeholders in a company can be overwhelming to founders, but their reaction all boils down to something she looks for in every founder pre-investment: good judgment.
Probably one of the most important qualities we look for in a founder is good judgment. To me, that means that given all the decisions you can make at any one point, what is that one decision that is better than all the other alternatives?
As a founder, you’re going to be getting lots of information. If it was clear how to build the next unicorn or decacorn, then there would be just a lot more successes there, but it’s not. And so I’d say it’s about understanding the patterns, being open, getting all the feedback from investors and then trusting your intuition in order to make that good decision of how to drive your business forward.
You want to find an investor that resonates with you, so that you guys can align on what the path forward is and that vision. If it doesn’t feel right in your gut, you’re going to have a lot of issues on the board just feeling supported and aligned to where you want to drive the business. And so I’d say be open and curious to hear what the feedback is from investors, and then synthesize it and figure out what actually makes sense in order to make that good judgment and decision for your business. (Timestamp: 29:38)
Obviously, finding an investor that resonates with you isn’t always a walk in the park — especially when many check-writers are homogeneous. One attendee explained how their startup’s runway is running out, and an investor with a “questionable #metoo” background is willing to offer money. They asked Wu a simple question: Should they take the money?
I generally like to view that the world is abundant, and that there is just so much capital out there and there are a ton of investors. And if you are willing to make that hustle in order to find that one investor that does believe in what you’re building, it just might make you feel better in terms of executing the business. And so it’s like a marriage, like, do you want to marry somebody who doesn’t have the same values as you? Probably not. It might cause some problems over time. So that’s generally my stance on that. (Timestamp: 33:47)
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