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Ask Slashdot: How Do You Sell an Algorithm To Venture Capitalists?

Unknown Lamer posted about a year ago | from the wait-for-apple-to-steal-it dept.

Businesses 205

dryriver writes "Dear Slashdotters, We are a two man crew who have spent almost three years developing a video processing algorithm that 'upgrades' the visual quality of digital video footage. We take video footage that is "of average quality" — think an amateur shooting on a cheap digital camcorder or on a smartphone camera — and use various mathematical tricks we have developed to make the footage look better — optically sharper, better lit, more vivid colours, improved contrast, enhanced sense of three-dimensionality and of 'being-there realism.' In about a month, we will be presenting our algorithm to some venture capitalists. We have the obligatory before-and-after video demos prepared for this, of course. But there will also be a short PowerPoint presentation where we explain our tech in some detail. Now here is our main question: What, in your opinion, should we — or indeed should we NOT — put in the PowerPoint presentation to impress a Venture Capitalist? Should we talk about how we developed the algorithm at all — what kind of R&D and testing was involved? Should we try to walk the VCs through how our algorithm works under the hood — simplified a bit for a 'non-engineer' audience of course? Or should we stick to talking about market potential, marketing strategy & money-related stuff only? If you were in our shoes — presenting a digital video-quality improvement technology to professional VCs — what would and would you not put in your PowerPoint? Any advice on this from Slashdotters with some experience would be most welcome!"

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Tell them (5, Insightful)

Deluvianvortex (2908365) | about a year ago | (#43636491)

how it will make them money.

Re:Tell them (0)

Anonymous Coward | about a year ago | (#43636515)

how it will make them money.

^

Re:Tell them (5, Funny)

Jeremiah Cornelius (137) | about a year ago | (#43636757)

Step one: Inscribe a pentagram on the floor around your feet, placing a 100-dollar bill at each of the 5 cardinal points.

Step two: Face the direction of the nearest cemetery and intone the words: "I offer my soul for the venture partner".

Step three: This will take care of itself...

Re:Tell them (2)

noh8rz10 (2716597) | about a year ago | (#43636879)

nobody cares about how you make the sausage. they only care about the quality of the sausage. most important is talking about the potential market for the sausage - for example, could it be applied to every youtube vidoe for better quality? or will it only be effective on flip cameras that aren't sold anymore?

Re:Tell them (5, Insightful)

ShanghaiBill (739463) | about a year ago | (#43636599)

how it will make them money.

Bingo. VCs don't invest in algorithms. They invest in businesses. They will want to look at your business plan, and you need to have one that looks professional. Make sure you spell check it. They will likely also ask if your algorithm is patented, and if not, what is going to stop someone else from using your idea. If your plan is to license your algorithm, then they will want to know if you have any OEMs lined up. If you plan to produce your own products, they will want to know what experience you have at marketing and production. They will want to see a team with a balance of tech, finance, marketing and operations.

Here is question for you: Why do you think you need VC money? Businesses are often better off without it, and even those that benefit from it often seek it too early. It is best to only seek VC money when your business is viable and growing, and you are ready to "get big fast".

Re:Tell them (1)

K. S. Kyosuke (729550) | about a year ago | (#43636619)

They will likely also ask if your algorithm is patented, and if not, what is going to stop someone else from using your idea.

Even if it gets patented, it's probably not going to stop anyone from using his idea. Math sort of works for everyone the same way.

Re:Tell them (4, Funny)

Anonymous Coward | about a year ago | (#43636663)

Math sort of works for everyone the same way.

Clearly you weren't in my high school algebra class.

Re:Tell them (0)

Anonymous Coward | about a year ago | (#43636667)

Tell that to MPEG-LA.

Re:Tell them (2)

BitterOak (537666) | about a year ago | (#43636779)

They will likely also ask if your algorithm is patented, and if not, what is going to stop someone else from using your idea.

Even if it gets patented, it's probably not going to stop anyone from using his idea. Math sort of works for everyone the same way.

It's not going to stop open source and homebrew people from using it, but that's not where the money is to be made anyway. It's licenses sold to commercial software companies like Adobe, or hardware companies like Apple, where the money will be made. In fact, if the algorithms are as good as you claim, I wouldn't be surprised if a large company offered to buy the entire patent portfolio outright.

Re:Tell them (0)

Anonymous Coward | about a year ago | (#43636647)

I wish I had mod points. This is the essence of what growing a company is about.

Re:Tell them (5, Insightful)

Anonymous Coward | about a year ago | (#43636829)

"VCs don't invest in algorithms." Not just bingo, but double bingo. They do invest in products and in people and you damn well need to know which you're pitching to them.

Do you just want to sell your software product? And please think of it as a product, not an "algorithm". VCs want to get in on the next Microsoft or Apple or Adobe or whatever - none of which sell "algorithms". And they typically don't want to just buy an idea around which they have to build a company.

Or do you want to build a business selling that product? If so, do either of the two of you have heavy sales and/or management experience? If you don't (or even if you do but don't come across as "dynamic" and "take charge") you will be replaced by the team chosen by the VCs. Which will leave you out in the cold wondering what happened.

And VCs are looking for high multiples of return to investment. They may promise vast sums of money but there will be strings and milestones and penalties for missing the milestones. They often demand a large percentage ownership of your company if you succeed and ownership of your patents if you don't.

Enter this with your eyes wide open while remembering that there is no free lunch and that although you may need their money, they don't need you.

Re:Tell them (1)

Anonymous Coward | about a year ago | (#43636609)

One of the big parts of showing "how it will make them more money" is also in showing them: how it improves upon existing content. New content being produced on RED Scarlets are already being down sampled to display on cinema, let alone the many TVs that people have.

However, think about how much is spent remastering film, or television...
A production studio that is worth anything is already going to have some nice cameras, thereby making your technology "cool, but not of value".

For what it is worth, I have already gone down this path with an audio technology that offers something very similar to your video technology. Sand Hill Road is brutal when it comes to seeking funding. If you don't already have customers or a completed product to sell to market within the next 9 months, be prepared to give up 50% or more for under what you ask them for.

Coming back when you already are in talks with the likes of Adobe, Apple, Autodesk, HTC, Samsung, etc. will have you in a much better position to get what you need for a reasonable percentage. And at that point, getting a VC to back you is more something that presents credibility to the big players.

