The One Question I Didn't Ask

I took care of everything when preparing my first pitch to an audience of venture capitalists -- everything, that is, except to ask about a fee

By Lisa Bergson

Seated in our cinderblock conference room, Rob Longenecker, the beefy new purchaser, stares blankly into space while I rehearse my speech for prospective investors. No eye contact with him. I focus on Marci Young, our sales associate, and Bob Augustine, our electronic engineer. I take Rob's disinterest for general disaffection. Maybe he resents being dragged away from his desk to listen to my blathering. The other two beam with interest.

For days, I've been rehearsing and refining this presentation, my first to a room filled with prospective investors in Tiger Optics. Through one of my mentors, I have been put in touch with a group of about 30 unaffiliated angel investors -- venture-capital outfits -- and their would-be service providers – compensation experts, headhunters, coaches, and such. The organizer (let's call him "Frank"), looked at our executive summary and invited me to speak. "You'll go on first," he said.

My presentation has to be excellent. My husband is endlessly patient, willing to listen to me go over the same material again and again. But, I also find it helpful to get feedback from diverse quarters. "To me, this is the opportunity of a lifetime," I say in closing. I look around the conference room. The day before, my researchers who witnessed the practice presentation said they wished they could write checks -- but this group is different. "These guys are gamblers," Rob says of the VCs I'll soon be seeing. He continues, as if thinking out loud. "They go by feel. You have to get them excited. The beginning didn't grab me." I feel resistance rising, maybe a little resentment: What does he know? But, maybe….


  About my age, with an angel's face and a caplet of ash blonde hair, Marci has been with me for years. She is totally supportive and utterly tactful. "It builds," she says of my presentation. "It's very strong at the end. Maybe if you moved some of the statements about our customers up higher -- IBM, Intel, Samsung?"

"Yeah," agrees Rob, exhibiting a little more life. "When we go to the track, my wife picks the pretty horses."

"How about if you say it's a patented technology sooner?" suggests engineer Bob. "When you got to that part, it was good, but it takes awhile."

"I could do that," I reply. I'm starting to write in the margins of my notes, moving up bright, little, gem-like factoids to the opening of my pitch. Rob is more right than he knows in making that analogy to horse racing. As I would soon discover, like any racetrack, this one has its share of characters who are full of surprises.

The following morning, the VCs are waiting and I'm in a cold sweat as we go around the room and introduce ourselves. My skin is breaking out. When my turn comes, I take a chance: "I'm nervous and excited because today is the first time I'm presenting to investors." In New York, such an admission would see me run out of town. But, this isn't New York. Here, sartorial tastes run to pink bow ties and suspenders, and the room we're in is comfortably down at heel. During the break before I lay out "the deal" section of my presentation, I get lots of literal hand-holding and admonitions to breathe. A half a bagel calms me down.

My much-rehearsed pitch draws applause and requests for our packet of information from several of the bona fide investors who stud the room. On Monday, I receive a call from one who seemed like a particularly good prospect -- I'll call him "Ken" -- a fellow Frank invited especially to hear about Tiger. My euphoria quickly fades when I receive a follow-up e-mail from Frank: "You had a good morning last Friday," he observes, adding, "I assume you are willing to pay a referral fee for any funding I am able to bring your way."


  Although I attended an earlier one of Frank's meetings and arranged a phone conference with him before I spoke, the subject of a fee is new to me. So, readers, learn from my experience: If you ever find yourself in a similar position, make sure to establish in advance what strings, if any, may bind the network of potential investors to the person who assembles them. Now, I'm being told that, if I don't agree to pay Frank 5% of any investment capital we raise through his invited contacts, any money Ken may be thinking of putting into Tiger may not eventuate.

After giving it some thought, I reply, with a copy to Ken: "For 3%, professional intermediaries help you write your executive summary and your book, work with you on your presentation, make myriad introductions, vet those who show interest, and usher you through the due diligence. I appreciate what you've done in setting up your network, but it hardly compares."

I continue: "I am willing to let go of the possibility of working with Ken if that is indeed your ultimatum." Six minutes later, Frank e-mails, "I know Ken is excited about your technology. I believe he can help you. Good luck."

It's going to take more than luck or a pretty horse to win this one. But, I've got too much at stake to lose. Besides, if you ask me, we're a lock.

Lisa Bergson is President and CEO of both MEECO and Tiger Optics. Before joining MEECO in 1983, Lisa Bergson worked as a business journalist at BusinessWeek and freelanced for many business publications. You can visit her companies' Web sites at and, or contact her at

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