What Questions Will an Investor Ask You? Moot Corp Part II

“You say there is a need, but you must describe why.”

Listen carefully to investment pitches and you’ll learn a few things about what investors want to hear from new venture teams. An ideal way to be a fly on the wall is to attend the Venture Labs Investment Competition (formerly Moot Corp) which completed global rounds last week at The University of Texas at Austin.

Last year I wrote about What Questions Will an Investor Ask You? Lessons from Texas Moot Corp. Here are six tips judges had for the venture teams this year:

1. Keep Your Numbers Straight

Even sophisticated investors have to digest the financials flashing on the screen, so be very precise about your ask. David Altounian of Motion Computing told one team, “I had a hard time understanding what you are asking for, you said $6 million at one point, but then it looked like $8 million later. I also need to understand the profit potential, the gross margins, give me a clear picture.”

2. Slow Down Your Pitch

The clock is running, but don’t let that force you into speed dump mode. You’ve practiced your pitch a zillion times, but it is all new to your audience. Lucas Braun of OnRamp recommended that teams “Slow down, force pauses in your presentation and allow investors to catch up with the technical presentation.” After one pitch, entrepreneur Ed Charrier complained, “It is still unclear to me how the product works.”

Online Entrepreneur Advocates for “One Day Business Plan”

“Your product doesn’t have to be perfect, it just needs to be good enough.”

Budding entrepreneurs at Texas Venture Week were told by the founder of ATailoredSuit.com that having a business plan is fine, “as long as you don’t spend more than a day on it.”

Tony Centeno is a former Marine, so you would expect him to move directly to his objective without unnecessary embellishment. Addressing a group of entrepreneurs and investors in Austin, he outlined his approach to business startup, lessons learned as he moved from Marine to MBA and finally, internet retailer.

The keyword of the day was action.

“Stop thinking about things with that 20-pound brain of yours,” he said. “Instead, you need to use your hands, your arms, your legs. Seriously, just take action. Sometimes we are just scared to succeed.”

Centeno markets custom-made men’s suits exclusively online. A strange occupation, it would seem, for a man who grew up with virtually no fashion experience. “Growing up, shorts and a Cowboys t-shirt was all I needed.”

University Entrepreneur Teams Follow in Footsteps of Ron Popeil

If your tastes run more blue-collar, how about the Rod Rescuer being pitched by the team from Loyola Marymount?

While there are plenty of gee-whiz technology products and miraculous medical devices among the 40+ business ideas being pitched this week in the Global Venture Labs Investment Competition at The University of Texas at Austin, you’ll also find a few quirky consumer products with a touch of Ron Popeil panache.

This week teams of students from universities around the world converge on Austin Texas for what was once called Moot Corp, the original university investment competition. It is now branded the Global Venture Labs Investment Competition, but the basic gig is the same; student teams compete by pitching their new business ideas to panels of flinty mannered investor judges.

• Austin American-Statesman
• Austin Business Journal

You’ll see the patent-pending bone reconstruction solution (Osteocene) from the team at Rice University, and MEMStim, the neurostimulation technology from the University of Michigan. That’s slick science for sure, but if your tastes run more blue-collar, how about the Rod Rescuer being pitched by the team from Loyola Marymount?

Billed as a durable and light-weight fishing rod attachment, the Rod Rescuer releases a buoyant gas-filled balloon that returns your fishing rod to the surface if it become submerged in the water. Allen Scott, who graduates with an MBA in finance this May, came up with the Rod Rescuer after a failed fishing trip with his buddies ended up with his fishing rod sinking to the bottom of the lake. (Scott makes no mention of how many Budweisers were involved in the incident.)

The Rod Rescuer isn’t the only Popeil-like invention being pitched to investors at the Global VLIC.

Texas Start Up Meet Up 2010

The Entrepreneur Society at the McCombs School of Business.

A great day of speakers and panel sessions, well-planned and executed by MBA students interested in entrepreneurship.

Speaker and panel videos.

Highlights of sessions I attended:

Robert Reeves, Chief Architect, Application Release Automation, Office of the CTO – BMC Software

Reeves serves as Chief Architect for BMC’s Application Release products. He was formerly the CTO and one of the original founders of Phurnace Software (acquired by BMC). Reeves was the Chief Architect of the Phurnace engine and the company’s first products. He has a B.A. in Economics with a mathematics minor from the University of Texas at Austin.

 

• “I was asked early on in our market validation process, ‘If this idea is so great, why hasn’t IBM done it?’”
• “Timing has a lot to do with this stuff, but you can do some things to increase your luck. Be ready to take advantage when that little blue bird lands on your window sill.”
• “We talked to our prospects and asked them, ‘What keeps you up at night?’ We found out that they didn’t want exactly what we had in mind. That saved us a tremendous amount of time and money.”
• “Rob Adams says to talk to 100 people about your idea as part of your market validation. He says, ‘If you can’t find 100 people now you’ll never be able to, and that is true.’”
• “If you want to make a lot of money, don’t start a company. Get a finance degree and head to NYC. If you want to change the world, start a company.”
• “If you want to make money in Q4, you’ve got to be selling to people in Q2. You’ve got to be flying around and meeting with customers, and where does the money come from for airline tickets?”
• “In a technology startup the engineers get treated better than Japanese cattle.”
• “When the economy went to crap we had to cut our workforce by 10%. We protested to the board, ‘But we’re only 10 people!’ But they insisted. So, it was last in first out, that was the only way to do it, because we only hired people we absolutely needed.”
• “When we made sales calls, I only wanted to talk to people who were really going to use our software. We could talk to decision-makers later. First we had to convince the user.”

The Technology Commercialization Race With Rob Adams

“It’s just a stomp-your-foot-on-the-gas-and-hang-on-for-the-ride kind of thing.”

Writer Tim Green recently assembled an interesting mix of UT Austin professors to lend perspective on extreme time scales–from the very long (think tectonic plate movement) to the ultra-short (laser pulses).

His article, It’s About Time, features new venture guru Rob Adams on the accelerated pace required when getting a new business off the ground, particularly in the technology industry.

“When you’re in a technology-oriented startup the world moves at a blinding pace because no one’s idea is truly unique,” says Adams, who works with startups and Master of Business Administration (MBA) students who might have a startup in their future.

When starting a company, he says, it’s better to get a product out to customers quickly rather than tweak it here and there to make it perfect. It’s been the norm in the technology industry to improve quality in subsequent releases.