Re:Tell them (4, Interesting)

Gorobei (127755) | about a year ago | (#43636809)

Hell, just whip up a website that lets users upload a video and get a link back to the improved version of video (use cloud compute for the first few months if needed.)

Get some word of mouth (look at Youtube videos that could benefit - mail the uploaders.) If people actually use it, you can and will get buzz fast on the tech sites.

If you have growing users/day, the VC pitch will be much easier.

Re:Tell them (1)

wonkey_monkey (2592601) | about a year ago | (#43636869)

A production studio that is worth anything is already going to have some nice cameras, thereby making your technology "cool, but not of value".

Did you even read this part?

We take video footage that is "of average quality" — think an amateur shooting on a cheap digital camcorder or on a smartphone camera

Re:Tell them (2)

calzones (890942) | about a year ago | (#43636735)

It will smell like money to them if you can generate hype for the technology before they even see it.

Try posting an Ask Slashdot question where you can tease the technology, spilling plenty of detail without giving away the maths. That will whet the appetites of the digerati general population and start up the hype engine.

.
.
.
Oh, and once you have it legally protected, post some before and after videos showing how miraculous the new tech is. Post links back to Slashdot again, and Reddit, lining back to the original Ask Slashdot question as well. Bonus points for using a TED Presenter style narrative, or a Steve Jobs "stunning" reality field distortion effect... or show several magical-appearing comparisons off with some kickass trendy electronica like Peace Orchestra's "Whom Am I?"

Re:Tell them (1)

Intrepid imaginaut (1970940) | about a year ago | (#43636797)

Bleh, use the words 'nano', 'green', 'crowdsourced' and 'cloud', doesn't matter what the rest of the words are, and walk away with teh monies. They aren't interested in a good product, they're interested in pumping up another bubble in something as quickly as they can and selling off their piece of it near the peak. Use the words they think will get the hoi polloi chattering and you're golden.

Re:Tell them (1)

Garridan (597129) | about a year ago | (#43636961)

A nanogreencloudsourced videomographier? I'll take two! Who do I give these crazillion balonies to?

Re:Tell them (4, Funny)

houghi (78078) | about a year ago | (#43636763)

First post and the thread can be closed. Congratulations.

Re:Tell them (5, Insightful)

Anonymous Coward | about a year ago | (#43636815)

The #1 mistake techies make when talking to investors is that they don't have the financial picture worked out. They think the tech will impress, and sell itself. If it will at all, then only to other techies, who are commonly not the ones you call VCs.

If you don't have someone on the team who knows finances yet, get them before it is too late. If they ask you what your revenue will be after 6 months, have the answer ready. If they ask you what your profit will be after 2 years, have the answer ready. As for the tech, forget about it, anything they are going to ask about that (haha, as if) you can answer straight away or draw out on the back of a napkin. Get your figures in a row, nicely tabulated and worked out. Tell them exactly how much it's going to cost them, when, how long before you break even, how long before THEY break even, how much profit they are going to make after 2 years, 3 years, 5 years, etc etc.

Keep in mind that you may not get a second chance. I have no idea what tech you have developed but the days of huge, unexpected advances in video processing are over. You may be ahead of the curve now, but if you don't get your show on the road, 6 months from now someone else will come up with something better. So get it right this time, there are no practice runs. Frankly if you already have the meeting set up and at this point need to go to ask/. to get advice, I'd say you may already be too late with that though.

Re:Tell them (0)

Anonymous Coward | about a year ago | (#43636831)

As off-the-cuff as this response might seem, it's exactly true. Show them some examples, ideally compared to any competitors, and explain to them how you plan to monetize on it.

Re:Tell them (0)

Anonymous Coward | about a year ago | (#43636855)

A good VC wants a minimum return of 35% @ year..you have to make him very sure that your idea is big enough..and that your team is good enough to do that with his chunk of money and minimal involvement...the idea and its performance may be a "wow" ...but do not get technical...think black box, talk black box, show black box...who buys, why they buy, how much they pay and how you go about supporting these guesses matters much more..you have about 5 minutes to get it across...if you don't get a bunch of questions, you flopped.

Re:Tell them (5, Insightful)

guttentag (313541) | about a year ago | (#43636943)

how it will make them money.

This. This is step one. Always has been.

Step two is to explain what is going to stop Microsoft/Apple/Google from copying incorporating your algorithm (patented or not) into their existing products/services and making you irrelevant. This has been step two since before Web 2.0, though it traditionally referred only to Microsoft.

Step three (optional, but helpful in pitching to VCs) is explaining how you plan to get Microsoft/Apple/Google to buy your company before it reaches maturity (or even adolescence in some states/Valleys) so they can incorporate your algorithm into their existing products/services. Hint: user base. It doesn't matter if your algorithm is the most obvious thing in the world... if you have millions of people using it for free they will want it. This has emerged as step three in the last 5-10 years.

Re:Tell them (1)

rasmusbr (2186518) | about a year ago | (#43636973)

how it will make them money.

That, and how the competition won't catch up with you. Be sure to mention any and all patents that you have.

That all depends (5, Funny)

ctime (755868) | about a year ago | (#43636497)

Know your audience, that's for sure. As far as how much detail to let them in on, send me the copy of the details and I'll get back to you.

Re:That all depends (4, Interesting)

AmiMoJo (196126) | about a year ago | (#43636571)

You raise a good point. Be sure to cover all the patents you have on your algorithms. Anyone investing will want to know that they won't be copied the moment they are demonstrated publicly.

You did patent it, right? It isn't obvious or just a combination of existing ideas, right?

Re:That all depends (2)

Trepidity (597) | about a year ago | (#43636711)

You did patent it, right? It isn't obvious or just a combination of existing ideas, right?

In practice, the latter is no real bar to the former...

Re:That all depends (1)

pipedwho (1174327) | about a year ago | (#43636743)

You did patent it, right? It isn't obvious or just a combination of existing ideas, right?

Since when has being obvious or a direct copy of prior art stopped the patent office from approving a patent?

Sadly, not for a long long time.

If the audience is VC's (1)

Ukab the Great (87152) | about a year ago | (#43636635)

There would be exactly one powerpoint slide that goes something like this:

1. Take the consumer's crappy video.
2. Run it through our patent pending thingy and make it look nice.
3. Profit!

They don't care about the tech. (0)

Anonymous Coward | about a year ago | (#43636501)

They care about making a good investment.

