How Startups Can Win Big With VCs

[qi:012] Startups looking for VC funding need to make two things crystal clear when pitching to investors: One, how your company plans to distribute your product or services to the masses; and two, why it’s going to shake up the tech industry. That’s the advice offered up by the panels of venture capitalists and tech executives to startups that presented at the TechCrunch 50 conference this week.

While during a demo, startups have to explain what their offering is and how it works, that’s only one part of a successful pitch. “There’s been a lack of focus on distribution,” said Marc Andreessen, founder of Netscape and now the head of a $300 million venture fund. “The typical path a lot of startups take is they launch their product and no one finds out about it.” They also need to do a better job explaining how they’re going to catalyze the industry. As Zappos CEO Tony Hsieh’s put it after viewing demos, “I didn’t see anything where I thought ‘Oh wow, I think this will change the world.'”

When it comes to social networking, Facebook may have already done that, noting this week that it now has 300 million users worldwide. Robert Scoble, a known enthusiast of the space, said social media-focused companies should be looking to integrate Facebook Connect or OAuth into their services. But one startup, Stribe, is trying to reinvent the wheel by developing a technology that lets publishers build social networks around their web sites. While Stribe’s technology is impressive, it provides a service we could happily live without.

As for those that are looking to build their business around the likes of Facebook, Twitter and other social networks, they need to offer something unique and something that adds value to those companies’ existing features. For example, Radiusly has developed a web-based service that lets companies create authorized profiles for Twitter and manage their accounts. A company profile would offer, say, links to its employees’ profiles. But Twitter already offers verified accounts for well-known executives and there’s a host of startups, such as CoTweet and HootSuite, that are focused on helping companies manage their Twitter accounts.

RedBeacon, a web site that connects people to local services and apparently hit all the right notes with its pitch, was crowned the winner of the event. On RedBeacon, people can post jobs they need done, such as house cleaning or gardening, and local service providers can bid on how much they’ll charge to do the job and when they’ll complete it. The San Mateo, Calif.-based company, founded by three ex-Googlers, is the startup to keep on your radar this year.

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