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Getting Your Startup Pitch Perfect
Having seen more than a few pitches in the last decade, working as a CMO at a fund, and being married to one very active angel investor, I can tell you that there’s no one-size-fits-all, magic pitch formula. However, there are lots of things you can do to earn your investor’s respect and attention.
Let’s start at the end – although investing in startups is one of the riskiest investments out there, most investors are looking for a relatively stable / safe investment, and that’s why they will try to identify the specific metrics that create a relatively “risk-proof” investment (in their eyes); it’s what they would normally describe as gut-feeling. It’s something they can’t really explain or measure, but it’s your job to provide them with as many “safety” indications as possible.
Here are some pointers that will help you score your pitch:
Who – The winning TEAM
At an early stage of a startup, your team is really all you got. The investor is actually partnering with you and your team more than he (or she!) does with your product, and so they will try to make sure they’re teaming up with the right set of people and will probably look for the following characteristics:
- Professionality – you should be able to prove you know the field you’re about to play in and know it well. Show that you understand your competition and the current alternatives in the market, the market trends and drivers, the relevant price range, and your location on it… you really don’t have to write all of these in your presentation, but you should be able to easily answer any market-related question, so make sure you’re ready.
- Passion – this word is overused and sounds corny, but passion is what drives a founder beyond the IPO, beyond the acquisition – beyond the monetary success. When driven by passion, people tend to be more curious and enthusiastic and are always evolving, and these are the kind of people investors are looking for (not the ones who are just there to make big bucks and retire in their 30s). Passion can be shown in the way you speak about the problem, in showing how much time you have been spending on it before you founded the startup, and can even be reflected in your bio. Anything that can surface this up would help.
- Management skills – if your startup is going to grow, would you be able to manage it? Would you be able to bind your team to the mission and push them forward? Try and demonstrate or highlight your leadership skills, and if you don’t excel in that, make sure you have someone on your team that does (and bring them with you to the pitch).
- Resilience – simply put: can you face this rollercoaster? Building and running a startup company is one hell of a ride, and it’s not for everybody. Investors usually look for the kind of people who don’t get overwhelmed easily, who find creative solutions… people who can stand the heat. Try and reflect that in your pitch; don’t get offensive if you’re getting not-so-positive feedback on something, or being tackled with a question you don’t know how to answer. Make sure you have a story of a problem or difficulty you once tackled in case the subject comes up.
“I’d rather invest in a startup that has a really great team and an idea that needs some refinement, than one that has the brightest idea but its team is lacking the right passion and resilience that are needed for the journey they’re about to take.”
Andrey Shirben, Follow[the]Seed
Why – The PROBLEM that you SOLVE.
I’ve met many founders who had some brilliant, innovative ideas that no one ever picked up or opted in to, and in most cases, it’s simply because no one really needed them – these startups were inventing a problem. I know, I know, not all startups were built to save the world’s problems and create a better future and there are many successful startups that are developing games, for example, and that’s great.
However, if you count your business as a problem-solving one, you need to prove that there is a real human need / problem / wish / aspiration behind it… it needs to have an existing market.
Don’t assume the investors will automatically “get” the painpoints or the size of the problem and market – you’ll need to show them how real the problem you’re solving is or the major changes your solution will bring into people’s lives / workplace / gameplay / etc.
Once they have a better understanding of your potential growth, they will be able to decide accordingly how risky this investment is.
The more your solution answers an existing and burning problem, the more likely you are to get your investment. It’s that simple. So when pitching, don’t forget to use data to support your point and prove the existence of a real problem and market size (you can use existing researches, testimonials, online search volume, the existence of alternatives, early traction figures, etc.).
What – What is your SOLUTION?
This part usually distinguishes the great pitches from the not-so-great ones, and it’s all about the way you present your solution. It’s clear that you, the founder, has all the knowledge about your idea, but you should be careful in how you present it. Unless you are talking to a very technical person, don’t focus on your features list or how you achieved it technically – talk about the benefits instead. Think about it: people don’t use Canva, for example, because it’s the best design tool out there or because it has the best pre-designed options for them; they use it because it allows them to quickly and easily create the design they had in mind and it saves them the time and cost of working with a designer. The pre-designed options there are just a feature that supports this main benefit. Investors look for the benefits that people can relate to, not for a list of features that can’t explain what’s in it for them.
Want to impress them even more? Show a long-term vision and/or your innovation pipe-line for future years. It’s true that some solutions are a one-trick pony, but it would be great if you could prove your creative and business view as to how this solution can be further developed to cater for more / different needs in the future.
Oh, and try to keep it short and sweet (even if your solution is technologically complicated). Good ideas are easily explained – make sure yours is the same.
Let’s talk business.
After you’ve (briefly!) demonstrated all of the above, get to the point: how much money do you need, what are you going to invest it in, and where will it get you to.
Investors don’t just give you their money and let you play with it. They want to have a clear view as to what this money will be used for, how will it affect your startup growth, and what will be your burn-rate.
Do your homework and make sure you are asking for the right amount for what you’re about to allocate it to, and no less important: make sure you have the numbers to back up this decision (e.g. why do you estimate that investing $X in marketing will get you to Y users in 2 years’ time?). This will give the investors a good indication that you know what you are talking about.
A few no-no’s:
- Drop the “hockey sticks”. In reality, the vast majority of startups can’t present an ongoing exponential growth, and even those who can should be aware that at some point, growth will start to level off, and that should show in your forecast. Be realistic and honest about your growth potential and don’t try to manipulate the numbers.
- It’s not a job interview. Don’t waste time talking too much about yourself, your resume, how you started this company in your parent’s garage, etc. Instead, try to dissolve the investor’s fears and address his interests. If they like what they’re hearing, most investors will guide you to the more personal questions themselves, so don’t dwell over personal stories – these won’t get you the money you’re asking for.
- Don’t let it get too long. I know how hard it is to chunk everything that’s going on into just a few slides, but trust me – if it’s getting too long, you lost it. Experienced investors hear so many pitches, and they can easily identify the good ones from the bad ones. They don’t need a 45-minute show to get what it is you’re doing. The ideal pitch should be easy to understand even without you speaking in the background. Not every word you’re about to say should be in your presentation; be ready to answer questions and give examples even if it’s not written.
- One version is not enough. Investors are not created equally. Some are more technical, some are less. Some will like surfing or recreational sports, and others will like traveling and relaxing. Make sure you know who you are pitching to (do your research, look at their past investments, etc) and tweak what you are presenting/saying to enable the investor to connect with you and your idea (e.g. if your investor is into sports betting, you could say something like, “It’s like in sport betting when you….”).
Bottom line – Be prepared!
There’s no right or wrong here, but if you were to put yourself in the investor’s shoes, you would understand that at the end of the day, all they look for is a serious entrepreneur with a good product-market fit!
It’s that simple. And it also means that you just have to do your homework and have all the answers to the above questions in hand.
When you know what they’re looking for, it’s much easier to win them over! Good luck!
Looking for some further assistance with your pitch? Need help with creating additional versions for the one you already have? Look no further! Contact me, I’d love to help! Contact me here.