The Perfect Pitch Part II

Scene II: Technical dress rehearsal, Harvard Business School, November 8, 2001. One day to the VC
forum.

Shoba and her business partner Anthony aren’t speaking to each other when they arrive at Harvard’s
imposing Spangler Center. They’re not fighting; she’s just in her own world. "The momentum is building,
and you feel like you’re in a different place," she says.

In the two weeks since her disastrous walk-through, Shoba has poured every last ounce of her being
into improving her 10-minute pitch. "I thought nothing else was important but those 10 minutes," she
says. "I told my employees, ‘Don’t call me unless someone is dying.’ " She spent entire days holed up in
her Manhattan apartment. Some Springboard coaches counseled her to be conservative about her
company’s mission. " ‘Don’t be too ambitious,’ they said. But that was counter to what I believed I
should do as I got more confident," says Shoba.

There are less than 24 hours until the VC forum, and the debate still rages in her heart. "How gung-ho
should I be?" she asks herself.

Act III: Stand and Deliver

Scene: Springboard: New England 2001 Venture Capital Forum, Harvard Business School, November 9,
2001.

In the small room off the stage Lucy waits. She is the first presenter of the day. She doesn’t feel nervous,
but with a few minutes to go, she suddenly bolts from the room. She wants to be alone. She quickly
practices again how she will hold her props and the slide clicker. "Don’t talk when you walk," she
reminds herself. And then it’s time.

Lucy walks across the stage holding her balloon and straw and launches into an almost dreamlike
performance. She’s hitting all her points and having fun. Lucy concludes with words every VC likes to
hear. "If you want to invest in a company that has near-term market potential, defensible new
technology, long-term growth potential, and a great team, come see me," she says.

The heat is on.

Comic relief comes when A.G. gets ready to walk on stage. The person introducing her fumbles with the
PowerPoint clicker and says what sounds like "Oh, shit." The audience roars. But what truly makes the
performance memorable is the way A.G. quickly takes command of the stage, makes a joke, and sails
right into her story. She has everyone’s complete attention as she confidently calls for $4 million in
financing for PrivaSource. (One result of all the coaching: presenters have increased not only their sales
projections but also the amount of funding they’re seeking.) When A.G. reveals her J.D. background, a
couple of thirtysomething investors let out a little whoop of approval for the lawyer who has refused to
dress the part. In fact, she was counseled to remove her ear hoop for the forum, but she refused.

And the painful moments, well, they are really painful. One woman freezes like a deer in the headlights.
But sitting in the first row, Amy Millman locks eyes with the entrepreneur and silently "coaches" her
through the pitch. Another presenter apologizes three times for being nervous and bursts into tears
when she walks off the stage. Witnessing the few disappointing performances breaks Millman’s heart.
"These women have done so much," she says.

No one knows what to expect when Shoba takes the stage, nearly last on the lineup. She looks radiant in
a flattering beige dress, a bright red Hermes scarf, and crocodile-skin high heels. "The news industry is a
bit of a mystery to many people," she begins. But as she looks out at the sea of faces, she struggles not
to panic. She quickly focuses on Anthony, her business partner, seated in the middle of the auditorium.
He is literally on the edge of his seat, silently reciting Shoba’s pitch, word for word, right along with her.
Then Shoba spots one of her coaches, a woman lawyer, sitting directly behind Anthony and doing the
same thing he is. They are both gripping the sides of the seat in front of them. Shoba feels her feet
weaken and her toes go tingly. "I saw their mouths moving. I suddenly went cold and said, ‘My God, I
can’t let these people down,’" she says later.

But then something happens to give Shoba pause: a man carrying a toddler walks down the center aisle
and settles into the front row. Shoba thinks, "Oh, it’s a baby. How unusual." The man and the toddler
soon leave, but somehow the baby’s brief presence has soothed Shoba’s nerves and put her in a
humorous mood. She launches into the rest of her presentation in earnest. And she does what she once
dreaded: she talks about herself and shares her big dream "to transform the way news is distributed."
She plays up her own background as an experienced entrepreneur who succeeded in bootstrapping her
first company and "selling it for $14 million." Gasps are heard. And for effect she adds, "It felt good
then, and it still does." The crowd erupts. You get the distinct feeling it has been much too long since
investors have heard a good exit story.