Market, market, market. Oh and having your sums done properly, accurately and without being too unrealistic in either direction.

ROI (4, Insightful)

Dins (2538550) | about a year ago | (#43636503)

I would focus your presentation on how the VCs would get ROI from your technology, in other words: what's in it for them. For example, what do you see being the primary use for this technology? Who would it benefit and how? How is this an improvement over what is already available? Etc.

dont use big words (0)

Anonymous Coward | about a year ago | (#43636505)

as they will get confused fairly quickly.

Just give it to them. (-1)

Anonymous Coward | about a year ago | (#43636509)

That's the way it's going to end anyway. At least this way you save time, money, hassle, and the anguish of actually thinking they give a shit about your success.

Re:Just give it to them. (4, Funny)

fuzzyfuzzyfungus (1223518) | about a year ago | (#43636525)

That's the way it's going to end anyway. At least this way you save time, money, hassle, and the anguish of actually thinking they give a shit about your success.

VC: "Ideas are like assholes, everybody has one and I'm going to get as much money out of selling yours as I can."

Re: Just give it to them. (-1)

Anonymous Coward | about a year ago | (#43636535)

It's Cheaper to Assassinate You

Microsoft ceo Steve Ballmer has found a new instrument to obtain and hold intellectual rights. Original invented by Walt Disney, Steve Ballmer quickly realised that patents are only valid for 20 years, however what would be the case if Steve would simply assassinate a programmer for his ideas or code?

The Walt Disney Construction

After the death of an author, the 70 years of intellectual rights, resulting from death of the author, have more value than a patent duration of 20 years. Patents are expensive, hiring a Death Squat is cheap.

Steve Ballmer betrayed Israel

As an Askerbenazi Jew himself, Steve Ballmer should have known it was wrong to assassinate among other jews. The world is allready so full of hatred against fellow Jews, what will happen if the people find out that Windows is made for company espionage? The people will blame all the Jews for the crime of a single Jew named Steve Ballmer.

The latest outbreak of the Flame malware made us all aware, Microsoft Windows users are spied on, it's a Trojan Horse. For years Flame came in with Windows Update, and Steve Ballmer still controls all Master Control Servers.

Expect evil

All that Steve Ballmer does is seeding hatred against Jews. The Muslim countries and Communist countries are starting to become suspecting that Windows is spyware.

The Cyber War

Both Bill Gates and Steve Ballmer finance governmental elections, they give us the best laws money can buy. And these gentlemen want to kill and destroy, to steal and if no other options remains to buy.

Steve and Bill are killers, it gives them sexual pleasure to seek out an unknowing programmer who believes Microsoft can be trusted.

Are you a government employee? And are you using Windows? Everything you type, everything you see on the screen and your files, it is secretly send to Microsoft servers all over the world.

Microsoft Windows is the malware. Expect evil when the Chinese find out.

Since Bill Gates financed Bush, Gates has participated in the great war and death of incredible numbers of victims.

There is a Cyber War going on, and Steve Ballmer and Bill Gates started it, they are evil spies, and cannot be trusted.

Re: Just give it to them. (-1)

Anonymous Coward | about a year ago | (#43636725)

jews are either ashkenazi or sepphardi, you lost me at askerbenazi

Don't Do It (4, Insightful)

Anonymous Coward | about a year ago | (#43636533)

Don't give your future away by taking money from VCs for this. It sounds like you have enough already to write a small standalone processor for video files and charge money for it. You give up a lot - everything if you're not careful - when you do a deal with VCs. If you can build a company with any profits at all on your own, do it.

Don't walk through the algorithm (0)

Anonymous Coward | about a year ago | (#43636537)

If they care how it works, they'll ask - don't waste your time giving an unsolicited explaination.

from experience (4, Insightful)

hackula (2596247) | about a year ago | (#43636541)

Do not go into too much internal detail. Focus on visualization of outputs. Make a powerpoint with these visualizations that walk through some real world problems. Get your elevator pitch down pat. Profit!

Re:from experience (0)

Anonymous Coward | about a year ago | (#43636561)

VCs are worried about 2 things: How to make money and how not to lose money. So talk about how you can make them money. However, don't give them all the secrets because if they think they can make money doing what you do without you, then they will steal it so fast your head will spin.

In order to really show what it can do, I would have them take videos and do the whole process in front of them.

Some things a VC will ask you (5, Informative)

Anonymous Coward | about a year ago | (#43636549)

1. Do you have Patents on the Technology?
2. What kind of money are people/corporations willing to pay for this type of video enhancement?
3. How big is the market? (e.g. Can you deploy the technology in a smartphone app, or does it require specialized hardware)

money talks (1)

bloodhawk (813939) | about a year ago | (#43636551)

They are venture capitalists, their goal is to make money and therefore you need to show a how and why what you are doing will make them money. So you need to show :

a) What your doing will sell and sell well, hopefully you have the market research behind this.
b) Your ideas are original, can't be easily copied by competitors or you have the patents/copyright behind it and you should be able to articulate this.
c) a good demo and complete openness when it comes to them asking questions, you need to be able to convince them you are worth the bet and nothing turns an investor off faster than you being less than forthcoming.

The deep technical details comes a distant second to the business aspects.

The patent number (0)

Anonymous Coward | about a year ago | (#43636555)

Tell them the number of the patent.

Answer: You Don't. (5, Interesting)

goruka (1721094) | about a year ago | (#43636557)

You don't sell technology to venture capitalists, you sell a business plan with well done research and projections.
Or, alternatively, you should start by licensing the technology to those interested first (figure out who) and create a steady income from there.
Or create a product that end users might find useful directly, like an iOS app.
One example of successful business model based on an algorithm is elastique [zplane.de] , which is used in pretty much all major audio and DJ apps.
Hope this info is useful!

Binary library? (0)

Anonymous Coward | about a year ago | (#43636649)

Why can't they just write a library ?

There's only so much hardware out there for video.

Re:Binary library? (1)

91degrees (207121) | about a year ago | (#43636727)

They could do that. But they need to know who will buy it, how much they'll pay for it, and how many customers they'll have.

