Breaking news….If you are a startup pursuing funding, you have more in common with a politician or athlete caught behaving badly then you might think.

A politician caught misbehaving, an athlete photographed doing something he or she shouldn’t be doing, or a celebrity who finds that one heated moment has turned into tabloid fodder for weeks on end all have one thing in common – how they communicate will likely determine whether the incident is a speed bump or a career ender. So what does this have to do with entrepreneurs pursuing VC funding? Everything!

Crisis communication is usually identified as the effort to protect and defend an individual, organization or corporation’s reputation when crisis strikes and public confidence in the individual or organization is shaken or thrown into question. Entrepreneurs often face the same situation every day while trying to raise capital. The crisis is always the same – a lack of funding puts the entire startup in danger – no funding, no operating budget, key personnel pack up and head for greener pastures, and the startup is in a lot of trouble (to say the least). So what is a startup to do? Pitch (communicate with) VC’s to raise the capital to end the crisis!

Lessons for Entrepreneurs:

  1. Have a Central Message

    The images are very clear…the “repentant” politician standing at the dais, wife at this side, as he stumbles through a very awkward and very longwinded statement that says twenty different things, which means he has said —Nothing!

    The value of having a message cannot be overstated. As I said in an earlier column, if you are pursuing funding, you must be able to identify how you will deliver a return on that investment, profits,
    and you must be able to do this in a manner that is clear, consistent, and easy to comprehend –remember, you are asking people to invest at a time when investing, no matter the size of the VC firm, is
    a scary thing to do.

    Why should the VC invest in your company? The risk to the VC is obvious, and the potential reward may or may not be as well. What mitigates that risk and gets the company across the finish line?

  2. It is not about YOU

    The athlete accused of using banned substances often forgets that it is not about him – it is about the fan that has placed his or her trust in loyalty in the athlete and now feels betrayed. The point of view the athlete takes often determines whether he is forgiven or the loyalty is gone forever.

    As much as your pitch may be about your company, it really isn’t – it is about the VC that you’re are pitching too, his or her investment, and what that investment in your company will mean to the VC in
    terms of opportunity cost, time, energy, effort and
    ultimately the ROI.

  3. Be Open –

    Like investigative reporters, VC’s are (usually) very adept at plying their trade, and that means that, when crisis strikes (or you need
    funding), just like the reporter, the VC will probably know what the hot button issues are and where to look.

    Be open – hiding information, trying to gloss over or bury a problem will do more harm than good. If there is bad news, it will get out – get it out on your terms. What you don’t say says a lot.

  4. Body Language Matters –

    An apology given with a smirk, or with arms crossed and a hostile look (don’t laugh, I’ve seen it) is always recognized, and the result is never good. In that same vein, looking down the entire pitch,
    speaking toward your shoes, shuffling in your pockets, fidgeting, bouncing back and forth on each foot (very common) always sends a message. Is body language the major difference maker for a pitch
    – of course not. Does it matter – of course it does –it sends a message.

  5. Words Matter –

    When a major crisis strikes a Fortune 50 company, every word uttered by the CEO and/or spokesperson is analyzed – every word, the choice of language, terminology is a potential landmine, as a poor choice of words could be a devastating blow to a leader. When pitching a VC, think about it – you are asking for millions of dollars– do you think your word choice might matter?

  6. Practice and Prepare –

    I can not overstate the importance of practicing and preparing. The road of busted startups is littered with great ideas and great leaders who failed to prepare for the pitch and didn’t receive the funding.

  7. Every “Crisis” is an Opportunity –

    Every crisis provides an opportunity to for a leader to show his or
    her true character, and can sometimes lead to that leader becoming even more popular going forward, based on how the crisis was handled. Every pitch affords an entrepreneur to do the same.


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