In the audience, VC Tom Claflin puts a little plus mark next to Shoba’s name.

Act IV: The Show Goes On

Scene: Springboard reunion, Goodwin Procter law offices, February 13, 2002.

Where are they now? Shoba, A.G., and Lucy are holding on for dear life. Not all 23 Springboard alumnae
have seen their companies survive. One woman was forced to liquidate her business for lack of funds.

For Shoba, who shows up at the Boston reunion looking depleted, it has been an exhausting
three-month roller-coaster ride since the forum. From Springboard she drew up a list of investors and
gave them each a deadline: meet with me before Thanksgiving. To her surprise, a few called her to
arrange a date. "Five investors contacted me, and I called 15, of whom 7 agreed to listen." By December
she had met with 12 potential investors. The good news: they wanted to go the next step. The bad news:
they wanted to go the next step. Shoba struggled to juggle the demands of multiple VC firms, all
clamoring for data on the NewsMarket’s sales projections and customers. "One partner at a VC firm said
to me, ‘So you’ve got 30 Fortune 500 clients. Can you get another 30?’ I’m thinking, ‘Jesus Christ, guys!’ "
she says before the reunion.

Shoba has endured the ignorance of VCs who didn’t bother to read a word about her company and the
insult of walking into large VC offices littered with leftover pizza and some other company’s term sheet
carelessly left on the table. Once she simply walked out. Other times she weathered the rejection of VC
firms that didn’t have the manpower to tend to smaller deals.

"People are pretty quick to say, ‘Should I listen or tune her out?’ It’s going to
be a lazy audience."

But then came the breakthrough. Claflin, who sought out Shoba at the forum, had failed to persuade his
partners at Claflin Capital to invest in the NewsMarket. However, he called Shoba to say that he’d
decided to personally invest, and he gave her the name of a big VC firm he knew well. She didn’t expect
to get a call. But 48 hours later she did. And that was followed up by two meetings with the partners.

By the time the reunion rolls around, Shoba is thick in the throes of negotiating a term sheet.

Lucy, post forum, took a $500,000 loan from her current investors to keep Chaoticom going. But she still
needs a major backer in order to make good on product-development dates. "We’re getting in front of
customers now, but you only get one chance — so you have to be able to deliver what you’re
promising," she says. She is now willing to do a VC deal for $4 million — half as much money as she
asked for at the forum — to get it done faster.

For the benefit of other Springboard alums gathered at the reunion, Lucy relates her latest VC
encounters. "It used to be they didn’t call you back when they meant no. Now they will call you back
when they mean no," she says. But Lucy, ever cheerful, shares her "Three Ways to Know a VC Is Really
Interested."

1. They must use the word excited at least three times in any discussion with you.

2. They must ask for a detailed "cap table" (that’s capitalization table); then you know they are really
pricing the deal.

3. You’re talking to a partner at the firm.

A.G. is getting VC meetings but no talk of a term sheet. So she is redoubling her efforts to land a first
major client and is seeking reinforcement from angels. "We may end up with 18 angels, which could
make things complicated with VCs," she says. Her Springboard coach, Clark Waterfall, of the Boston
Search Group, warned her, "You don’t have a choice."

At the reunion, she announces that she has commenced talks with 10 more VC firms, thanks to her new
Springboard connections. Ask her what she’s learned, and she happily complies with her own crib sheet
of the stock questions that "VCs ask when they don’t know what else to say." A few of her favorites:
What’s the mission of this company? Translation: Are you willing to change your model? What are the
founders looking for? Read: Will the founders get out of the way when the time comes?

But A.G. insists she’s not discouraged. "It’s still interesting," she says. "I still get raked over the coals.
‘Is it realistic to think you can do this level of sales in this time frame?’ I’ve had to do some fancy
dancing. But they’re good hard questions."

Curtain Call

Scene: Five months after the forum, April 2002.

