Unlocking Secrets To Early-Stage Startup Success With Scott Kelly, Part 1

 

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Welcome to another episode of The 7 in 7 Show with Zack Ellison, which features full length interviews with the world’s leading investors in innovation.

Episode #13 of Season 2 features Scott Kelly, CEO of Black Dog Venture Partners, Host of VC Fast Pitch, and Strategic Advisor to TCA Southeast.

Scott Kelly is a 30-year fundraising, marketing, sales, training and publicity veteran. Scott has raised hundreds of millions of dollars in capital for disruptive companies, garnered national media coverage for hundreds of regional and national brands and generated hundreds of millions of dollars in revenues for the companies he has represented.

He has also trained over 1,000 salespeople and has taught marketing at the university level in the United States and Europe.

In this episode, Zack Ellison and Scott Kelly discuss:

1. Importance of Team in Early-Stage Investing: Emphasis on evaluating the team behind a startup as a critical factor for investment decisions.
2. Market Research and Problem Identification: The necessity for entrepreneurs to thoroughly research their market and identify real, scalable problems.
3. Investment Processes and Principles: Key principles for early-stage investing, including the importance of team, technology, IP, and market potential.
4. Pitching and Fundraising Effectively: Tips for making successful pitches, including clarity, storytelling, knowing your numbers, building relationships, and understanding investor expectations.
5. Role of AI in Investment and Business: Discussion on the impact of AI and machine learning on businesses and the importance of having AI expertise in investment teams.
6. Venture Debt: An overview of venture debt, its benefits, and how it complements equity financing for later-stage startups.
7. Global and Sectoral Trends in Innovation: Insights into emerging markets and sectors, including AI, decentralization, and global innovation hubs.

Unlocking Secrets To Early-Stage Startup Success With Scott Kelly, Part 1

Introduction To Scott Kelly And VC Fast Pitch

I have Scott Kelly with me. Scott is the Founder and CEO of Black Dog Venture Partners. He’s also the Host of VC Fast Pitch. Scott, thanks for joining.

Thanks for having me, Zack. Appreciate it.

I went to your VC Fast Pitch event in St. Pete, and I thought it was awesome. How did you get into this? Tell everybody what VC Fast Pitch is.

I’ve been in venture and on both sides of the coin for about 30 years. Many years ago, I went to a pitch event in Southern California, and I was completely underwhelmed. What I found at this event was there were entrepreneurs desperately trying to raise capital for their business and they were pitching their idea to judges who had never run a startup, had never funded a startup, and wouldn’t do anything to assist a startup. I thought that was really just a disservice.

What I’ve done over the years is we’ve taken VC Fast Pitch, and we’ve democratized the process, meaning companies don’t apply. If you attend and show up, you get a chance to pitch, and we vet the investors. I tell everybody, “This is the show. This is the game.” I have two sons who played sports in high school and college, and I tell them, you practice, but you ultimately have to play a game. That’s really the premise around this.

 

 

I’m a big believer that entrepreneurs need to be able to tell their story in short, fit blocks and with distinct blocks. We started out VC Fast Pitch doing one-minute pitches. We have raised millions of dollars for companies with a one-minute pitch. We now do a five-minute presentation. The reality is that the goal is for these entrepreneurs to give the investors enough information to ask for a second meeting. That’s been pretty successful for us. We’ve done over 50 events. We’ve done them around the country. We do them online. So far, it’s been pretty good. In fact, the St. Petersburg event has already led to seventeen follow-up calls and two-term sheets.

I really liked that event and appreciate you having me join as one of the venture judges. I thought there were some great founders there, some really interesting startups. I think a lot of people overlook Florida as a great state and also Tampa and St. Pete as a great region for startups. I think what you’re doing is great as a leader in the space.

I believe that St. Petersburg, in general, and Tampa Bay as a whole, is the next Austin, Texas. It’s where money and deal flow are coming at a breakneck pace.

You and I both, before we moved to St. Petersburg, lived in Southern California. We both had the same idea separately and then wound up connecting down here. You’re doing some really interesting things down here, not just with VC Fast Pitch, but also with Tech Coast Angels. Talk a little bit about that.

I’ve been involved with the Tech Coast Angels out of California for probably a decade or so. When I moved here a couple of years ago, one of my goals and agendas was to introduce West Coast investors to Southeast opportunities. I’ve been friends with David Freeman, the chairman emeritus, and he reached out to me, and we decided to open a Southeast chapter of Tech Coast Angels.

