Howard Hartenbaum: The Mind of a Venture Capitalist

What if you could know what an investor is really thinking during your pitch?

Yesterday, Howard Hartenbaum, General Partner at August Capital and early Skype investor, met with four of our Founders Network Angel Level Members for private, one-on-one fnMentoring sessions to critique and discuss their investor pitches. He sat down with Tyler Dikman of Loungebuddy, who started his first multimillion dollar business at age 15; Justin Parfitt of HeyLets, who sold FastLife International, the world’s largest speed dating service; and accelerator graduates George Favvas of PerkHub (500 Startups) and Tim Varner of Roost (Y Combinator).

Howard is known for his direct and honest method of giving feedback which can be incredibly valuable if you have thick enough skin to handle it.  In our Founders Network Peer Advisory Boards, we call this “Informed honesty”.  I’ve summed up the best highlights from Hartenbaum’s sessions to give you an idea of what a VC is really thinking during your elevator pitch:

Is the market big enough for venture funding?
If the elevator pitch is good, the investor won’t want to interrupt! Start with a compelling hook to pull the investor in (hint: if successful, this thing can be BIG!).

Please, keep your pivots to yourself.
Hartenbaum advised founders not to talk about the past because investors are investing in the future. Frankly, a long-winded story about the journey of your venture can be a waste of time in a short pitch session.

Can they grow without my investment?
A great pitch demonstrates that your business doesn’t need funding to survive; funding will only accelerate growth.  As Hartenbaum puts it, “We’re all optimists who are going to be skeptical.”  There is nothing like success to silence the skeptics.

Are they winners?
“I have 15 years experience in software” is boring.  “I started my first multimillion dollar business at age 15 and was the youngest person ever to earn United Global Services (Tyler Dikman, LoungeBuddy)” is an incredibly compelling hook.  Quickly summarize your experience in a compelling way to convince investors you are intelligent, qualified and capable.

Do they have real numbers?
As Hartenbaum put it, “Nothing @#$! up a good business like real numbers.” You won’t want to raise funding too close to your launch, because investors will decide to wait and see instead of investing now.  Start building the relationships now.

Is the founder analytical enough?
If you have real numbers, make sure you have a solid grasp on them.  Hartenbaum noted that “two out of five partners” at a VC firm are likely to be analytical decision makers.  Know your audience and address analytical partners by demonstrating your analytical capability with a solid grasp of your key metrics.

Is there a proven business model?
Know your customer acquisition costs (CAC) and make sure they are a fraction of your customer lifetime value (LTV). Present a strong business model to show investors that if they put their money in, your business will generate growth and profit.

Do they realize ‘data’ and ‘Long tail’ are all four letter words?
Too many Investors have been burned on the vague promise of “monetizing the data,” so if that’s your plan, be sure you can back yourself up.

Are they on Android?
Interesting tidbit for the mobile founders, Android is viewed as the market of scale, so if you leave Android capabilities out, investors may pass.

Do they have a backup ask?
Because most investors will pass, make sure to have a second ask in your back pocket. Ask for an introduction to a customer or advisor–because if you’re only asking for money, you’re likely to leave the conversation empty-handed.

A big thank you to Howard for taking the time to advise our members one-on-one!  For the opportunity to access FN’s many benefits including an invitation to our next fnMentoring session, apply here.