April Fool’s Day marks one year since Lucy quit her big-company job and took the reins at Chaoticom.
But she has no regrets. She is waiting for a term sheet from one of three VC firms, including one she
reconnected with at the Springboard reunion. Lucy has been courting all three seriously for months. She
thinks this is the month.

A.G. has made surprising leaps. On March 10 she closed on a $1.3- million angel round with 15 investors.
Now she is deep in term-sheet negotiations with a well-known Boston VC firm, a connection she made
indirectly through the Springboard forum. "Springboard," she says, "has been a good branding device
for me." Her only disappointment: she can’t buy a motorcycle now. After all, she has investors and
employees to consider.

Shoba has the best news of all. "I’m raising 50% more than I wanted to raise, and I had to turn people
back," she reports. On February 20 she signed a term sheet for a $3-million "A" round that included Tom
Claflin, three VC firms, and an angel investor. She met four of the five investors directly through
Springboard. In early April she is nervously awaiting a closing date. "You hear all kinds of horror
stories, like VCs who walk away even after the term sheet," she says. But Shoba is also counting her
blessings.

The progress of the three women gives some credence to a bold prediction by the leaders of the
Springboard nonprofit: that by year-end the New England presenters will not only outperform the market
but uphold the nearly 40% rate of financing. That’s not so wild a dream, says Claflin. "I was really
impressed by the quality of the people there," he says.

Shoba says she’s a changed woman. "Before, I was embarrassed to go up there and say that what I have
is an unbelievable opportunity," she says. "Talking about the company is in many ways like talking
about yourself. Springboard said that’s OK." She pauses to reflect on how far she’s come. "My lead
investor told me, ‘There’s no doubt you knock people’s socks off when you pitch.’ And I was thinking, ‘If
you only knew …’"

Susan Greco is a senior writer at Inc and is coauthor of the new book Customer Chemistry: How to
Keep the Customers You Want — and Say "Good-bye" to the Ones You Don’t (McGraw-Hill, 2002).

On-Line Resources

Are you ready to present? Learn more about what investors listen for now at http://www.inc.com/keyword/vc.
You can also find related stories about raising capital, as well as about the birth of Springboard and the
new network for female entrepreneurs.

More related links:
Elements of a Winning Pitch
Directory of VC and Entrepreneurial Boot Camps

Was It Worth It?

Shoba Purushothaman, 39, CEO, the NewsMarket, New York City

Best part of Springboard: "At a practice session, a VC said to me, ‘Stop selling me your product and sell
me the investment opportunity.’ That was a turning point for me."

And the worst: "A number of VCs came to Springboard events only to meet other VCs."

How I think about my business now: "Like a stock. Investors are like customers, but what they’re buying
is your stock. I also learned to value my company a lot more because of the things people latched on to
at Springboard: the high margins that are possible, the nonintuitive barriers to entry, and my low fixed
costs."

A.G. Breitenstein, 33, senior vice-president, PrivaSource, Waltham, Mass.

Best part of Springboard: "Continually practicing the pitch and getting feedback on all aspects of the
business. My main coach helped us flush out the inconsistencies in the way I described the business
model."

And the worst: "The same coach forced me to watch myself on a video monitor as I talked."

How I think about my business now: "We used to think of ourselves as a software company, and now
we see ourselves as a ‘data intermediary,’ which has much more potential. To the extent that we can
create a much better supply of patient data, we can increase the size of our market — from $3 billion to $5
billion. Springboard pushed us to put numbers to it."

Lucy McQuilken, 37, president, Chaoticom, Hampton Falls, N.H.

Best part of Springboard: "The quick pace. Springboard gave me deadlines. I don’t think my
presentation would have evolved so quickly otherwise."

And the worst: "The presentation was geared to speaking for 10 minutes in an amphitheater to a large
audience. In my experience, most VC meetings are about 90 minutes long and extremely interactive. Some
VCs won’t even let you talk without asking questions first."

How I think about my business now: "I’m more realistic about market size. The video-rental market, for
example, is $17 billion, but only about 20% of that is available to ‘infrastructure’ companies like mine, so
it’s actually more like a $3.7-billion market. And I explain that in my presentation."

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