They rebranded to TCA Venture Group. The goal is to take the very successful model that was part of Tech Coast Angels and bring it to the market. We have two folks that are leading the charge here in St. Petersburg, and it’s going to be really focused on entrepreneurs, startups, and angel investors in both Florida and Atlanta, Georgia.

For folks who don’t really know TCA’s model, how would you describe it in simple terms?

The model is obviously investor- and education-focused. A lot of angel groups, they are a large group with hundreds of members and have been involved in literally hundreds of deals, but they’re more than just putting a check into a company. They provide a lot of support, syndication opportunities, and education opportunities. You’ll see if you go to the TCA Venture Group or find them on social media, they’re constantly doing education events, workshops, and demo days to give entrepreneurs an opportunity, not just an opportunity to be showcased from an investment standpoint, but to get some education and mentorship.

I always thought TCA did a great job when I was a member there in Southern California, and so I was very excited when I moved to St. Pete to learn that they were going to be building out their first non-SoCal chapter down here. It’s perfect.

We’re excited about that.

In addition to VC Fast Pitch and what you’re doing with TCA Venture Group, you also run Black Dog Ventures. What’s your focus there?

It’s hard to really define what we are, whether we are an accelerator or a venture studio. What happened in the early 2000s, after doing relatively well in the ‘90s, I set up Black Dog Venture Partners because a lot of the larger venture capital firms in Silicon Valley and Southern California had deals that weren’t ready for them. We built our accelerator as an opportunity to help these companies get their early-stage funding, help them go to market, help them build their team, and then we effectively hand them back over to those larger firms. Our goal is to help a company, much like I started my first company, maybe from a spare bedroom to having an exit down the line.

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Essentially, you are an expert in early-stage investing and work very closely with the founders, helping them grow their companies, but also work very closely with the investors, helping them identify the right types of opportunities and assess the companies in a way that provides for risk mitigation as well as the big upside. Let’s dig into investment processes because for early-stage companies, it’s very different than for later-stage or publicly traded companies. Big picture, what are some of the key investment principles that you live by when you’re thinking about early-stage investing?

When I look at early-stage companies, it’s almost entirely the team, in my opinion, because the reality is you’re dealing with companies that don’t have revenue, maybe don’t even have a product yet. Ideas are a dime a dozen, but people that can execute them are paramount. Obviously, you’ve got a great technology, great IP. You can have a wonderful pitch deck, great deal room, and excellent projections, but at the end of the day, you need to have a solid team that covers all scopes of running a business, from finance to accounting to legal to marketing. I look at the team first because that’s going to be really the primary factor in them being successful going forward.

When you think about the team, what are some of the signals that you look for that indicate a higher probability of success or failure?

I like the leaders of a bunch of startups to be pragmatic about what they know, but more importantly, what they don’t know. I think there’s the impression that you have to do everything. The problem is, sometimes, it’s a necessity when you’re an early-stage startup, but as soon as you can bring in the people that are experts at their portion of the business, don’t try to do your own legal if you’re not a lawyer, don’t do your own financial forecasting if you’re not an accountant. If you’re not going to market, you don’t do that. I come up with companies all the time that have very smart engineers, technologists, and developers, stick with that. If you can’t do those other things and you can’t learn those other things, build a team of people who can.

I agree with that. I think team is most important, and there was an article in the Harvard Business Review that probably came out a couple of years ago, but I was reviewing it again, and it said that 95% of VCs value and evaluate the team when making a deal decision, and that was the number one factor. Ninety-five percent look at the team, and that was followed by product or business model, that’s how they framed it.

In addition to business model and team, the market and the industry. Market and industry are different, but they’re related. Obviously, the team is the most important for early-stage, and I 100% agree with that. When we look at then the business model, are there things that you look for in that regard as well?

Identifying Real Market Problems And Solutions

Yeah, I look at a problem that is a large enough problem for enough people to be scalable. It has to be a problem that if you solve it for a bunch of people, you can make money with it. I think a lot of times, entrepreneurs don’t do enough research. Is there enough people that have pain to be willing to pay for the solution you’re providing? I think that’s paramount.

