As part of my job I get to see a lot of startups pitch their businesses. So what makes the best ones truly stand out? In my experience the most effective pitches share a few traits in common. I’m going to share eleven of them with you here (ten is no fun, eleven is one louder anyway). Crafting a pitch with these ideas in mind will hopefully give you a leg up when you are trying to get potential investors’ attention.
At Connect Ventures we specialize in investing in early stage technology businesses, primarily internet and mobile companies. So what I’m suggesting here is tailored to that. Different types of businesses and ones at later stages of development might have to emphasize other things in addition to what I’m recommending. Nonetheless most of what I have to say here should be pretty broadly applicable.
1.) Figure out who you want to pitch and get a referral
Make sure you do your homework before you meet a potential investor. It’s a good idea to know what kinds of business the investor you’re pitching is interested in. Make sure you speak with investors that will be interested in what you’re doing: there’s no point trying to get in front of an investor that doesn’t invest in the kind of business you’re building. Then find somebody in your network that can refer you to the investor you’re targeting. A referral is always better than a cold call or email. A good referral will guarantee you a meeting.
2.) Show don’t tell
You’d be amazed at how many businesses’ pitches I see that talk all about the product the business builds but never get around to showing the actual product itself. These days, in web and mobile businesses, there’s no excuse to not have at least a mockup or prototype to show an investor. If your company is at such an early stage that you don’t have at least a basic prototype then you’re probably not ready to raise money yet. If you have a prototype then don’t hide it! Be ready to show it off to an investor. Allowing them to play with the product does two things: it’s the best way for someone to understand exactly what it is that you’re doing and it gives you a chance to get them engaged with the business. If someone really likes your product you’ll have really grabbed their attention and the rest of the pitch becomes easier.
3.) Explain things clearly and simply
I also see a lot of pitches that are very complex and confusing. Remember that the pitch is not the end goal. You don’t need to explain every last detail of the business you’re building all in one pitch. The goal of a pitch is start engagement with potential investors. You want to make sure they understand the most important aspects of your business. If you complicate pitch with needless complexity you’re just reducing the odds of creating further engagement with investors.
4.) Tell a story
A good pitch is a lot more than a product explanation, a market analysis, and a set of financial and operational numbers. It is a story. A story about a business, a problem that business solves, and look into the future that shows how your startup is going to become a big business and do its part to change the world. Thinking about a pitch in terms of a story is not just some slick salesmanship gimmick. It’s a great framework for organizing your thoughts in a clear and understandable way. The story format gives the person on the other end of your pitch a “hook” to grab on to that lets them really understand what you’re up to.
5.) Be to the point
A good pitch doesn’t need to be a long pitch. In fact short and to the point is the best way to pitch. A long pitch can easily “get out in the weeds”. This is a hard one to follow in practice. Most entrepreneurs I meet really love their businesses and could easily talk about them all day and in great detail. This is a good thing. But it’s not what you want to do in a pitch. Remember the goal of a pitch is to generate further engagement with an investor so you have to make sure you cover all the big ideas as efficiently as you can. The only way to do this is to be to the point.
6.) Be specific with what you’re looking for
A good pitch is really specific about what it asks for. Good: we are seeking £750K syndicate that can help us get our prototype to a finished product and then help with the product launch, £500K from an institutional lead and £250K from a collection of angel investors with expertise in product design and retail channels. Bad: we are looking for between £500K and £1.25M. Really Bad: we want money to develop the first phase of the product.
7.) Know how you’re spending the money you’re raising
Good pitches explain clearly where the money is going, at what rate the cash will be spent, and how long the cash will last. With specifics. When pitching an early stage venture capital investor, you really need to know these things cold and be prepared to have an on-the-spot discussion about the logic and assumptions that underlie these numbers.
8.) Know the goal of the round you’re raising
Many tech startups that seek venture funding are going to need additional rounds of funding beyond the one currently being raised (well at least early stage startups…). A good pitch documents specific milestones that the new funding round will help address. It will also be pretty clear about what the next step is, funding-wise, after those milestones have been hit. This analysis helps investors calibrate your expectations with their own. Think of this as a jumping off point for further discussion, not some final word that’s etched in stone.
9.) Show your passion
If you’ve taken the leap to start a business you must be pretty excited about the problem your solving and the solution you’ve created. Don’t forget to show that excitement! Pitching can be a nerve-wracking experience, especially for first time entrepreneurs, showing some passion for your business, instead of hiding it away, is a great way to break through the nerves and can easily cover up any fumbles or lack of polish that might come from being nervous.
Those nine ideas will take you a long way and give you the basis for building a solid pitch. Here are two more points, maybe more minor than the first nine.
10.) Your pitch should reflect the business you’re building
If you’re building a design-oriented product, don’t show a pitch full of Arial 12-pt bulleted lists. If you’re building copy-intensive website, don’t have spelling mistakes in your pitch (well don’t have spelling mistakes in your pitch no matter what!). The production values of your pitch reflect the level of care you are putting in to your business. If you shortchange them and have a sloppy pitch, it reflects poorly on your business and product, even if those are super polished and well designed. A corollary to this: don’t concentrate on the production values of your pitch to the point where you neglect your product.
11.) Don’t ask for an NDA
If you need an NDA to show an investor even an intro pitch you’re making life hard for yourself. It’s a needless barrier to getting an investors’ attention. Many early stage investors meet with hundreds of companies a year. If they had to have an NDA in place with each company they met, they’d never get anything done. Assume investors won’t sign an NDA (some do, many of the best don’t) and create a pitch that doesn’t require one.
Thank you Bill. To find out more about Connect Ventures, visit their website at connectventures.co.uk.
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