A VC doesn't care what it is. It could be a CD of killer tunes, or a skyscraper. What they care about is whether they'll actually make money from it. To convince them that they will, the pitcher needs to show them the market.

Re:Answer: You Don't. (0)

Anonymous Coward | about a year ago | (#43636657)

Thus: Be sure of what you're really trying to sell, and to whom. If you're trying to get VC funding, it's the business model (how else are you going to make back the money?).

If you're trying to sell just the algorithm, well, find interested parties like makers of video hardware or software. Or patent it and flog off the patents to trolls.

Also, ditch the powerpoint. Far too easy to get hung up on a "presentation" that just confuses, instead of enhances, the points you're trying to make.

Yes, slides can help. No, starting with the slides is exactly the wrong way around, as is making the entire point through slides, putting too many details on slides, and so on, and so forth. If you think that providing the slides is enough to give a sense of the presentation (as so many do, as exemplified by publishing just the slides), then you're doing it wrong and need to start over.

That is, if you're trying to win on content.

If all you want is the money, well, learn how to spin bullshit like a boss, rake in the money, then run. We recently saw a nice example of how to do just that.

Re:Answer: You Don't. (5, Insightful)

Sir Holo (531007) | about a year ago | (#43636817)

A business plan is typically a 10-page PPT presentation. Only ONE slide deals with the technology itself. Slides are:

* Market
* Product
* Customers
* Technology
* Development Plan
* Distribution Plan
* Team
* Competition
* Financial Projections
* Exit strategy

If you drone on about the specifics of the technology, they will get bored, and will think that you do not have interest in putting in the "other" work necessary to get a business off the ground.

Lastly, avoid VCs if you can. They care only about ROI and will be constantly breathing down your neck. Rather, get a few articles into trade mags if you can, then solicit big companies. Your best bet may be an exit strategy of "Exit upon sale" of the technology. The buyer may also hire you on for a while, but don't count on that lasting after you've spilled all of the beans.

And last-lastly---at a minimum, file a Provisional Patent with the USPTO. That protects you for up to a year, and costs like $75. A full patent is more like $15k.

And keep your secrets close to your chest. Tell people what it does, but not how it does it.

DISCLAIMER: I'm a small-business owner and patent holder.

Audience and ROI (0)

Anonymous Coward | about a year ago | (#43636563)

No matter what you put in your presentation, it is how you display them.

Here a small how to to impress capitalists : Powerpoint [youtube.com]

"Enhance, zoom in!" (5, Funny)

flandre (1278778) | about a year ago | (#43636575)

It'll sell really fast if you include those features.

Re:"Enhance, zoom in!" (2)

greg1104 (461138) | about a year ago | (#43636611)

Make sure you test it against reflections in a mirror [youtube.com] too.

Re:"Enhance, zoom in!" (5, Informative)

Anonymous Coward | about a year ago | (#43636675)

I spent ten years of my life building a company based on selling a mathematical idea. I had the 1 in 1000 companies that got venture capitalism, grew to over 50 people and then died in the credit crunch: leaving me nearly bankrupt, 10 years older and a lot wiser

It's very hard. Be really sure you want to do it.

Do your bookwork first: Read "Crossing the Chasm", "Lean Startup","Prime Solution Selling","Black Swan".
Read blogs: I find the Equity Kicker very good. There are many others

Realise that if you do succeed it will be through blind luck (if I get hammered by other posters, would the other posters just explain that they HAVE read Black Swan and that they can disprove his thesis: not by example but by maths)

The comments above are very good. I partially disagree with the comment about the business plan. In my experience (limited to about 10 VCs, and 1 multi-million dollar successful investment) VCs care only about "the people that are creating the company". Do they have the technical, the managerial and the marketing skills to make this work? Business plans are works of fiction,and the VCs know that. Having said that you still need one, but you need also to demonstrate that you know its a work of fiction, but the potential it describes is real

Most importantly realise that this is your life for the next ten years, and that the most likely outcome is that you will fail.

Re:"Enhance, zoom in!" (1)

alexander_686 (957440) | about a year ago | (#43636771)

Louis Pasteur, “Fortune favors the prepared mind.”

I think you need to reread Nassim Nicholas Taleb’s The Black Swan, for he says no such thing. Not that it is random but that it cannot be molded. It has fat tails - this means the world is less calm then you think. Have reserves so when unexpected disaster strikes it does not wipe you out. Take a lot of small risks with big payoffs. Never risk more than you can lose.

Shark Tank, other ideas (2)

alexander_686 (957440) | about a year ago | (#43636577)

As people has said, know your audience and what they expect.

Watch a few episodes of “Shark Tank”. Its entertainment so don’t take it as gospel. But it does show a lot of people doing rookie mistakes. Such as talking about how big the market is and if we can only get a sliver.

Also, focus on making a clean presentation.
      Make sure all of the programs you will be using are up and running prior to the presentation – don’t start the programs in the middle – you are just asking for problems. Turn off everything else – in particular things that pop up.
      Little errors & inconsistences make it seem you have a half-baked product.
      There is a fine line between confidence and arrogance, between insecurity and honesty (I am assuming your product is not 100% perfect yet). . Find that line before you go in.

A Word About Angel Investors... (2)

bradorsomething (527297) | about a year ago | (#43636585)

Tell them broad strokes, not enough to figure it out. Remember that they're called Angel Investors because they can swoop in, take your idea, and do it themselves with their own money. Otherwise, most advice here is solid. They want to see how you develop it, what the exits are, and how much they can reasonably make.

Re:A Word About Angel Investors... (1)

pipedwho (1174327) | about a year ago | (#43636909)

Tell them broad strokes, not enough to figure it out. Remember that they're called Angel Investors because they can swoop in, take your idea, and do it themselves with their own money. Otherwise, most advice here is solid. They want to see how you develop it, what the exits are, and how much they can reasonably make.

Remember that they're called Angel Investors because they can swoop in, take your idea, and do it themselves with their own money.

This happens far less often than you'd think. That same investor still needs a platform to implement the 'stolen' ideas, so if you've already done the initial hard yards, why not use you.

Unfortunately, in so many cases the 'ideas' are obvious enough to be already in the pipeline of one or more companies already operating in that industry (one of which might be part of an investor's portfolio). Approach enough investors, and the probability of this being true approaches certainty.

