Author: Adam Higton / Source: 99U by Behance
As designers strive to build businesses and brands of their own, many find they need to be fluent in more than Photoshop to spark the interest of the investment community. And for those looking to launch a company or clearly articulate a new business idea, veteran investor Tige Savage, Managing Partner at Revolution Ventures, offers his best advice on how to craft a winning pitch.
Artists and designers, for the most part, strive to create beautiful products and solve an array of visual, aural, and tactile challenges. They don’t often pursue their careers with the hope of becoming professional number crunchers. And yet, as more designers strive to build businesses and brands of their own, many find they need to be fluent in more than Photoshop to spark the interest of the investment community.
Veteran investor Tige Savage, who co-founded venture capital firm Revolution and co-leads the firm’s early state investment fund, Revolution Ventures, knows a thing or two about what it takes to successfully grow a business. And he’s willing to look anywhere for a good idea. One of his most recent investments is the design-focused start-up Framebridge, a direct-to-consumer custom framing company that just announced a $30 million Series C funding led by T. Rowe Price.
In the interview below, Savage offers keen insight to creatives on how they can perfect their sales pitch.
When somebody is coming to you with an investment proposal, what do you look for?
The key things that you really want to articulate to your investors are your background, your team, and the elements of the team. There is a tendency to get into great detail. Take it to the high level. Say, this is what our thing does, this is how we monetize it, and here is what the competition look like. An investor will ask who your competitors are. Many people will say “our product is so new and different we have no competitors.” This is not right. VCs want to understand your awareness of the competitive environment. They want to know why you think you have strengths that carve out a reasonable niche versus the rest.
Then you need to explain how you expect to deploy capital. How, ultimately, you expect for the investors to get their money back? Know your numbers; investors will want to see objective evidence of success. Ask yourself: What’s my customer acquisition cost? How is that trending over time? How did those customers acquired at different points in time behave vis-a-vis each other?
“An investor will ask who your competitors are. Many people will say “our product is so new and different we have no competitors.” This is not right.”
What are some of the most common mistakes you see?
One of the greatest mistakes first-time founders make is thinking they need to know the answers to everything, and that VCs are just out to fire them if they don’t. Neither of those things is true.
Nobody expects you to know the answer to everything. What they are expecting is that you hire the best people. Often, founders feel that hiring super qualified people somehow undermines them. They think, “maybe this person knows more than I do and the VCs are going to want these guys to run the company and I’m gonna end up with some political fight.” The truth is, nobody ever gets fired because they have a great team. It’s the opposite.
“One of the greatest mistakes first-time founders make is thinking they need to know the answers to everything, and that VCs are just out to fire them if they don’t. Neither of those things is true.”
It’s also important for founders to remember that when companies mature, the needs of the senior team change. Often, you can hire a better person when you’re a bigger, more established, better capitalized, higher growth company. But what happens is that founders who have a very small team of two or three people early on feel too great a sense of allegiance to these people. They think: “Gosh, they got me from A…
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