Ignition’s John Zagula Offers Three Tips For Making a Winning Pitch to a VC

One out of 100: that’s roughly how many business plans are considered promising enough to generate a meeting with a venture capitalist, according to John Zagula, a partner at Bellevue, WA-based Ignition Partners. The firm invests in software and services for large businesses, as well as consumer tech and communications.

The competition for a VC’s time is only getting tougher these days. So when you do get a meeting, you’d better have a plan for how to get a VC’s attention, hold their interest, and persuade them to give you the capital you need.

Zagula, a former Microsoftie, has come up with three keys to a successful VC pitch, which I thought would be useful and fun to share here. It sounds like a lot of common sense, but you’d be surprised how many pitches don’t get their point across effectively.

1. Gambit—Make a strong opening move to establish relevance and credibility.

Tell a personal story or anecdote that is relevant and impressive (don’t start cold with just facts or analysis, say). Next, explain the genesis of your idea and the reason for your business (don’t assume understanding). Then hook them: connect the dots and explain the opportunity (don’t assume interest). For example, something like “Our customers told us that record labels need a China strategy. Currently the Chinese wireless carriers have nothing like our music-download service. So we want to invest in a U.S.-China partnership to exploit a giant mobile phone base.”

2. Nutshell—Tell your story in a compact package, quickly and clearly.

This is the classic elevator pitch. Take a very short time, no more than a few minutes, to outline the opportunity, case, and proof (don’t ramble). Map out the order of your argument, and follow it. Use an easy-to-grasp pattern, such as spelling out the problem and the solution, with key stats. Or a simple list of bullet points such as market, competition, product, and team will do (don’t get fancy).

3. Gift—Give them what they want, which is clear proof of “what’s in it for you.”

This is the take-home message. Explain your positioning in the market and your plan of action. Show that you’re exploiting a real gap with a clear strategy, so you have an increased chance of success. And demonstrate a concrete use of funds with a clear destination (don’t be vague), so you make a strong case for a well-placed investment.

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