The world is changing, and the “supplier power” of VCs is eroding. It doesn’t cost what it used to to start up a startup, and the more nimble of us VCs realize it.
So, to make a long story short, we need to hone our pitching skills. Which means we need to pay attention to Solution Pitching ourselves.
Imagine if we didn’t. Imagine what an interaction with a VC would be like if we dwelt on the Market Problem the way less Solution-Pitching-savvy entrepreneurs do:
Entrepreneur: Hey, how’s it going?
VC: Are you aware how acute the capital shortage has become? Many entrepreneurs today tell us that they are literally starving for capital, starving for relationships that will move their business forward, and in deep need of answers to these problems.
Entrepreneur: Huh? Are you a VC looking to fund me?
VC: I’ll answer your questions in a second, but for right now just let me picture to you the terrible situation that everyone in the technology-innovation business is going to be in when capital shortfalls for startup investment reach $200B in 2015 as they are projected to do by VentureSource.
Entrepreneur: Are you offering capital to people with businesses like mine?
VC: Some sources of capital provide only partial solutions to this problem. So-called “angels” can offer smaller amounts of capital, but their Rolodex is significantly smaller than what entrepreneurs need. And bank loans, which many think would be a good solution, are poorly adapted to the risks of a startup venture.
By now the entrepreneur has gone from confused to irritated. His questions are not being answered, he’s not sure if he’s wasting his time, but most of all he’s being talked at rather than talked to.
It’s not the road to a Solution.