A World Class Pitch

Athletes are gearing up this spring for the Olympics in Beijing, but for New Jersey entrepreneurs a shot at the gold arrives much sooner.

The Spring 2008 Elevator Pitch Olympics, presented by the Venture Association of NJ, is an opportunity for entrepreneurs to meet with potential investors and talk about their dreams. Impressing the right venture capitalist means winning the funding that will take their dreams from idea to million-dollar company.

The Elevator Pitch Olympics is one part of a day-long expo for entrepreneurs beginning at 10:30 a.m. on Thursday, May 22, at Marriott Hanover Hotel in Whippany. Exhibitors and elevator pitch contestants are limited to 35 companies, but according to Jay Trien, president of VANJ, last-minute vacancies occasionally do occur, so entrepreneurs who are prepared and interested in presenting should call Clara Stricchiola at 973-267-4200, ext. 193. Cost to attend: $75.

The day offers much for both entrepreneurs and investors, Trien says, including a potentially beneficial lunch. “Entrepreneurs have the chance to sit down for an hour next to investors and talk about their products. Some of our entrepreneurs have found funding just by sitting at lunch with an investor at the expo. For investors it’s an excellent way to hear about 35 great ideas all in one day. “

The Olympics are judged by investors who, just as in the real thing, will hold up their scores at the end of each presentation. Contestants are awarded points from 1 to 10 in two categories: quality of presentation and business fundability. This year’s panelists include Ethan Ayer of Milestone Venture Partners; Charles Crockett of Ascend Venture Group; Michael Helmer of Thacher Proffitt & Wood;, Jeanne Sullivan of Starvest Partners, and Tom Uhlman of New Venture Partners.

Winning the Elevator Pitch Olympics is about more than just having a great idea, of course. “A common mistake made by entrepreneurs in pitching their company is presenting their message from their own point of view, as entrepreneur, and not from the view point of the investor,” says Jeanne Gray, whose company, NJEntrepreneur, is one of the sponsors of the Elevator Pitch Olympics.

While the term “elevator pitch” is often used to refer to any short presentation about a business, pitching to investors differs from pitching to a prospective client, explains Gray, who calls herself a “serial entrepreneur.” In fact, the serial entrepreneur status is the reason she started NJEntrepreneur.com. Based in Westfield, her business helps “emerging growth companies build their businesses faster,” she explains.

Gray received her bachelor’s degree in applied business in 1978 from Cornell University and her master’s in finance from New York University in 1983. She founded and ran a point-of-purchase display business for 12 years before selling it and moving on to “run other companies” for the next several years.

“I realized finally that I am a serial entrepreneur and I wanted to work with other people who were interested in starting a business,” she says. She also realized there was no one website where entrepreneurs in New Jersey could go to find out all of the information, advice, and technical expertise they needed. She decided to fill that void with NJEntreprenur.com, a web-based business that offers a variety of free and membership fee-based services as well as individual consulting.

“There are a lot of business coaches and consultants out there who come from a corporate management background,” says Gray. “What makes me different is that I am also an entrepreneur. I’ve experienced everything that the new entrepreneur is going through.”

That experience also helps her to understand exactly what potential investors are looking for. Venture capital firms and angel investor groups receive hundreds of proposals each month. That means that the entrepreneur is striving for attention in a very crowded field. “‘Entrepreneur’ sometimes speaks in terms of their vision and dreams, of their product features and market share,” says Gray. “The investor evaluates opportunities in terms of return on investment and repayment of investment principal.” To stand out, an entrepreneur must explain how he will help the investor make money.

Your market. The first step in presenting to a potential investor is to explain the market need and how your company will solve it. “Give details on market share. Don’t just say, ‘this is going to be a billion dollar industry and we will have 10 percent of it.’ That’s not the way an investor looks at things,” says Gray. That type of statement is the mark of a plan that has not been well thought out.

Your customers. How many customers can you realistically expect? “Use five-year revenue projections that are based on building the company from the ground up. Realistically describe the number of customer contracts you will need over that period of time to make your goals and tell the investor how those contracts will be secured,” says Gray.

Proof of concept. Make sure the investors know what you already have to offer. “Many people think that investors are looking for a great idea. In fact, most investors are looking for an emerging company that already has a product and customers and experience,” says Gray.

Discuss the background of your management team and explain how their experience is relevant to the industry you will be working in and to the growth and management of the company. You should also describe how any gaps in experience will be filled.

The money. Make sure you tell your potential investors how much money you need and how you plan to use it. You should also discuss how much money has already been invested in your venture, either from you, your family and friends, or other investors. Explain what has been accomplished with those funds and how and why the investor’s money will be well spent to accelerate growth, says Gray.

The return. A good elevator pitch details how and when the investor will get his money back. Investors want to know that they will get a return on the money they invest, when they can expect to see that return, and what the rate of return will be. “Project an exit strategy for the investor describing how it will occur, such as by the company’s acquisition or through an initial public offering,” says Gray. Investors usually require repayment of their investment within a five to seven-year period.

To come home with the gold from Beijing this summer, Olympic athletes must be the best in their sport. It’s the same thing at the Elevator Pitch Olympics. To come away with the gold entrepreneurs must explain not only why their idea is the best, but why it will be the best investment for their funders. —Karen Hodges Miller

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