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12 Tips to Pitch to a VC if You Have a Business Idea Coming from Academia

After Evaluating more than 150 Technology Transfer Projects in 3 Months, These Are the Tips I Can Share with You

I admit. I have a Ph.D. in chemistry, I did my post-doc, and back in those years, I was already thinking about transforming some of my findings into business ideas. I did not do it in the end. Maybe because I was not ready. Maybe because I got overwhelmed by the need of publishing scientific papers instead of focusing on business or maybe because after all, I did not find anything that was impressive enough to me either.

Fun enough, after almost 10 years, I ended up being the guy who evaluates business ideas coming from researchers. During the lockdown, I and the rest of the team of the venture fund I work for had to evaluate more than 150 ideas coming from brilliant researchers all around Italy.

It has been quite a journey. Sometimes I could see myself in those researchers, sometimes what I did not want to become, and others who I wish I was.

After some time is passed from those three crazy and intense months, I can look back and see some common patterns. This is my collection of advice, for those who have a potential breakthrough into technology and decided to fundraise to transform it into a successful product in the market.

1. DO NOT BE COCKY. Maybe you graduated with outstanding results and you are publishing in top-level scientific journals. This is great, but still, look at how many articles make an issue of a scientific journal and then multiply that number for the number of years that journal existed for. You are a good scientist, not the only one. Do not underestimate those you are talking to, and do not fall in love with your science. Maybe, it is not such a good business idea.
2. CEO, CSO, CTO, CFO, CMO… Wait! Your start-up (where incorporated) is made of 3 founders? Please, use the power of google and read the definition of that title that you like to have under your pictures in the last slide of your presentation! Most of the time a simple “Founder” is more than ok. And it is ok to be “simply” a Founder even in the future when you will have a billion-dollar company. Hire expert managers and C-executives as soon as possible. Exploit their experience. Being a scientist or a Professor does not mean being a businessman or a good corporate manager.
3. Science is not the Product. This is one of the most common issues. A good idea, a well-published paper does not make the product done. If NASA had the need to build the TRL scale, it is because from science to market the journey is long, complex, and though. Assess it properly.
4. ADVANTAGE vs PROBLEM. Nine out of ten researchers introduce their technology by addressing a problem. Usually, the pitch starts describing a problem and providing the solution straight after. This is my personal perspective: except for drug development, where we are actually dealing with a health problem, I would rather exploit the concept of “advantage”. Having in mind this “advantage” concept, your pitch will change deeply. I would use something like: “with our technology you save money”, “you make better products”, “you can build a new revenue stream”, etc. This is usually quite relevant if you want to sell a product.
5. BUYER PERSONA. As a former geek, I understand the beauty of an over-accessorized tool. Unfortunately, though, in the last 20 years, there is quite a lot of literature showing that the best way to enter the market is through the so-called MVP. Look for -and design your buyer persona, this will guide you from the beginning to the market with the right step.
6. PITCH TRIAL to your friends (and not colleagues). Did they get curious and excited after your pitch? If Yes, well done. If Not, please change something and repeat.
7. STORYTELLING. Even if you have to talk science and finance most of the time, keep in mind that you should also be able to tell a story, possibly a winning story. You need to do it both for investors and future customers. Get used to it.
8. CASH FLOW. Set a budget that includes communication, legal, IP protection, travel expenses, and taxes: developing a business plan is about cash flow. Also, the valuation of your company will go through a “cash flow” analysis. Get familiar with it. It helps investors in understanding the money you need and you in not running out of money in 6 months.
9. LET THEM TALK. Think about your team and assess their communication skills. Are you the right one for pitching? If you are the PI of the group, or the leader- senior member, sometimes it is wise to leave the floor to someone else that has better communication skills. This shows two good points to potential investors: you are aware of your own limits and are ok with collaborating with talents. You are a genuine team player; this is more important than science.
10. Explore the scenario. When introducing a new technology or product to come and you are a scientist, often you might feel uncomfortable talking money. It is understandable. Almost everyone knows that it is a good thing to provide estimates of the market size, cagr, etc. in your deck. What is often missing is information like how much it is going to cost your product? What is the pricing strategy of your competitors? By showing these numbers, you help investors in understanding the positioning of your product.
11. SET A USE CASE. If you are pitching your idea to investors, you cannot expect them to always be proficient in your field. By setting a use case and showing where your product is going to be placed in the value chain, you help them understand the value of what you have in mind.
12. VALIDATE your product in the market. Yes, I know.. this is one of the most difficult things to do. Especially if you do not have a product or if having an MVP is still far away. If you have invented the best time machine, everyone would understand that it takes time to build it. Still, while you are raising money to develop a prototype, you can meet potential customers and see if they are already willing to pay. I repeat: willing to pay NOW. Do they want to support the development of your prototype? This validation will payback in different ways. First, you will start to gather real feedback from the market. You will understand how to design and fine-tune your product and communication according to this feedback. Second, you might end up with partnership or industrial POCs that when are mentioned in your pitch will make investors even more willing to do their job with you. Last but not least, it should be you going out there and sell your product in the beginning. To hear some No’s, about the beautiful idea you had, is extremely useful to understand the complexity of establishing a new product in the market.

Good Luck!

P.S.: Thanks to Roberto della Marina — Managing Partner of the VV3TT Fund for the fruitful conversations on this topic.