I couldn’t agree more. I’ve talked about this a lot, and actually, at the VC Fast Pitch, I think it’s one of the points that a lot of the investors brought up in the sense that if you can identify a problem that’s not being effectively solved, and you can solve it and find customers that are willing to pay you to solve it, that’s probably the most important thing. Also, being able to build a model to solve that problem and have the team that can execute on that model, that’s the magic.

In terms of industries or market analysis, I know a lot of folks focus on what we’d call TAM, the Total Addressable Market, and then other folks will focus more on the Serviceable Addressable Market, the SAM. For later-stage people, lenders in particular, but also growth equity investors, will focus a lot on the SOM. Talk a little bit about how you think about market sizing and analysis.

I think the reality is, when you’re looking at a market, you need to realize there’s the best option, the best picture, but then you want to go after the people that are right in your backyard, the people that are most obtainable. I find a lot of entrepreneurs, especially when you’re building a platform or a network. I was in the music business for a while and owned a record label and was fortunate to have one gold record. I talked to several music executives and radio promoters who would market, would go to artists, and brag about getting them 100 radio spins across the country.

Record labels didn’t care about that. They wanted to know you can get a 5,000 or 10,000 fan base in a single geographical location or city, then that’s a replicable model. I think what a lot of entrepreneurs do, and the old adage is, “How do you eat an elephant? One bite at a time.” Look at the market that’s not the most obtainable, but the easiest obtainable. Build that first, work out all the kinks, work out all the problems, get the pricing, and get the marketing and the message right, and then look at TAM, SOM, and other things.

I think just getting to that minimum viable product, or what some people call the MVP, and then really zeroing in on that core market that you can really get your hooks into so that some people call it the Serviceable Obtainable Market, the SOM. These are all acronyms that people generally use. To your point, intuitively, it makes sense. Find a group that really resonates, or your product really resonates with them, and then they’ll also be your marketers by extension. If you can get them to be true believers, they’ve all got friends, and they’ve all got social media, and they’ve got that built-in base.

 

Exactly right. It’s interesting you say that because many years ago, I was a retail stockbroker, and I started to work with teachers. What I did was I joined all the teacher organizations. I spoke at all the teacher events, and all their retirement accounts came to me because they talked together. I didn’t have to establish trust as much because trust was already established because I was guilty by association. I think a lot of entrepreneurs, if you can be really hyper-focused, build a network of people that communicate with each other, and like you said, they become your marketers.

What are some of the tips that you would give to early-stage company builders just on day one, when maybe they’ve got an idea, but haven’t really started putting it to work yet, and you want to help them avoid some pitfalls? What would you tell them?

Find something you can sell right away. I think some technology entrepreneurs get very caught up in the technology. You and I have been at many events where someone says, “I’m building this great app.” I ask them a couple of questions. “How would you do this business before smartphones? How would you do this business before the internet?” If you can build a product that is independent of technology, you’ll have a product that is supercharged by technology, and that’s how I really talk to entrepreneurs, like find that thing.

We had an entrepreneur that we helped several years ago, and he didn’t even have an app. He had a web-enabled website, a mobile-enabled website, generated millions of dollars in revenue, and raised millions of dollars in venture capital, then developed the app. He found something to sell first and then used technology to make the sales easy.

This goes back to your point about identifying a problem. The problem isn’t that people don’t have enough apps in their life. The problem isn’t that they don’t have enough AI in their life. The problem is real-life problems. Maybe it’s a health issue. Maybe it’s an efficiency issue at work. It could be numerous things. If you can identify that pain point and then, like you said, use technology to really scale it, make it more efficient, that’s where there’s magic, I think. Too many people have got away from that. They look for what’s shiny and they don’t really look for what’s underlying that.

Just a quick thought here that I’ve been thinking about. There’s some research that’s come out about when middle school, high school and college kids are asked what they want to be when they grow up, the number one response is influencer. I think in many ways, that’s a destructive thought because what they should be thinking about is becoming an expert in something to solve problems, and add value for society, and that, in turn, is what should make you an influencer.

It shouldn’t work in reverse, like, “I’m an influencer because I have a podcast or 1 million Instagram followers, and then I’ll develop something useful to say.” It should be that you have something very useful that helps a lot of people, and then you develop the platform to distribute that message and then become an influencer. I think they’ve got the causation wrong in the order of operation.

A hundred percent. Do something that makes you influential, instead of trying to be influential for something that doesn’t make a difference.

