I've received a number of phone messages and direct mail solicitations for the Venture Capital Workshop and Conference, which will be held in New York City on Tuesday, March 4, and in Boston on April 8.
I was surprised to get invitations to this type of conference for two reasons. First, because Black Duck Software is not an early stage venture, and we don’t need the money. And second, because I thought this form of investor jamboree was dead. Maybe that was wishful thinking. It seems like such a '80s thing to do.
The appeal is of these conference is that – for a fee – an early stage company can find a room full of eager venture investors who want to hear an investor pitch. This beats having to make individual pitches on Winter Street in Waltham, MA, or on Sand Hill Road in Palo Alto, CA, or in front of standalone VCs on the east and west coasts.
I think these conferences are a total waste of time and money for entrepreneurs seeking venture capital. Let me tell you why.
You remember that room full of VCs? Well, it actually contains an audience consisting mostly of other parties with other interests. Or undesirable investors. One quarter of the room is occupied by other entrepreneurs waiting their turn to make a pitch, listening to pitches to polish their own. Approximately one half are accountants, attorneys, business brokers, consultants, and others who will try to sell you their services. And the remaining quarter are junior, ill-advised, or simply stupid investors. (A slightly old but still relevant description of an entrepreneur's experience at a venture conference can be found here.)
My Dear Brothers and Sisters: There is a better way.
First, do a Google search of your area VCs. Type in, for example, “Boston venture capital”. VCs like to invest locally, no matter what they say about doing remote investments. Traveling is not fun, detracts from their current investments, and cuts into sourcing time. If you are located far away from the center of VC clusters (Silicon Valley and Boston), then use Google to vector in on some closer locations. Also, I would recommend getting at least one advisor who has been VC-funded and network your way into a VC pitch.
Second, call on a partner in the firm with an interest in your venture area. If you do not know any partners in the firm personally, you have a choice: Cold call them starting with their executive assistant (the key to scheduling any partner), or identify a principal or associate. Get their names from their website.
Alter your approach according to your audience. With a partner, you should go in assuming you have one shot. With a principal or associate, come prepared to encounter stupid questions, but your aim is to make them your evangelist inside the firm. In either case, you objective is another meeting.
Finally, bring a great story -- your total addressable market, growth plans, and other elements of the business. Answer the question: Is this a billion dollar idea? If it isn't, how can it built to be?
Whatever else you do to attract the attention of VCs, don’t waste your valuable time and money at a venture conference. You're far better off taking that time and money and churning it into your business.