Investors generally don't run on building up 'ideas', but on implementing solid viable business plans that they can profit from. The 'investor stole my idea' assumption comes from very little understanding of how the industry works. And usually from someone that didn't patent the inventive part of the plan in the first place.

(Side note: If an invention is truly novel, it's not that hard to patent it without huge expense. If you're having trouble getting the patent, it is usually because the 'invention' is either blatantly obvious, or similar ideas have recently crossed the desks of the patent examiners. A patent attorney can help obfuscate and 'enhance' the application sufficiently to allow an otherwise obvious idea to survive examination. That's when patents get expensive.)

Garbage In, Garbage Out (0)

Anonymous Coward | about a year ago | (#43636593)

You've developed a crappy post processor and now you want to profit.

The sad news is that everyone who already needs to do post processing has plenty of capability to do this already. Additionally, it sounds like an incredible amount of snake oil. Our software has "enhanced bullshit..."

Now, I did use the word "NEED" in that sentence and again those who need it already do it well. However, an automagic post processor might have a good place with a certain site that allows users to upload tons of crappy videos.

Sounds like a match made in hell. Shitty videos. Shitty post production work. The best part... users might even pay for the premium ability. It could turn a tidy profit if it nickles and dimes a user base.

Where is version 2 and 3 ? (3, Interesting)

DCFC (933633) | about a year ago | (#43636595)

If you can explain it in ways they can understand then its probably not worth much and if you do explain it they can share it with others.
You're really lucky you have an algo where they can see the effect, leave it like that.

They want a cash flow over time, which means:

1: Patent protection

2: A version 2,3,4,5, read up on Dolby Studios, they started decades ago doing the same thing but for hissy audio tape, still going N versions later on totally different media.

3: Get the word "mobile" in this. VCs are obsessed with mobile currently, I assume this will make phone pictures better ?

4: They want an exit strategy, is this going to be sold to join people's patent armouries or a firm they can float ?

5. Have you talked to Google, this sound like just what they might want for YouTube and to stop others getting it.

patent number, results, uniqueness (0)

Anonymous Coward | about a year ago | (#43636597)

patent number.

show them results.

show them a live demo.

you got all the lingo right there though! "being there" and all! of course what they'll really want to know if they have an expert on the field they'll call is.. what the fuck do you have over existing plugins on the market? because that expert will laugh at your description of the product.

Patent pending (1)

Steve1952 (651150) | about a year ago | (#43636601)

Your discussion should mention that it is patent pending. Otherwise they will probably not be interested.

Different strategy (4, Interesting)

Ion Berkley (35404) | about a year ago | (#43636613)

Here's my take. As others have stated VC's are in this for money, thus you show them the business case and that incudes explaining the barrier to entry - why another 2 bright guys, suitably funded couldn't easily reproduce your efforts. Now my real advice is this: VC's are not interested in small play's, they want to put a significant chunk of money in, and take a large multiple on that back. What that means is they are interested in large $$ opportunities that may take some time to come to fruition ...and that involves plenty things that can go wrong along the way leaving you with nothing to show for it. You are 2 guys, you already have something you think is very impressive to show, you don't really need lots of capital to continue development, it's really just your time. Go shop this to the incumbents in the applicable spaces looking for an immediate sale, Adobe/Apple in authoring S/W, google/vimeo on the backend, go-pro/contour/canon/nikon etc etc on the consumer H/W side. What you are looking for is enough money for the 2 of you to have a nice 7 figure bank balance..which means sell it, go work for the buyer for a while, take the money now whilst there is no obvious competition or the market changes and minimize the risk. Don't hold out to be a bizzilionaire, the chances not matter how good it is are vanishingly small.

Does it actually work (2)

EdZ (755139) | about a year ago | (#43636615)

I've seen a whole lot of video enhancement 'algorithms', boxes, programs, etc. Not one of the press-button-get-video variants have actually improved video quality, and almost universally they just make things worse; more often than not, they just shove up contrast and saturation and add an unsharp mask, but some are genuinely innovative in their uglyness (e.g. the dreaded WarpSharp, Q-Tec's BD butchery, etc). The vast majority of 'easy to use' variants, with a few sliders to move about or checkboxes to flip, are equally ineffective.

Do you have any examples of your 'algorithm' that show it to be something other than run-of-the-mill?

Re:Does it actually work (2)

fluffy99 (870997) | about a year ago | (#43636695)

I've seen a whole lot of video enhancement 'algorithms', boxes, programs, etc. Not one of the press-button-get-video variants have actually improved video quality, and almost universally they just make things worse; more often than not, they just shove up contrast and saturation and add an unsharp mask, but some are genuinely innovative in their uglyness (e.g. the dreaded WarpSharp, Q-Tec's BD butchery, etc). The vast majority of 'easy to use' variants, with a few sliders to move about or checkboxes to flip, are equally ineffective.

  Do you have any examples of your 'algorithm' that show it to be something other than run-of-the-mill?

Video has some interest possibilities for enhancement unlike a single static image though. If the camera or the image is moving, you can extrapolate higher resolution details than what's in the based video stream resolution. If the camera is slowly panned sideways in one direction so that the next frame is aligned 1/2-pixel off from the previous frame, with some mathematical trickery using the successive frames you've effectively increased your horizontal resolution. You can do similar tricks if the object is moving. As an extreme example, imagine a 1-pixel resolution camera scanning - the reverse of how a CRT works if you will. I've see demo's where something that moved across the screen is removed and replaced with the static imagery from previous frames - essentially removing a subject from the video with no apparent missing data.

Re:Does it actually work (1)

wonkey_monkey (2592601) | about a year ago | (#43636749)

If the camera is slowly panned sideways in one direction so that the next frame is aligned 1/2-pixel off from the previous frame, with some mathematical trickery using the successive frames you've effectively increased your horizontal resolution.

That's a big if. It certainly won't get you anywhere near the improvement you'd see just by investigating in a better camera.

In case you are murdered.... (0)

Anonymous Coward | about a year ago | (#43636621)

You should keep the secret recipe in a vault, or online open sources folder dated to open, just in case you are killed or held ransom for your ideas.

How are you going to make them money? (1)

Coward Anonymous (110649) | about a year ago | (#43636629)

Tell the VCs how you are going to make them rich.