That’s just something I’ve been thinking about a lot, because as a society, we’ve got a lot of people chasing influence, fame and consumption, but they should be chasing education, being helpful, how to make an impact, how to solve problems, how to help broader humanity. That’s just something that I look for when I’m thinking about early-stage investing.

As you know, I run a venture debt fund. Those are later-stage companies that are typically producing $5 million or $10 million of revenue at a minimum. I also do some angel investing, and so when I’m looking for angel investments, I’m looking for the same things you are, looking for founders that have really high integrity and are relentless, and will never give up, but will also be able to be adaptable and pivot where needed.

I’m a big believer. I’m a little old school. I like people to overpromise and overdeliver. I like people to be on time. My father was in sales as I was growing up. The old saying was, “Fifteen minutes early is on time, on time is too late, fifteen minutes late is unacceptable.” I want them to have those kinds of values. I think sometimes people get caught up in terms like unicorn or hockey stick projections. Build a good business, build a good team, do what you say you’re going to do, and like I said before, underpromise and overdeliver.

Doing a little pivot here, let’s talk about big picture, the state of the innovation economy. There’s been a lot of talk about how it’s been really hard to raise money the last couple of years for startups, valuations are way down. What’s your sense on where we’re headed now and the current state, but also where we’re going over the next couple of years?

I think venture, much like the public markets, are cyclical. They’re a pendulum. We had a lot of froth a few years ago in and coming out of COVID on that side, and now we’re back to pragmatism. We’re back to companies that are investing in entrepreneurs saying, “We need more than an idea. We need revenue. We did a real go-to-market.” I think that’s changed. Now, I can tell you, that’s happened in the ’80s. That’s happened in the ’90s with the dot-com boom. I think there’s more pragmatism out there. Now, obviously, there are certain parts of the market, certain industries, that are letting go of pragmatism again because they have the buzzwords.

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AI in Investment And Business

Speaking of buzzwords, how do you feel about two letters? AI.

I think, obviously, much like the three letters of the past, COM., there’s significant opportunity, but the problem is getting a domain name that has that AI does not make you an artificial intelligence business. I think slapping in ChatGPT in the background of your landing page doesn’t make you an AI company. Obviously, I think it’s revolutionary. It’s the equivalent of the cell phone. It’s the equivalent of the internet.

The reality is, much like I was involved in a lot of dot-com businesses in the ’90s, I was telling someone we were involved in Pets.com and Webvan.com, two of the biggest colossal failures in the Internet. Pets.com, the only thing that remained was the sock puppet, not another business. I think much like those days, you still have to look at this from a pragmatic standpoint, a lot of potential, but much like the dot-com age, a lot of companies are going to raise a lot of money. They’re going to burn out, and the ones that stick around will be significant.

How should investors think about engaging in AI? There’s so much noise and a lot of hype, a lot of people pretending they’re doing things they’re not. Yet, obviously, this is going to be game-changing. It could change our entire future. We want to get involved, but we also want to be smart about it and careful where we can be. Are there any tips you have for navigating something?

What I’m noticing now, and we’re beginning to seriously do some interviews in this regard, is obviously on an investor due diligence team, you may have people from a legal standpoint, from a marketing standpoint, from a kind of standpoint. You need to add an AI expert to your due diligence team. The reality is most investors, like us, don’t have the real time to get educated in AI.

You’ve got a lot of degrees. I don’t think you’re going back for an engineering degree anytime soon, unless that’s new news. I think that’s an important process because you’re right. Everything looks good until you get under the hood or get behind the coat. I think the reality is for investors, they need to have some AI quant as part of their diligence.

I think that’s a great point, especially for folks who are really interested in investing in what I call technology companies. If you don’t have somebody who really understands the mechanics, that has real experience and educational training, then you’re just relying on what the startups are telling you. Obviously, that’s going to be spun. The question is how much, but certainly, probably quite a bit, especially with earlier-stage companies. That’s a great point. Definitely having somebody that’s a true expert in machine learning, AI, and data science, I think that that’s really helpful.

On the flip side, I was thinking about what a lot of startups lack. On the investing side, you want to have the expert in technology and AI. On the startup side, what I’m finding is a lot of them have really good ideas and they’ve got some operational skill in their product and experience, oftentimes as well from previous roles, but I’m finding that they’re really lacking when it comes to their financial understanding. I think there’s actually going to be an opportunity for more fractional CFOs or folks like yourself that, not that you’re a CFO, obviously, but your experience and you understand the financials and helping companies understand their cap table from day one, I think is really important.

