New York-based Zor Gorelov is a three-time startup entrepreneur. He’s the founder of Kasisto, a company that develops conversational AI platforms for banking. Though founded in 2013, Kasisto’s techology is being used for banking bots at DBS Bank, Mastercard, TD Bank, Standard Chartered and Wells Fargo, and the list continues to grow.
But in the early days, although Kasisto’s technology for AI and chatbots resonated with funders, its application to banking led to questions from some investors.
“When we said we wanted to start with banking, some VCs were not very enthusiastic and wanted us to do something else,” Gorelov said. “One VC told me, ‘Why don’t you build a development tool and sign up developers, and see what traction you get and come back?’ And I was like, ‘Seriously?'” Others suggested he apply his conversational AI to other business ideas. But Gorelov stuck to his vision to apply the technology to banking and was eventually able to score numerous funding offers.
The science of pitching, he explained, is a lot about persistence and finding the right type of investor. He acknowledged that most pitches fail, and most seasoned entrepreneurs understand that’s just part of the process.
“The basic principle is you have to kiss a lot of frogs to find the right VC,” he said. “Some entrepreneurs fail because they’re not the right fit [with investors], some aren’t on top of their game, and some are pitching to the wrong investors.”
Tearsheet spoke with startup entrepreneurs to nail down the science of pitching.
The personal brand
To be listened to, founders may need to do more than just chant the virtues of their idea.
“Street credibility matters — more and more that appears to be in the social world,” said one New York-based founder. “People that tweet more often get listened to more. It doesn’t mean that their motivation is necessarily higher; it just means they have more stuff out there.”
For Emmet Savage, co-founder of investment startup Rubicoin, being a known quantity was an important part of the process to land a funding partner. Savage said his first major investor was online investment advice platform The Motley Fool, and since he was already a contributor to the site, that made the funding ask a lot easier.
“There was a high level of trust because we went back a long way, and they know me as a contributor. And when they invested, it reassured a lot of others,” he said. “When I meet new entrepreneurs and they have an idea, my view and the advice I always give them is to go to who you believe is the biggest player in the space, and ask them to back you.”
Looking back at the pitching process, one U.S. West Coast-based founder of a personal finance platform said knowing how to interpret the signals investors give during the process is crucial. Since raising money is time-consuming, he said it’s important to be wary of “bad closers” — investors that ask for more than a couple of pitch rounds but show no appetite to close a deal. “It’s such a long and arduous process; it’s not that fair for someone to take up that much time and relationship capital,” he said.
The West Coast founder said it’s worth keeping an eye on funders that make asks that go beyond what’s reasonable. During an early-stage fundraising round, he said he pitched around 40 potential funders, and among them, two dragged out talks, requesting seven meetings over several weeks.
“It was like the same questions over and over again, and it almost seemed like they were looking for Series B or Series C results.”
To the founder, inappropriate asks were red flags. He said that despite no apparent deal, the venture capitalist wanted to meet with his other investors. This triggered a request to get a reference from a high-profile angel investor for a reference despite no movement on the deal. “That was a favor I had to burn on that,” he said, explaining that it doesn’t look good for a founder to pull a high-profile reference unless the funder is serious.
Another investor made what he thought was an unusual reference request. The funder asked for three professional references “that he had a good relationship with,” along with one person with whom he had a significant disagreement. To the founder, offering up a bad reference seemed like a pointless exercise, so he just sat on the request while he waited on other offers, which eventually came through. A lesson he said he learned was to move on if a deal didn’t shape up up after two or three meetings.
But regardless of how adept an entrepreneur is at building their brand and taking feedback on their pitch, it’s important to stay true to the vision to be successful, entrepreneurs say. Gorelov cites his example of an original idea that could have been taken astray, but moved forward due to perseverance of a vision and finding the right kind of backers to support it.
“It’s important to believe in what you’re doing and not change course after every meeting,” he said. “VCs are looking for different ideas, and you just need to find the right partner who will believe in that, will help you grow your business and get behind you.”