More often than not, an entrepreneur with a great idea looking for funding will pitch his or her startup dozens, if not hundreds of times to potential investors. There is an endless amount of resources out there for entrepreneurs looking to learn the best practices for their pitch, including what to include in their decks, how long to speak, and what pitfalls to avoid. By the time an entrepreneur actually gets funding, they've probably mastered their pitch to a point where they could recite it in their sleep and provide advice of their own to newcomers. The problem with this is they can get stuck in their pitch mentality and it can creep into areas of their business that need the ole straight talk express.
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Michael Hirshland of Polaris Venture Partners, who blogs under the name VCMike, wrote today about a problem he often sees when in board meetings with startups. The issue is that entrepreneurs are so used to speaking a certain way to VCs that they sometimes have a pitch-like tone that gets in the way of board room progress. As Hirshland points out, don't try to beat around the bush when it comes to bad news.
"VCs hear bad news all the time -- it is part of the startup process and part of the VC job description," says Hirshland. "Any VC worth his or her salt should respond to bad news, provided it is shared in a timely fashion, by helping the entrepreneur figure out the best way to respond rather than dwelling on what went wrong."
He advises CEOs to stear clear of attempts to placate their board members by spouting off excuses for whatever their bad news is, or by claiming that they are already fixing the problem in hopes of avoiding any impending wrath. From what Hirshland says, board members are not schoolmasters there to punish you and whip you into shape; they are there to help, so don't isolate yourself, he says. If you speak openly and honestly about your issues with your board, chances are you will preserve your most valued asset as an entrepreneur and as a startup: credibility.
"Early stage ventures are filled with ambiguity. Entrepreneurs and their investors need to make quick decisions based on information that is far from complete," says Hirshland. "This necessitates relying to a very substantial degree on the entrepreneurs' interpretation of the situation and prospects."
In other words, you are the eyes and ears for your board, and if you aren't being open and honest with them, bad things will happen. Worst of all, speaking with fluff and rounding out the rough edges of your company will destroy your credibility, which Hirshland calls "toxic" to your partnership and "not a happy place for either the entrepreneur or the investor."
As we mentioned earlier this week, credibility is your best friend when trying to get funded, so make sure you carry it with you and preserve it in your board meetings and into your company's future. Save the pitching for future rounds of fundraising, and when it comes to your board members, don't try to win them over, simply treat them like equal members of your team.
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