Not just the mechanics of how do you raise capital, but all the nuances around that, how much should you raise, at what valuation, the timing of the raises. What are the proceeds going to be used for? These are all things that I think a lot of startup founders don’t really know. This goes back to the point you made earlier about bringing in experts from day one. Good legal counsel obviously is paramount, but I also think just as important is good financial counsel, because if you screw up your cap table early on, that’s a hole you can never dig out of.

I agree 100%. The reality is what that does from an entrepreneur standpoint, if you know your numbers, you can negotiate for a position of strength. As you know, in investing, the entrepreneur has one idea of what the value of their company is, and the investor has another value idea, and they’re vastly different. Obviously, the ultimate goal is to get this close to your ideal, and as far away from their idea. Having a good handle on your numbers is going to be paramount because this is a numbers game.

We both know from the angel standpoint, and investor standpoint, it’s like baseball. If you bat 300, you’re in the Hall of Fame. They realize they’re going to have seven strikeouts. The reality is they need assurance that you can’t be one of them. If you know your numbers, that’s a risk mitigation factor you can begin to remove for investors.

I’m always shocked when people don’t really know their numbers inside and out. When I used to be a portfolio manager at larger institutions, I always knew every position that we had, irrespective of whether I had it in front of me. I knew because I made that decision, or somebody else, if they made the decision, I understood why and what impact it had on the portfolio.

I always find it crazy when I ask somebody, “What’s your projected revenue? What’s your annualized last quarter revenue?” and some other basic financial metrics. They’re like, “I don’t know, I have to check on that,” and like, no chance you ever even get another conversation with me. You should know those things inside and out. If you don’t know that, you’ve just got a fancy pitch deck, that’s not helpful.

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It’s interesting you mentioned those terms, TAM, SOM, and everything else. When I start working with an entrepreneur, I send them an entire glossary of terms that they may get asked, because the reality is, what’s worse than not knowing the information is not knowing what the acronym means. You need to know the questions you’re going to be asked and the terms you’re going to be hit with.

This is actually a great segue into what I think is a really important question, which is, what are the mistakes that founders make and how can they avoid them generally?

Building Relationships With Investors

From a fundraising standpoint, I think the biggest mistake founders make is they start too late in the fundraising process. The reality is, you need six months before you even consider fundraising. There are two things you really need to do. You need to educate yourself on the fundraising process, and you need to build your pipeline and your relationships. This is still a relationship business. AI will maybe start making venture capital investments, but for today, it’s still humans who are making the call. I tell everybody, go build a relationship. More importantly, make sure you’re targeting the right investors.

You and I both have this example where someone becomes a LinkedIn connection and then within milliseconds, the pitch deck is in your message. You need to understand who these investors are. Do your research. Find out, do they invest at your stage? Do they invest in your industry? Do they have complementary companies in their portfolio? Do your homework first. It’s like any marketing. Build your list. Build it strategically before you go out and approach it. I think the two paramount things are be educated, build a team, and then build your funnel.

I agree wholeheartedly with both of those thoughts. I’ll add to that in that I think everything will always take longer than you expect. To your points, if you want to raise money in a year, 2 years, 3 years, start building now, because oftentimes the sales cycle is a multi-year process. It’s not just, “I’ve got a good idea, and somebody’s going to open their wallet and write a check.” It doesn’t work like that. They’ve got to really trust you, and trust takes time to build. I always advise people to start early, just like you do.

The other thing I was thinking about too, in my own case, raising money as a fund manager is actually even harder than raising money as a founder because we’ve got a lot higher bar to clear because institutional investors have very strict requirements. In my own experience, there are folks that I’ve talked to about ARI years ago, well before we were even in the process of raising money, let alone having raised it. It’s funny because a lot of those investors are coming back now.

They’re always watching.

There are investors that won’t invest in the first 2 or 3 funds, but they’re going to be a fund for investors because what a lot of folks don’t realize is that investors are watching, at least the good ones. They determine if you should remain on their radar, and then they’re watching to see if you can execute, to see if you can maintain momentum, and to see if you do the things you say you’re going to do. Relatedly, one of the things I’ve been finding in the venture debt space that works really well is what’s called milestone-based financing.

