Some advice and tips on content and approach to "pitching" potential angel investors, corporate investors, or venture capitalists for equity investment.
2. Let’s focus on the pitch!
Entrepreneurs have consistent questions:
What topics are required and what should be omitted?
What is the best way to communicate my message?
What depth of information should be provided?
What is the optimal length of slide deck and balance between too
little, and too much information?
What is the best flow from start to finish and from slide to slide?
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3. Learn to pitch!
Pitching and negotiation are
fundamental, necessary business skills
Learn them!
Applied to:
Potential investors
Potential customers
Potential employees/recruits
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4. Pitch Purpose
A convincing argument or thesis for investment support
Create/increase investors’ confidence in your
investment thesis
Lead them to a shared view of your company’s
value/attractiveness
An investment thesis is either concept-driven or datadriven. Which are you pitching?
Almost all early-stage companies pitch on basis the of
concept (future opportunities)
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5. Do your homework!
You need to know:
Your unique value proposition
What you are asking for
Who your audience is
How to tell your story with passion
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6. The fine art of pitching
What you say
Explain yourself in the first minute
Explain the relevance of what you do
Clarity. Less is more!
What you do
Keep it high level
Listen for audience reaction to what you say
Be passionate, dynamic
What you show them
The pitch deck
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7. A good pitch deck . . .
Catches the audience’s attention in the first 60 seconds
Facilitates discussion. Do not simply read it aloud!
Clearly and simply communicates excitement and
aspirations to potential investors
“Own” the story and the presentation
Not intended to cover every detail, but leaves them
wanting more
You’ll know a good pitch - it will pique interest, prompt
questions and result in follow-up meetings
Practice, practice, practice!!! Know it inside-out
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8. Investors invest in the team
Investors are looking for a self-aware, founder team that
Knows what they don’t know
Understands their collective strengths and
weaknesses
Can articulate the gaps
Is comfortable NOT knowing all the answers
Has the drive and determination to find and verify
every answer
Investors invest in the team so let them get to know you!
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9. Pitch deck – look and feel
Brand shamelessly – logo on every slide
Lots of white space
Single-line titles
Use 12/24/12 rule: 12 slides, 24 minutes, 24 font size
Diagrams, graphs and photos supplement
Less is more, it begs further questions and spawns
conversation!
Put additional details on backup slides after the “thank
you” slide just in case you are asked that question
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10. Know and understand your audience
What are the most important things this audience would
like to learn about the company
Are there any special issues, landmines, questions, you
should be prepared for
Know the organization’s mission, how they are
funded, available funds, exit horizon, etc.
Brainstorm with your team on the pitch: what to say;
what connections to exploit before you show up
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11. Be prepared!
Arrive early. Be prepared. Be comfortable
Listen for objections and feedback – note them
Be passionate, objective and balanced
Defend your position – any good idea has legitimate
reasons why it won’t work.
Be contrarian but be right!
Bring one additional member of your team to
observe, note questions, watch body language, but
have one person do the talking
Check to ensure your audience is with you
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12. STORYBOARD - A pitch outline
1. Proposition
2. Problem
3. Solution
4. Market
5. The team
6. Business
model
7. Going to
market
8. Competition
9. Traction &
Milestones
10. Financial &
Key Metrics
11. Summary
12. Thank you
13. What the investor wants to know. . .
The Proposition
Why he/she should be listening to you
Sets the stage and draws them in
What is your unique value proposition? (12 words or less!)
Summarize the status of your company and ensure you:
Present a convincing argument that you have an opportunity
worth investing in; and,
The right team to execute on the opportunity
Convince investors they will see an ROI in 5-7 years
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14. What the investor wants to know. . .
Problem
Your company is solving a problem that really exists
What is the solution?
Where does it fit in their company/industry/sector?
Why does it matter?
You have the qualifications to solve it
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15. What the investor wants to know. . .
Solution
What your solution does, not how it does it
The benefits to the user – not just the features
Is there a difference between user and target for
monetization?
Don’t go into the weeds on technology details unless
asked
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16. What the investor wants to know. . .
Market
This is a good opportunity that you can build a big
business around
Demonstrate the market is significant enough to invest
Quantify the market size and growth rate
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17. What the investor wants to know. . .
Team
Why you are relevant as CEO? Are you coachable?
Link the team’s skills and experience to:
The problem you are solving
The business model
The marketing & sales strategy
Every start-up has gaps - acknowledge yours
Add Board Members and existing investors or advisors
to add credibility and references
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18. What the investor wants to know. . .
Business Model
Know who is buying your product and why
Understand the economics of the customer and how
much they are worth
Is model scalable?
What is revenue model?
Does model require a fundamental change in
customer’s current practice or way of doing business?
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19. What the investor wants to know. . .
Go-to-market plan
How will you efficiently and cost-effectively reach your
market?
What resources and partnerships can you use to get to
market faster and cheaper
Channels, price, focus
Effective go-to-market strategy that will enable rapid
market penetration and scalability
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20. What the investor
wants to know. . .
Competition
Who are they
Price vs. value comparison
Features & benefits
Why you are GOOD, not why
they are bad - accentuate the
positive
You need to be up and to the
far right ( X – Y graph)
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21. What the investor wants to know. . .
Traction & milestones
What have you accomplished to date?
What you are going to accomplish next?
That you are scrappy and have skin in the game
Whether there will be additional rounds of financing
When/how much required to reach liquidity?
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22. What the investor wants to know. . .
Financials Metrics
That you understand how much $ is required to break even
Expected use of funds/Leverage of funds
Cash flow
Consider sales cycles (always longer than stated)
Underlying assumptions are more important than the
numbers!
