Thinking like both a business owner and a venture capitalist – and how it affects a pitch

What’s all the fuss about? I said yes, I’d invest. Okay, it’s the first time since I started hearing pitches on BNN’s The Pitch. “What’s so special about Neil Raj’s pitch for AdCommunal?” over 10 of you asked me by email. Let’s work through it.

The business owner perspective

When I appear on the show, I’m wearing two hats – one as a business owner and one as a venture capitalist. From a business owner perspective, I was not sold on AdCommunal’s value proposition for delivering leads. As a business owner, I want sales, not leads. John Varghese (VentureLink Funds) and I sparred in a friendly way over this perspective. Sales contribute to “top line” revenue. Leads might, but there’s no guarantee a lead will become a customer. Want cash flow? Focus on sales, or conversions, as we say in the online business world.

The venture capitalist perspective

From a venture capitalist perspective, I loved AdCommunal’s business model. Here’s what stood out for me:

1.       Neil Raj has credibility – he’s worked in the online adverting world and some of his previous employer companies were sold for multi-millions.

2.       Neil Raj is smart and articulate – he nailed his answers on the show (okay, his answers cut into my airtime, but I’ll forgive him).

3.       Pay-for-performance models of online advertising are taking over traditional “you pay us a fortune, and we may deliver conversions for you” models – so AdCommunal is early stage in the life cycle.

4.       Huge growth potential.

5.       Exit opportunity – AdCommunal could be built for an early and lucrative exit – for Neil and his investors.

6.       AdCommunal is cash flow positive – and has been since day one posting $2.5 million in revenue for 2010.

So I said yes. Easy – subject to due diligence. I did raise a concern over Neil’s team. I want him to build a stronger, better known team with a track record.

Want to attract VC money? Build a business model that speaks to credibility, team, concept, growth and traction. I like saying yes.

Have no idea what I’m talking about? Watch the February 2 episode of The Pitch online for free on BNN’s website. Let me know what you think!

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