Crowdsource it (3, Interesting)

olafura (539592) | about a year ago | (#43636633)

Just a thought if a lot of people are going to benefit from your algorithm then you could think about having a kickstarter campain to open source the code. With the amount you are looking to get from the VC's. Maybe with stretch goals of a iPad and Android version. You'll get money up front and might also be able to license it to somebody that doesn't like either (lgpl or gpl) depending on the strategy you choose. You could try having the opportunity of corporate sponsorship and trying to contact Google they are probably going to love having something that makes Youtube videos look better. It would trow some money your way because we need more funding of R&D through crowdsourcing. And remember to have some accessories for people like T-shirts.

What is important to VCs is very different ... (2)

perpenso (1613749) | about a year ago | (#43636637)

What is important to VCs is very different from what is important to you. They really only care about two things.

(1) The team is most important. Have you assembled a team with the necessary experience to convert an idea into a successful product. VCs mostly invest in people, not so much ideas. Ideas are plentiful, people that can ***deliver*** are not.

(2) The idea is of secondary importance, but it must be something that can be protected by ***patents*** and/or other intellectual property. It does not matter how good the idea is if it is something that can be replicated by others.

We have the obligatory before-and-after video demos prepared for this, of course. But there will also be a short PowerPoint presentation where we explain our tech in some detail. Now here is our main question: What, in your opinion, should we — or indeed should we NOT — put in the PowerPoint presentation to impress a Venture Capitalist?

Give them an overview of the process. High light the points that can be protected by ***patents*** and other forms of relevant intellectual property.

Should we talk about how we developed the algorithm at all — what kind of R&D and testing was involved? Should we try to walk the VCs through how our algorithm works under the hood — simplified a bit for a 'non-engineer' audience of course?

They will not care beyond determining that the algorithm is in fact ***your creation*** and not related to previous employment or other potential conflicts.

Or should we stick to talking about market potential, marketing strategy & money-related stuff only?

They both care and don't care about this. They care in the context of determining if you are being realistic. Have three sets of numbers. One covering the scenario if things go as planned, another more pessimistic one, and another more optimistic one. The pessimistic one should not lose money.

That said, they will not trust your numbers. They will do their own research and do their own numbers. Do not let this deter you from doing the best job you can on your numbers. You are being ***tested***.

This. (1)

Etherwalk (681268) | about a year ago | (#43636787)

(1) The team is most important. Have you assembled a team with the necessary experience to convert an idea into a successful product. VCs mostly invest in people, not so much ideas. Ideas are plentiful, people that can ***deliver*** are not.

Parent is dead on. You really need to have an excellent team, and because you're seeking financing that excellent team has to have the resumes to prove their excellence. Find someone who has actually brought one or more products like yours to market and bring them on board. It may cost a lot, but it greatly increases your chances, both of success and of getting investors on-board.

Do you have business experience? (0)

Anonymous Coward | about a year ago | (#43636653)

We are a two man office at the moment and we develop some software. We think it will be a great success. And we need some people to invest. We both don't have that much experience with economy. An investor will ask us how he could make money out of the fact that he will put money at risk. He will not be interested in the software stuff nor how I didn't sleep to get things strait. We both are of no value to investors at this very moment. We need to get somebody to work out a business plan for us and this we may be able to sell people.

Three steps (2)

Hentes (2461350) | about a year ago | (#43636655)

  1. Definition
  2. Theorem
  3. Proof

Talk value (1)

alphad0g (1172971) | about a year ago | (#43636673)

VCs have different contractual terms, but in the end they want to see at least a 4 to 1 ROI. As others have said, you need to tell them how it will make them money. Do you expect to have a software company and sell an app? Will you license this tech? If so, who is your target. Does this take time - meaning if Samsung was a licensee would this algorithm work in real time on a phone? Will someone have to transfer video to a PC and then post process? If it is the latter, you really need to talk about who will buy it. Have you done any market research? You have to convince the VCs that this will make them money - so you should have a solid idea of who your customer is, and if it will sell.

FAB (1)

jklovanc (1603149) | about a year ago | (#43636677)

Feature, Advantage benefit.
For each feature the software has, how is it an advantage and how does it benefit the customer.

Also the one thing VC's really want is data to back up your claims of sales. What market research have you done, Who will buy this product? How many will buy the product? Is it a need, want or nice to have? What are your costs? Is there customer support involved? Is the a mass market or niche market? How will people find your product?

The bottom line for a VC is "How am I going to have a reasonable likelihood of making money on this product?". Do not go into technical detail on how things work. At best this will bore them; at worst it will make them feel stupid. Most VC's don't care how it works; they care that it works well and will make them money. Be prepared with technical details because you may be tested to see how well prepared you are.

Re:FAB (1)

Etherwalk (681268) | about a year ago | (#43636801)

Also the one thing VC's really want is data to back up your claims of sales. What market research have you done, Who will buy this product? How many will buy the product? Is it a need, want or nice to have? What are your costs? Is there customer support involved? Is the a mass market or niche market? How will people find your product?

But do not say "if we only capture 1% of giant market X we'll be rich!" Make your case using real numbers. Read books on how to do this. And once you've learned how to do it, relax while doing it: be yourself, but as yourself make the projections. There's a lot on the line, so have fun with it, geek out on it, and do a damn fine job. Like you would coding.

Convince them it is special (1)

sleepypsycho (1335401) | about a year ago | (#43636679)

I agree with the rest of the posts that it is all about the business case. One critical component is how easy it will be for someone else to duplicate if the business is successful. Patents can be worked around and expose key elements of the technology to examination, so it is OK for someone else to accomplish the same results with a different mechanism. Technically algorithms can't be patented, but you can patent it, if you say its part of a system. So it may be more valuable if you have something so advance that no one else is capable of reproducing it. If you have years of research with top level people then you should mention it in the presentation. This includes marketing research etc. Being first to market is also important, and you will be asked how you know someone is not doing the exact same thing right now and has it ready to launch. Anything that makes your work unique will help answer the question.

They expect complex technology, so show them (1)

DeathGrippe (2906227) | about a year ago | (#43636681)

Don't be afraid to confuse them - just be sure that you prove the benefits of your idea first. A hands-on, real-time, first person demonstration of before and after would probably work best.

Once you've shown them that it works, launch into a short thesis of the technology, and don't be afraid to use technical terms and equations and leave them shaking their heads - this is a good thing because they will walk away saying things like "I'm really impressed."