One of the ways to de-risk as an investor is to not give all the money upfront and say, “I’m going to give you a portion of the money. When you execute and do what you say, or do what you said you were going to do, then you’ll get more money.” You can either set certain milestones that are numeric, or you can leave it more open-ended. I’ve found that there’s a huge trend now. If you look at the deals that are getting done on the debt side, almost all of them are milestone-based.

It’s very rare now to see a full commitment being made and deployed on day one. It’s always a fraction of the total commitment. I think conceptually, this makes a lot of sense because one of the things I’ve learned, and I would love to hear your thoughts on this, is you don’t really know how someone’s going to act until they have your money. You do not know.

You also really learn a lot during the diligence process and the deal negotiation process. It’s funny, there’s been some companies that I loved, that I thought, “This company is great. I would love to invest in this company,” and then when I got to know them going through the diligence process, I realized they weren’t anybody I’d want to be close to.

My view is, if they act that way before they have your money, how are they going to act after they have your money? One of the things I’ve been thinking about, Scott, is how can we as investors provide more flexibility for ourselves so that we can get a look into that behavior before we’re fully pot committed? I think structurally, I don’t want to give away too many secrets, but the reality is, I think this is something that’s incredibly important for de-risking both equity and debt investments.

It’s to really figure out, how can I get a true understanding of what this person and this team and this firm is going to do once they have my money. If they wind up being bad apples or they’re good people, but they just can’t execute, I don’t want to have much risk on. I also want the optionality to invest more and to support them if they actually can deliver. And so that to me is one of the keys to structuring, is figuring out how can you basically gain optionality, keep your risk minimal, but also scale up as the company delivers.

 

It’s interesting you say that because the Bible verse, “Money is the root of all evil,” was really appropriate in the 90s. We had several companies that we had raised money for, invested in, and instead of putting it into staff and development, they bought a hundred foosball tables, really stupid stuff. One thing I’ve been able to do over the last several years is, if you want to understand how someone manages their business, ask them how they manage their household. Ask them how they find their retirement. Ask them about, are they teaching their kids financial literacy. I think that gives a true impression of who they are, in my opinion. I’m a big believer that how you manage things on a familiar, small basis is a good indicator of how you’re going to manage things once you get a lot of money.

I love the expression, “How you do anything is how you do everything,” which is exactly aligned with what you just said. If they’re telling you they’re going to do X, Y, and Z, but they’ve never done it before and they’re not doing it in their personal life or any other endeavors, why would they suddenly do it for you now? I think a big part of success also is just being very disciplined and process-focused. It doesn’t matter what you’re doing.

You look at the best athletes, the best musicians, the best business people, the best scientists, it’s all process and then dedication and work ethic. I don’t even think intelligence is really that important in the grand scheme of things. It’s important, clearly, but once you’re over a certain base level, at that point, it’s more about integrity and work ethic, and the ability to form relationships, I think, is also huge.

I think the reality is, I think I’m interested in people having wisdom, which is applied intelligence. Being able to take what you have and maximize it. That’s where I see some real value. Some of the best entrepreneurs aren’t educated formally but are grinders. They want to be an expert at their craft, their particular line in the sand, so to speak.

What other mistakes do you see founders making?

I think a lot of times, it comes down to, they really don’t fully understand the problem and the amount of people that it’s impacting. I think they don’t do enough market research. There’s a famous story. I taught entrepreneurship several years ago at Grand Canyon University in Phoenix, and I shared the story of a company called Juicero, and I encourage everyone to look this up. This is the company, many years ago, that raised $120 million, I think it was, from some of the top venture capital firms in the country for a phone-enabled juicer. They put out a video on YouTube showing how they could, with this $700 to $2,400 juicer, make juice in two minutes.

Obviously, what happened within seconds of that, a YouTube video came up with how someone made juice in 60 seconds with a $100 blender. That company blew through $120 million in less than 24 months. Google that. I use that as an example to young entrepreneurs that I was teaching at universities. Do your homework, make sure it’s a real problem, and make sure you know your competitors before you jump into something.

I’m coming out with five-minute abs.

You got to put the video on the reel for this podcast for that crap.

I’ve done all this research. Doing four-and-a-half-minute abs, you won’t get enough in. Five-and-a-half is a waste of 30 seconds. It’s all about five-minute abs. I’m the only guy on the planet that knows this routine, Scott, I’m telling you. I’ll tell you, it’ll actually plan around your personal physique using AI so that your five-minute routine is optimized.

You can tokenize it.

