[THE PITCH]
for 17 September 1996. Updated every TUESDAY.
 


[isp.com]
 
BIG IDEA Fat venture capitalists meet money-hungry
entrepreneurs... on the web!
 
25 WORDS <= By compressing the time frame of the
typical VC-entrepreneur dance, VC.COM
reduces the lamb-to-slaughter cycle to
days rather than months.
 
HARD SELL Bringing venture capitalists and
entrepreneurs together is not a very
efficient process. Once a budding
Andreessen-wannabe has developed his
killer app and written the
incomprehensible 80-page business plan,
it's on to a humiliating courtship with
the VC. First we have the obligatory
lunch at some cheesy seafood restaurant
on Sand Hill Road, followed by a humbling
tour of the VC's swanky offices. Then,
under the guise of "due diligence," the
fax machines start whirring out term
sheets and deal memorandums. This stalls
the process long enough to push the
entrepreneur to the brink of bankruptcy,
all the while their "first-mover
advantage" gets vaporized. The result? By
the time ink hits paper, the entrepreneur
is so desperate they've come out of the
deal demotivated and demoralized, and the
VC has a company who's missed their
market window. Surely, if we know the
results ahead of time, there must be a
more efficient way to do this?
 
VC.COM compresses the traditional
high-tech funding cycle by giving venture
capitalists and entrepreneurs a
forms-driven template that serves as an
intermediary for the negotiating process.
For the entrepreneur, it's a fast and
efficient way to find that ideal funding
partner. For VCs, it solves the age-old
problem of deal flow by securing a steady
stream of new companies - all from the
privacy of their own browsers.
 
[Comic]
 
The entrepreneur logs into VC.COM,
and types in his big idea. The patented
"Mission Streamliner" helps the
entrepreneur keep the idea within
bounds, streamlining the business plan.
The entrepreneur then types in the amount
of financing needed and the proposed
valuation, and the site does the rest.
VC.COM uses proven industry ratios to
develop a realistic funding model,
eliminating messy negotiations between
parties. And our new "Management
Augmentation Matrix" lets the
entrepreneur help pick their newly
appointed mentors by specifying specific
duties they need help with. A venture
capitalist logs in ready to cut a check,
knowing the work has been done for them.
In the end, the company gets funded much
more quickly, the VC gets the company
that they want, and it's sit-back-and-
wait-for-the-IPO time.
 
OVERHEAD Let's not kid ourselves. VCs hate risking
a scratch on their new BMW by parking in
SoMa. Plus they always feel so out of
place, what with all this talk about
computers and such. But they've got a ton
of dough to burn through, and need a
reliable source of new companies that
deal in technologies they're clueless
about. And talk about predictable plots!
From the minute an entrepreneur's
Converse All-Stars meet the marble floors
of a venture capital office, we could
script the results. VC.COM just does it
for them. For infrastructure, a simple
secure commerce site will suffice. The
"Mission Streamliner" is an off-the-shelf
business-plan template that allows the
entrepreneur to enter only the most basic
company information, stripping out "The
Management Team" section. The "Management
Augmentation Matrix" is a slick way to
get the founder to pick their own
replacement, since they're gonna get the
boot anyway. Forms-based CGI scripts will
do the math on the numbers, whittling the
valuation to the point where the VCs own
more of the company than the
entrepreneur. The system adds endless
provisions for warrants, options and
preferred shares sure to confuse the
entrepreneur so badly that it'll take
their law school buddies weeks to figure
out the deal. By then, the entrepreneur
has given away a pretty hefty chunk of
the company, the employee-share pool is
down to single digits, and the VCs have
just enough board seats to install their
own CEO six months from close. As IPO
time rolls around, the entrepreneur is
little more than a figurehead who waves
from his office as the tour of investment
bankers goes by.
 

[Pitch Archive]

courtesy of
I.P. Oh