A Kleiner Perkins partner explains what VCs want to see in the pitch from an early-stage startup

• Kleiner Perkins Partner Mamoon Hamid, who was an early investor in companies such as Slack, Box and Yammer, explains the fine points of pitching to venture capital firms for early-stage startups.
• The key is to find "an alignment around the end-market that the founders are pursuing and our belief in those founders to go actually do it," he told Business Insider.
• "With Series A, there are not a lot of numbers to talk about," he said. "With Series A, I'm thinking a lot about the vision, the team, the market that they are going into. In Series B, it's really about execution since the Series A -- how developed is the product? Is it in the hands of customers? What is the sales cycle like?"
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A startup's early years can be the toughest, especially when it comes to financial matters.

That's why founders and entrepreneurs typically turn to venture capital investors as they look for their initial big investments: The Series A investment round that gives the startup the cash to really establish the business, and then the crucial Series B follow-up round that can add more fuel to the proverbial fire.

Mamoon Hamid, managing director at Kleiner Perkins and one of the early backers of such companies as Slack, Box and Yammer, boiled down for us what VCs like him are typically looking for from startup founders and entrepreneurs in both rounds.

Investors will generally be looking for "an alignment around the end-market that the founders are pursuing and our belief in those founders to go actually do it," he told Business Insider.

Series A to Series B

In a Series A round, investors will be focused on your vision, your game plan and if it's addressing a key need - and less so on financial metrics, since the expectation is that the company is still really just establishing itself. By the time the Series B rolls around, though, that should probably be swapped around.

"With Series A, there are not a lot of numbers to talk about," he said. "With Series A, I'm thinking a lot about the vision, the team, the market that they are going into. In Series B, it's really about execution since the Series A - how developed is the product? Is it in the hands of customers? What is the sales cycle like?"

The biggest mistakes startup founders and entrepreneurs make in pitching to VCs is failing to turn the spotlight on key areas that investors would be interested in in each round, he said. In all cases, he said, what you're trying to do should ideally match what the VC investors are looking to add to their portfolio.

"The blunder is not highlighting the right thing at the right time," he said.

Having deep expertise in solving a problem

In all cases, too, you need to demonstrate that "you're solving a problem, that you have deep domain expertise and you have thought about it probably more than anyone else and you have come up with an elegant solution," he said.

"You've either built the product already, or you will be building the product and your prior credentials make us believe that you will build that product," he added.

Many startups founders and entrepreneurs make the mistake of pitching an old or otherwise unoriginal idea with what VCs would see us a weak or sloppy game plan, he said.

"It's been done or it's been tried slightly differently," Hamid said. More importantly, you may be taking aim at "a hard market" and your game plan for taking it on clearly won't work - or you're not able to convince the VCs that it can work.

'Seeing around the corners'

That's not to say that the idea is inherently doomed. It might just mean a trip back to the drawing board.

"It's just that you haven't seen around the corners yet," he added.

In many ways, it's about being able to tell a compelling story based on a solid, well thought-out plan. For example, it may be an old idea, but maybe you've found a fresh approach.

"For early stage companies, there are a lot of unknowns," Hamid said. "Things that couldn't have been possible five years ago may be possible today. You don't want to take yourself too seriously by saying, 'It was done before and it can't be done today.' Well, maybe times have changed and maybe the time is now."

The key is being able to demonstrate what VCs and entrepreneurs refer to as "product-market fit."

"What that means is you built a product that now customers are saying, 'This is useful for me. I will pay for it,'" Hamid said. "You've identified a pain point for them that they are willing to take out their credit card."

Identifying that pain point can take a lot of effort and precision. Hamid cited the experience of Moveworks, which just raised a $75 million Series B round led by Kleiner Perkins, ICONIQ Capital and Sapphire Ventures.

Moveworks uses AI to help businesses automate the processing tech support issues and problems faster. To develop its product, the startup did its homework by interviewing many CIOs to figure out the scope of the problem and what they needed.

"They do a lot of customer interviews and ask a few questions before even going into a company," Hamid said. Moveworks reached out to companies that "had forward-thinking IT CIOs" and "had a priority list of things that mattered."

All that work helped Moveworks stand out, he added: "They really just pulled ahead from the rest of the competition. It's just a lot progress since their Series A."

"I think it requires a high level of precision and having that point of view to get it right."

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