GOING UP
Psst … Want to Hear an Elevator Pitch? Entrepreneurs Sharpen Calls for Venture Funds
By SHERRI CRUZ
Kristin Kennedy has done plenty of 15-minute sales pitches about her company.
But she’s never done an elevator pitch, a 50-second chance to grab an investor’s attention.
That’s about 150 words or three paragraphs.
When asked for her pitch: “You want it off the top of my head? Oh, gosh” she said. “This is going to be rough.”
But she sails through in about 50 seconds. In her pitch, she describes the product, notes her nine years of expertise in the homebuilding market and boasts her fund-raising experience,$850,000 raised in series A funding and about half of a planned $1.3 million series B round already secured.
Kennedy, chief executive of San Clemente-based Your Design Center Inc., will be one of 15 vying for the attention of the Tech Coast Angels May 12 during the investor group’s Fast Pitch Competition, held during the Harvard Business School Orange County Association’s Entrepreneurs Confer-ence.
The elevator pitch became popular in the dot-com era, but it’s been around for at least 20 years, said Luis Villalobos, founder and director of Tech Coast Angels, a 200-member investor group.
It also has been called the “grandmother pitch”,explaining what a company does in terms your grandmother could understand. Entrepreneurs need to learn how to deftly explain their company anytime, anywhere, Villalobos said.
Walter Schindler, managing partner for Odyssey Venture Partners of Newport Beach, said he gives people three tries to explain their business.
If they can’t, they’re out, he said. What’s more important, though, is the business plan, especially the executive summary, he said.
“The elevator pitch is important to a lot of people,” he said. “But we don’t really put a whole lot of stock in it.”
If a company fits one of Odyssey’s portfolio categories,energy, biomedical and wireless,and management presents a good plan, then Schindler might schedule a meeting.
Kennedy is hoping for exposure. She wants to raise $700,000 for her company, which offers homebuilders’ customers design options for their homes via the Internet.
The entrepreneurs will be judged on presentation and profit-making potential. Three winners earn meetings with investors.
Some of the no-nos when pitching include talking too fast, spending too much time telling who they are or where their company is based, using fluffy words such as “revolutionary” and perhaps worst of all, expressing little passion.
“But it doesn’t mean show business,” Villalobos said.
Andrew Hanscom, chief executive of Irvine-based Databank International Inc., will try and sell his foot software and scanner device.
He has his work cut out for him. “It’s not biotech, it’s the shoe industry,” he said.
And the product is complex, involving three-dimensional foot scanners, databases and Web sites,all of which may go straight over grandma’s head. Essentially, Databank International’s device takes 3-D measurements of customers’ feet so shoe stores can better fit their clients and eliminate returns.
Hanscom said he wanted to learn how to do an elevator pitch because a briefcase can’t be carried on the golf course and PowerPoint presentations at cocktail parties don’t mix.
But his first practice session didn’t go too well (presenters get three practice and coaching sessions prior to the event).
“I stood up in front of the room and got these blank stares,” he said. But he has cleaned up his pitch and finishes in 45 seconds.
Hanscom begins with his name and zeros in on how his company saves shoe stores money,shoe stores lose $3 billion a year in returned footwear because of poor fits, he said.
Villalobos said it’s important entrepreneurs point out how their company will make money for its customers as opposed to: “We’re going to make you, the investor, rich.”
Another pitfall for entrepreneurs is giving a practical pitch that’s not particularly interesting. The investor needs to know how the founder’s company is different, Villalobos said.
Phil Hilmes, chief executive of Los Angeles-based Audssey Laboratories, has an intriguing description of his company’s aim: “We want to increase the emotional impact of audio.”
Hilmes plans to use that in his pitch. His company develops and licenses audio technologies.
The entrepreneur said he’s learned a lot from the coaching sessions.
“I’m used to talking about the company in a more casual style, adding a bunch of fluff,” he said. “You have to give cold hard facts that grab peoples’ attention.”
Even if he doesn’t win, he says if he pitches to an audience of about 100, perhaps one will be interested and that’s all he needs.