In your back pocket – funding for 12 months (min.)
3 year proforma projections are standard
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23. What the investor wants to know. . .
Summary slide
Recaps the key elements that would lead the investor to believe
there is a great opportunity in which to invest and to bring you back
for a second meeting
Reiterates how great the people/team are and why VC should back
them with investment
Don’t “corner” investor for decision on the spot, but ask if they need
any additional information for delivery, set up in-depth
demo, arrange for customer reference calls, and anything else that
can support their positive decision
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Notes de l'éditeur
Most entrepreneurs have consistent questions they ask us about developing their pitchesWhat topics are required and what should be omitted?What is the best way to communicate their message?What depth of information should be provided in a deck?What about really great slides that make it too long? (stick them at the back - just in case)What is the best flow from start to finish? From slide to slide?
1. Learn to pitch you will be doing it throughout the life of your company!2. Financing is fundamental to successpeople frequently think the most fundamental strategy of a start-up is product it isn’t!the most fundamental strategy is a solid financing strategy
Pitch Purpose:A convincing argument for the right opportunity and for the right team People frequently think the most fundamental strategy of a startup is the product strategy, in fact, the most fundamental strategy is the financing strategy (and always think about the next round too, it is only a year away)To stimulate interest not to close the deal!Know what you wantIn early stages this is sometimes difficult to determineUnderstand your audienceResearch prospective investors thoroughlyUnderstand the broader financing climateWhat deals have been done recently, who and how muchKnow what you want to sayAn investment thesis is either concept-driven or data-driven, which are you pitching? Use the concept method when your data isn’t that impressiveArticulate your thesis clearly and succinctly
2.0 There’s homework!What are you looking for?A pitch is either concept-driven or data driven. Which are you pitching?Generally early-stage pitches are concept driven because the data isn’t impressiveInternal data is more important in Series A round and beyondExpress your competitive advantageWhat about the risks?Experienced investors know there are always risks, assure them up-front that you too understand the risks be explicit and straight forward explain how you will mitigate risk or say you don’t know/research required
What you sayPeople listen to 7% of what you sayThey listen to 52% of your body languageBe excited! Be memorable!Show passionUse pauses
A good pitch and deck:
The teamRecognize that:Analogies are dangerous! Google, Facebook and Twitter couldn’t describe their companies this way - there were none!!Investors will ask questions and the only wrong answer is not having thought through the possibilities ‘I don’t know because … “ is an acceptable answerElements of your business that are critical or unique must be includedYou should address big elephant-in-the-room questions before they get asked, proving you understand the issues and are not afraid of them, investors may assume you were nervous about the fact or that it is a true weakness in the business if you don’t bring them upDemonstrate you know adjacent and competitive markets, products, companies and models – know your stuff
Deck look and feel
Know and understand your audience Different audiences require a pitch tailored to their needs, including:Government economic development program managerCustomerPartner or potential partnerAngel investor or angel networkEarly- mid- or late-stage institutional investorIndustry sector, business model, geographic focus
During the presentation
THE PROPOSITION (Overview)An investor wants to know why s/he should be listening to youRemember – you have 60 seconds
THE PROBLEM - An investor wants to know:your company is solving a problem that really existswhat is the solution? where does it fit?why does it matter?you have the qualifications to solve itwhat is your unique value proposition?The product, the pain and how you will make moneyA VC is looking for traction, market size, and team qualitySteer into investors’ objections, there are usually a few problematic areas for your financing, address them head on and early
YOUR SOLUTION - An investor wants to know:WHAT you solution does, not how it does itDon’t go too deep on technical details, unless the investor shows a real interests or asksShow a focus on bottom-up tactical for your strategiesShow your product, rather than saying you will build best-of-breed product - walk the talk!
THE MARKET - An investor wants to know:this is a good opportunity that you can build a big business arounddemonstrate the market is significant enough to invest
THE TEAM- An investor wants to know:Why you are relevant as CEO? Are you coachable?Link the team’s skills and experience to: The problem you are solvingThe solutionThe business modelThe marketing & sales strategyUnderstanding the competitionEvery start-up has holes, just own them / fix themNo need to go deep except to answer the points Maybe use name-brand affiliations that add credibilityAdd Board Members and existing investors or advisors to add credibility and references
Business Model – An investor wants to:
Going to Market- An investor wants to:Avoid going to market the old-fashioned wayKnow what resources and partnerships can you use to get to market faster and cheaper?Channels, price, focusEffective go-to-market strategy that won’t break the bank
Competition- An investor wants to know:That you know the space very well, they depend on you to be the expertYou need to be up and to the far right ( X – Y graph)How are problems presented being addressedA complete overview by competitor (summarized in a chart perhaps)Who are they, and where are they fromCompared to youPrice vs. ValueFeatures & benefitsWhy you are GOOD, not why they are bad, ‘accentuate the positive’
Traction/Milestones – An investor wants to know:That you are scrappyThat you have skin in the gameWhether there will be additional rounds of financing
Financials & key metrics – An investor wants to know:That you understand how much cash is required to break evenThat this is a good business and that they will be able to make money through their investmentExpected use of fundsLeverage of fundsProduct phase, development timeframesTimeline and milestones (past and future)Cash flowWork it out from the bottom up Consider long sales cycles (perhaps a chart in the back)Underlying assumptions are more important than the numbers!In your back pocket – 18 months at minimum, 3 year projections are standard
Summary - the askEnd on a slide that you want people paying attention to – your unique value propositionRecaps the key elements that would lead the investor to believe there is a great opportunity in which to invest and to bring you back for a second meetingDon’t be afraid to ask for the next meeting