Speaking of pitches, what do you think makes a good pitch? First of all, how many have you seen? How many pitches do you think you’ve seen in your life? Countless.

Tens of thousands, maybe?

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Having seen tens of thousands, what are some things that work and what are some things that don’t? Let’s start with what works.

I think what works is the ability to quickly and concisely identify what you do. I have been on so many pitches where we’re 5 minutes, 10 minutes, 15 minutes into it, and I don’t know what they do. I don’t know what their business is. Get to the point. I think that’s probably one of the most important things. I think it’s very important to be able to present on several different time intervals.

You might be on an elevator, like the famous elevator pitches, and only have a minute to conceptualize what you do. You may have five, you may have twenty. Have all of them not memorized, but have them internalized. We saw this at our event. We had several presenters read cue cards. If you don’t know your business enough to be able to talk about it for as long as time is needed, you don’t know your business.

That’s great advice. It’s funny because I’ve been giving that same piece of advice when it comes to pitch decks. Same thing. You should have 1-pager, a 10-pager, and then you should also have the in-depth, deeper dive. That also feeds into the data room concept. One thing that I think really differentiates early-stage companies and makes them look good is that they have a data room with all the pertinent documents, and it’s easily accessible and well-organized. Just right off the bat, it makes them look like they know what they’re doing. What are some other things that you’ve found make for successful pitches?

You just brought it up. Be prepared. I think you’re right. Don’t go into this battle without being fully armored. Have your pitch deck, have your financials, have your data room, be prepared. I think that’s paramount because the reality is you have to understand something. Folks like yourself, you’re giving up your valuable time to listen to their business. You don’t want your time wasted. You and I, in the time of this phone call, probably each have 50 pitch decks in our inbox. We have someone else we can talk to, so be prepared.

I think that’s the most important thing before you get into it. That’s what leads to a successful pitch because the reality is everyone can talk high profile, 30,000-foot view of what they want to be or what they want to do, but you need to be prepared to show that you are ready to execute, and I think that’s paramount.

Final Thoughts On Early-Stage Success

I was on a presentation and go, “What do you want to accomplish?” They start with, “I want to be a unicorn.” I almost shut down immediately because that’s not the goal. That might be the offshoot of accomplishing your goal, but that’s not the goal. Build a business that’s successful, generates revenue, employs people, and provides impact. All of those things should be enough. Unicorn is a cherry on top of the cake.

I think that when people are too overly optimistic, that also sends the wrong type of signal. Obviously, you want to be very optimistic and passionate about your business. If you come in, you’re pitching, saying, “We’re going to be a unicorn for all these reasons,” to your point, you just want to shut down because the probability of that happening is close to zero. If they don’t realize that, they’re probably not going to become a unicorn, certainly. Are there any other factors with the pitch explicitly that you think every founder should be thinking about before they pitch?

Yeah, like you said, I think you have to have a couple of types of pitch decks. I think when we do our VC Fast Pitch, I believe less is more, not a lot of text. You don’t want investors reading the presentation while you’re doing it. Tell a story. I think it’s really important that investors should know the genesis of why you came up with this idea.

If you are a biotechnology company trying to cure cancer, tell me the story of someone who died from cancer. If you are trying to build a better airbag for a car, talk about someone dying in a car accident. Have a story and personalize it a little bit, because then you get them engaged. You get the investors understanding that, “I can relate to this problem.” I think that’s really important. Tell stories, be less bullet points. Obviously, as you get into more formal presentations, you just need to make sure you have all the answers covered to the best of your ability.

 

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• Scott Kelly on LinkedIn
• Black Dog Venture Partners
• VC Fast Pitch
• 7 in 7 Show Disclaimer

 

About Scott Kelly

Venture Capital, Marketing, Sales and Leadership Professional. College Professor
I am the Founder and CEO of Black Dog Venture Partners.

Black Dog Venture Partners is a business accelerator that provides access to funding though our network of 13,000 investors, business development though our network of 40,000 business partners, sales/marketing and executive coaching services for disruptive companies. BlackDogVenturePartners.com

We also host our VC Fast Pitch Events that connect startups with the nations top investors. VCFastPitch.com
Proud father and owner of “Melvin” our black dog and company mascot.

Specialties: Venture Capital, Angel Investing, Private Equity, Business Development, Marketing, advertising, event promotion, social media, online marketing, public relations, publicity, mobile marketing, mentoring, discipleship, leader development, consulting, angel investing.