This is because people in general, including vc's, devalue anything that is explained in simple, understandable terms, thinking "if even I can understand it, it must not be all that impressive."

Just make sure you prove that it works first.

Rule 34 (4, Funny)

fermion (181285) | about a year ago | (#43636685)

Are you telling me you can't acquire 80's pr0n, run it through this algorithm, and then make a bundle reselling it. Recent reports say this is more profitable that Netflix and prime. This should give enough funding to do whatever else is wanted.

Say it's Instagram filters for video (0)

Anonymous Coward | about a year ago | (#43636687)

They know Instagram, they know what it turned out to be worth, so they know there is a huge demand for this kind of stuff. Feed it to them like that.

Focus on current demand (0)

Anonymous Coward | about a year ago | (#43636689)

Or any evidence that a market for your product exists today. What companies have you spoken too? What contracts/agreements do you have in place with them?

Are you sure you want VC money? (5, Insightful)

sjbe (173966) | about a year ago | (#43636691)

I've worked directly with a lot of VCs and private equity guys.

First question you have to ask is "do I really want VC money?" Make no bones about it, VCs will scalp you. They will take control of the company and there is a good chance you will be pushed out. (No you will not retain control ala Mark Zuckerberg in all likelihood) Furthermore the cost of capital from a VC is VERY VERY high. They expect a big return on their investment. If you can fund your company with Angel investors, loans, friends and family, etc, then do that. You'll come out better in the long run most likely. Most people that think they want VC money really don't. I know it's a bit of a cultural thing in Silicon Valley but even the VCs will tell you that you don't want their money if you don't need it.

If you decide that VC money is still the best way to go then yes they will want to see the technical details of your product. They will do considerable due diligence regarding it and they will call in experts they trust to look it over. However you don't need to get carried away with technical details in the initial meetings. What they are going to be looking for is a business model around the technology that they can develop. VCs aren't typically going to want to develop the business themselves - they want to invest in people who are going to develop the business. They may bring in their own people to help or take over if needed. So what you need is to be able to explain very concisely who you are and why you are worth investing in, why this technology matters, what the market opportunity is, who the competition is and how you will overcome them, and how the VCs will be able to get a return on their investment. You should be able to say all of the above in 60 seconds or less.

Don't assume your technology is unique from a business standpoint - it probably isn't. There will be competing products out there and you'll need to explain why your technology is special and more importantly why you and your team are especially positioned to take advantage of whatever market opportunity you see.

Frankly VCs will be less interested in the technical details than in is your business plan and especially in the team you have around you to execute said business plan. VCs really don't invest as much in technology as they do in the people who are trying to bring that technology to market. They are investing in YOU more than anything else. Tell them about your leadership team. Show them your team has a track record of bringing technologies to market successfully. Guys like Elon Musk can raise money for almost anything because of their track record. If you don't have a track record of building successful businesses, get people on board who do BEFORE you try to talk to VCs. Get a team of advisors who can poke holes in your business plan and help you get on the road to success.

Finally, VCs tend to specialize. Odds are most won't be interested in what you have. Kind of like publishers you have to look around for the right one and you'll probably get a lot of doors (politely) slammed in your face. The VC community is a small one and they tend to all know each other. Don't be rude or talk smack about anyone else because word will get around.

Why is your algorithm valuable (1)

PhamNguyen (2695929) | about a year ago | (#43636693)

As others have said VC's care about money, but the money your company can make is a direct function of the value of your algorithm (and also team etc.). Other commenters have talked about business plans, market reserach etc. but this is really secondary. What is of primary importance is what is your algorithm in itself, what does it do? Nothing you have claimed so far makes your algorithm stand out as something of value. If I were a VC I would ask you the following: Does your algorithm automatically fix the video with no input parameters needing to be speicifed? If it needs parameters, how is it different to composing a number of conventional video filters? Also do you have videos comparing the "best" current algorithms applied to video, with your own? Remember you are selling your algorithm, not the video editing software that could theoretically be built using your algroithm, as such software could also use other algorithms too, so that is not your competitive advantage.

Get hired with it... (0)

Anonymous Coward | about a year ago | (#43636713)

Approach Google. Use the algorithm you have developed as a demo of your skills, and get them to hire you all. Get them to "buy" the algorithm for a nominal amount of money to cover your work developing it.

You wont become ultra rich, but you'll get a very cool job doing exactly this sort of thing with the rest of your team.

Reply here if you need a hand with this.

Don't give them technical details (1)

1s44c (552956) | about a year ago | (#43636715)

Do not give them technical details, a before and after video will be enough. If you give them details they may just try and rip you off. If you give them details make sure they are not complete enough to reimplement your work.

Ideally don't deal with Venture Capitalists at all, these people are only interested in taking as much of your business away from you as they can get away with. They can't be trusted.

It sounds like what you really need is a sales guy to go out and sell this technology under license, not a venture capitalist.

Re:Don't give them technical details (1)

thed8 (1739450) | about a year ago | (#43636811)

I agree don't give them enough technical details to take a copy of it with them, give to another code writer and reproduce. Ideally you would want a secrecy or non compete agreement but they would run it through so many lawyers that the agreement will mean nothing or you will die of old age. Put the words confidential, secret or something on each slide or any handouts then get their names, affiliations, etc. in like a sign in sheet. They know you could use this to prove they stole it if they do something to circumvent your work. At least put a block diagram or something to show them a black box concept. Show them how it can be integrated into the existing hardware, if it will, or how it could be used with the objective of a commercial advantage for the seller. Describe how difficult it would be to recreate. That's certainly part of the value because once someone knows how to do it they can either buy it or develop it themselves. The difference in the cost of these options is part of the value. Good luck.

Simple. (0)

Anonymous Coward | about a year ago | (#43636721)

Release the Source Code under the GPL3 license, and Richard Stallman will give you lots of GNU T-shirts!

Think what will happen in the business.... (0)

Anonymous Coward | about a year ago | (#43636729)

The VC want to know about:

1. Business plan. How are you going to build the company and eventually make the VC a profit.
Be aware that a lot of VC will be looking for an "out". Most likely investing long enough to get the company up to a certain size where it will be attractive to a more larger company and selling out, or floating on the stock exchange. They are not in for the long haul or building a company all the way up to a profitable sustainable business on it's own.

