Wednesday, March 18, 2009

To Get VC, Lose the Jargon and Catchphrases

In the venture capital and start-up world, you frequently hear entrepreneurs and incipient financiers using the word du jour. The buzz word. What they believe is the "it" or the "new new" thing. It is almost as if they believe that, much like Ali Baba, if they merely utter the magic words, the door to the treasure cave will open.

Whether the current catchphrase is Web 2.0 or cloud computing, by the time it is widely recognized as a catchphrase in the MSM it is too late. Too many times I have watched a budding entrepreneur bang the drum of a long over-done buzz word and watched the potential venture capitalist visibly recoil after each stroke. As I mentioned in my earlier post "Five Keys to Raising Venture Capital":

Anyone that is a real source of funding is sophisticated enough to see through a sales routine. They may not call you out on your "marketing" but they certainly won't invest. Answer questions directly and when you don't know the answer, admit it. Don't tell the investor or his advisers what you think they want to hear. Trust me, it is more obvious than you think. Also, don't over play the buzz words. If they are buzz words, the novelty has already worn off. Seriously, Web 2.0/3.0 just does not get people excited anymore. Explain what you are doing and how you are going to do it.

In a great article last week, James Urquhart of CNET made a very similar point in his discussion of cloud computing. He said:
I've had a few discussions with venture capitalists of late regarding the assignment of the "cloud" label to start-ups pitching everything from hardware to--believe it or not--downloadable software clients.
It seems that just about every pitch these days is for "cloud computing," and the folks with the money are getting a little weary of it.

I echo his sentiments and urge entrepreneurs to put more effort into explaining their business proposition in clear and easy to understand English. Jargon is rarely the answer.

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Dividends and Preferences by Hank Heyming is licensed under a Creative Commons Attribution 3.0 United States License.