Inside the boot camp that teaches startup founders how to raise millions of dollars

Dennis Pilarinos was frustrated and a little "pissed off" after his first day in a special program that teaches startup CEOs the delicate art of raising money.

The CEO of Buddybuild was eager to go deep into the specifics of his company, but was told he was doing it all wrong. Instead, he was instructed to focus on what he considered big-picture platitudes.

"I was completely wrong," admits Pilarinos, who now credits the program with helping him raise more than $7.4 million in two weeks for his startup.

Pilarinos is one of dozens of startup founders who have graduated from a two-year old boot camp run by First Round, a venture capital firm that focuses on early-stage tech startups.

The 2-to-6 week program drills its cadets in important lessons that are part Sales 101, part human psychology seminar and part tutorials on practical tasks like creating slide decks. The goal is to help startup founders, who may have spent months or years engrossed in arcane product details, sell their vision to the people with the money.

And in a tough funding environment where the easy money has dried up, the CEO boot camp, known as Pitch Assist, could become increasingly critical as startups fight to secure more financing.

Going straight for the jugular

The coaches at the boot camp, who are basically First Round partners, don't pull any punches.

On the first day, CEOs are instantly put on the spot and made to answer the burning questions investors will have - especially the tough questions the CEOs might not yet have answers for.

"Some of the questions are the sort of holes in the business. No company is perfect. There's always a weak point in the architecture," said First Round partner Bill Trenchard.

Those holes in the business are areas that the CEO isn't used to talking about. No one starts a sales call by going over their weaknesses. But, for pitching investors, those weak points have to be addressed head on in the presentation.

"If you try to play games or try to hide things, any reasonable investor will notice. And once you've lost that credibility, there's no coming back from that," says Brett Berson, First Round's VP of Platform.

Berson estimates that it takes about two hours of work to go through each question, but when they're done, they can step back and see the overall picture. The questions become the plot points - the market potential, the technology advantage, the sales' prowess - and the story of the startup starts to take shape.

The startup trap

One thing that quickly becomes apparent is that the partners at First Round describe a company in a way that's usually very different from the way a founder does.

"It's the trap of every startup. It's a story that revolves around you," said Frank Bien of Looker, which went through ahead of its Series B round. "When you're living your startup and you're so focused and drinking your own Kool-Aid, that becomes hard to do, to have you step back and tell that story in a broader way."

The idea for the pitching boot camp came from Berson, who noticed that CEOs had coaches for skills like management and media appearances, but not for raising money.

"One of the things that you notice about founders when they pitch is that three to four weeks into the process, they're three or four or five times better than the first meeting they take," Berson says. "And it's always a bummer because it's like if you did that before, you'd be three or four times better for your first meeting."

Berson wanted some way to turn the First Round partners' experience of seeing its companies close over 1,000 finance rounds into more than just a sheet on best practices. CEOs had to set aside the time to go through the boot camp, but it's worked.

"It's understandable why founders are bad at this. In the life of their company, they probably do it once every two years," says Trenchard. "It's just not something that is a regular, repeated skill but it just makes such a big difference."

Since the program was created, more than 25 startups have honed their pitching skills and gone on to raise roughly half a billion dollars in follow-on rounds, according to First Round.

Don't stack your strengths

The program's instructors teach startups to stay away from some common pitching pitfalls. For one, they'll never lead with an executive summary that shares what they'll talk about the whole pitch.

"We found it's like if you're going to the movie and you have the whole story line in front of you. You take out all the interest away and you know what's going to happen," Berson said.

Also, they don't stack all of the company's strengths at the beginning of the presentation. Instead, what makes the company stand out should be bread crumbs throughout the presentation - otherwise you'll be left with a story that goes nowhere at the end.

CEOs spend a week practicing their pitch with a plain blocking deck that tells the story.

Once most of the tweaks have been made, First Round's Pitch Assist team is the one who make the finalized slides, sparing a startup's UI designer from wasting hours in PowerPoint.

From there, the golden rule becomes one hour of practice for every minute of the pitch.

CEOs can practice their pitch in front of the Pitch Assist team first, followed by individual First Round partners, followed by all of the partners. By the time a CEO gets to the all partner meeting, they should know how the ins and outs of their startup's story.

For Pilarinos, it took two weeks to get from a frustrating first meeting to presenting to the partners. In another two weeks, Pilarinos had already signed the term sheet with Kleiner Perkins for a $7.6 million Series A round.

All in, it took the startup one month to go from dissecting its burning questions to pocketing its next round of funding. Moreover, Pitch Assist has changed the way Pilarinos explains his business to everyone from friends to potential partners.

"I was super impressed," he said. "The benefits of that conversation has paid off numerous dividends since then, in presentations I've done, in conversations that I've had with people."