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The Language of Venture Capital

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The first time I attended a conference to learn about venture, I was greeted at the door by a man who said, simply, "VC or Entrepreneur?" I knew I wasn't a "VC" or Venture Capitalist, but had never realized that I was an Entrepreneur -- or that the word "Entrepreneur" could actually be a job title.

So, shortly thereafter, I joined the ASTIA program for female entrepreneurs (now firm in my conviction that I was an Entrepreneur). This is an incubator for female CEO's with start-ups. I distinctly remember sitting in one of the first seminars struggling to follow the language one of the instructor/CEO's was using to demonstrate how to assemble my company financials. It was then that I realized that almost every other woman in the room was struggling to keep up as well. Yes, there were a few MBA's who had the lingo down, but not the rest of us. And what I also realized was, it wasn't because we weren't able to articulate what was being asked of us -- in fact, most of us could rattle off the answers if asked in layman's terms. But not so in venture speak.

Since that time, I've started to familiarize myself with the terminology necessary to operate in this world of start-ups, fundraising and building a business. It was not something that, as a woman, I had ever been exposed to, though I had started businesses before. And I realized that women in particular are very disadvantaged by not knowing this language.

So, for my first blog, I am sharing with my fellow female entrepreneurs what and how I learned the "language of venture."

Here are a few suggestions that worked for me:

1. Attend pitch sessions. Most angel groups have showcases. (you can Google angel showcase in your area; or if you don't find any, check out www.vator.com, the www.pitch.com or other online pitching opportunities. (Note: a "pitch" is exactly what it sounds like -- you explain your idea in concise, clear language designed to let your potential investor see what you see in the idea with an end goal of getting them to give you money to do it.) I'd also suggest seeking the advice of others in the audience. If you're lucky enough as I was to sit next to someone who will take the time to critique the pitches for you (my chance meeting was with Ted Driscoll, angel, VC and now friend extraordinaire...), then take advantage of the fact that most have probably seen hundreds of these pitch's and can focus you on the most effective way to clearly and concisely present your business and connect with potential investors.

2. Earnings Calls: I got a great bit of advice from a friend at Goldman I met on a plane years ago. He said: Listen to earnings calls. Anyone can call in. So give it a try. Write down all the words you hear that you are not familiar with. Then look them up. Google them. See how they're used. Then try to apply them to your business. If you pick up languages easily, great. If not, listen more. You'll pick it up and soon start talking about your relationships in terms of scaling! (Or not... yikes... time to bail.)

3. Power Point: Do a tutorial for using the Power Point program. This is the common form of presentation when you pitch your idea to potential investors or venture folks. I have always liked Bill Reichert's pitch guidelines. Aside from being a smart man (evidenced by the fact that he's married to a very lovely and smart woman who's also a lawyer and also a Michelle), his advice is solid. You can find his slideshow presentation here, which contains the ten things that should be in your presentation. And don't be deterred when they ask you to make it "pretty." I was so worried about insulting my audience that I had all very serious words and statistics on each page. I was told venture loves statistics that support your proposition that the market is huge and that they will make tons of money if they invest -- so they don't have to take your word for it. Wrong on the words. Right on the statistics. Venture folks don't like to work too hard to get your point. If they do, you lose their interest. Think of it like dating: If you take one look at him and yell "check!" -- it's probably not going to be a match made in heaven.

4. Connect to Women Run Networks: There are several networks promoting women such as ASTIA, Girls in Tech, Catalyst. I started with ASTIA, which is an incubator. Sharon Vosmek, ASTIA CEO, throws out some pretty interesting statistics (i.e. only 4.3% of venture investments in 2006 had female CEO's). Translation = opportunity! So find one in your area and connect. Aside from providing access to funding, these places teach you "investor speak." This language includes crafting your pitch, assembling a team, identifying market statistics that prove people need/want what you're offering, assembling credible financials to make profit projections (another blog on this another day... ), and possible exits (how will investors realize their profit). They also provide relationships with other CEO's or with "coaches" who have experience in your field. Bottom line, it's all about being able to effectively communicate in their language the need for what you're selling in the market, that your particular solution is the answer, and explaining just how your opportunity will make your investors rich (... now that's a language we can all understand).

Hopefully I've been able to shed a little light on the language barrier preventing many women from obtaining venture investment for their business. If you have more suggestions or funny venture speak stories, I'd love to hear them!

Inspire, Innovate, Illuminate,

Michele

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