2. What the market is for this?

3. What IP you have, and what it covers.

4. Any competing or comparable products.

5. How the ownership of this company you have is structured. So they know what they are investing into.

Alternatives (1)

snadrus (930168) | about a year ago | (#43636741)

Sure you'll cover the market & the work, but the first thing a clueless VC wants to know is what the competition/alternatives look like. Not in-depth company analyses, but what an average consumer may find & try in 1/2 hour and how poor their results will be.

Also, BusinessWeek has a recent presentation that won major VC buy-in. It's where I got the above tip from & there's probably more to mine from it.

If you don't know, you aren't ready (0)

Anonymous Coward | about a year ago | (#43636745)

If you don't know the answer to your question - and I mean really understand the goals of the presentation and the triggers - then you should reschedule and hire someone who does. Otherwise, you are wasting their time and will not realize much value for your work.

One key piece of advice. Saying that consumer video is your market will be the kiss of death. Tell them that your tech has industrial value, or can help Homeland Security identify people in 7-11 surveillance videos. Now that they can build a profitable business plan around.

From experience (1)

PsychicX (866028) | about a year ago | (#43636747)

I have talked to VCs a number of times. Always wound up finding other funding in the end, but got a lot of perspective on what VCs are looking for and how they anticipate getting it.

Number one: a VC expects 5x-10x return on investment. That return is typically from selling to another company (which may itself be a VC). It may also be from revenue but VCs these days are less interested in active revenue. They want to sell the company and move on.
Number two: They don't care so much about the actual technology. It's important to have good demos etc, but it's kind of a tertiary concern. VCs are investing, first and foremost, in people who they think will get it done. Not just on the tech side, but on the business side.
Number three: The more you talk about the tech's details, the worse it gets. Focus on why this makes sense to consumers at a high level. Focus on why YOU are special. Not the algorithm. YOU.
Number four: It is enormously helpful to have important industry people to vouch for you. Find filmmakers or producers or somebody who are successful with recognized achievements, and have them write mini-recommendations for the tech.

As engineers, it is very tempting to try and explain to a VC why your algorithm is so much more clever than what's out there. Do not bother. That's not what capital is about.

kickstarter (0)

Anonymous Coward | about a year ago | (#43636755)

you're best bet is kickstarting it. or being nice and open sourcing it, but charging for support.

Specific market. (0)

Anonymous Coward | about a year ago | (#43636777)

Market it as a SERVICE to law enforcement.

Show them your "before-and-after" video clips of the Boston bombers.

It seems that every TV law/crime/detective show has that scene where
where everyone stands around looking at a video over the shoulder of the
"computer wiz" person and says "Zoom in over here and blow it up...."
"...Now sharpen that up." Its a TV show. In real life that doesn't happen.
It might as well be science fiction.

If you actually have something that can demo to a crime lab,
anybody/everybody will sit back and listen.

why? (0)

Anonymous Coward | about a year ago | (#43636819)

Please explain why you need a venture capitalist. There are potentially better ways to fund your company.

Be prepared (0)

Anonymous Coward | about a year ago | (#43636837)

Be concise. Make sure that they understand that you have technology covered. Have a separate deck with deeper details (aka abridged technology overview), and pull it out if asked. Otherwise stay visual, demo is your best bet. Tell why you better than others. Pitch your team, your know-how and tell them a plausible scenario of how you will make at least 1 billion with it. They know you don't have an 'all figured out' business plan - so don't sweat too much on topics that you don't understand. Focus on what you do understand - and it is why do you need money? How much? How you plan to spend them? What is your plan and what you will owe to show to VCs in a course of growing your company. Good luck!

legal (1)

shentino (1139071) | about a year ago | (#43636847)

Make sure they sign an NDA before you let them see anything.

They aren't going to buy it from you if they can steal it for free.

Re:legal (1)

stupendou (466135) | about a year ago | (#43636935)

VCs never sign NDAs.

here it is.. (1)

goffster (1104287) | about a year ago | (#43636865)

while(I produce revenue) {
        give me money ;
}
take most of whatever is left ;
buy yourself something nice ;

You can't (0)

Anonymous Coward | about a year ago | (#43636867)

No capitalist would have anything at all to do with Al Gore, and everyone knows that white boy ain't got no rhythm!

Patent and license (1)

alen (225700) | about a year ago | (#43636887)

First patent your algorithm
Then license it to chip makers, electronics companies, apple, samsung, etc

Find a sales guy with good contacts and let him sell
Almost every major product these days licenses thousands of patents from tiny start ups like yours for different things

Demo or die (1)

srijon (1091345) | about a year ago | (#43636919)

The BBC's Dragon's Den [youtube.com] has some eye-opening examples of a broad range of pitches, and is actually quite revealing of the difference in mindset between investor and investor.

Avoid powerpoint altogether. Turn up with a cheap video camera, let the investors shoot video themselves, process it on the spot and show an A/B comparison. Then be extremely prepared to answer questions, pulling up slides and more demos on demand as necessary. It's about business model, not tech. Given YouTube (as just one example) is adding more impressive post-processing options for free - their Calibration-Free Rolling Shutter Removal [google.com] is pretty cool - what does your stuff do that is so different? How is your product positioned in the market, who are the other major competitors, how do they make money, what is the overall market size for this segment of tools, what is your marketing plan, how will you fend off competitors, who are the business partners, etc etc.

Far better to delay the VC route if you can. Find a strategic, patient, trustworthy and experienced angel partner. VC, from what I've seen, attempt to steer companies to where they perceive the market to be, and this is likely very different from own ideas.

Not just money (1)

Registered Coward v2 (447531) | about a year ago | (#43636937)

but how fast can you reach stratospheric levels. They want to be at the bottom of a very step revenue (and profit) curve so the can quickly make many time stehir investment.

Give them enough but not too much (1)

stupendou (466135) | about a year ago | (#43636949)

I specialize in algorithms and have worked as a principal in VC-backed companies for over 15 years.

They won't care about fine details but they have to understand enough to know:

1) How easy is it to replicate your algorithm?
2) What enhancements/future features do you have in mind to stay ahead of the fast followers?
3) Why are you and your team uniquely able to pull this off?

Give enough details -- in fact, I'd suggest slides directly addressing these questions -- so you can back up the answers.

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