I’ve been a stakeholder in the venture capital backed startup community for two and half decades as a founder, entrepreneur, operator, investor, board director, pitch contest judge, Board Chair for a technology incubator, and a consultant/advisor/mentor to many early-stage companies and founders.
I’ve seen a few pitches.
In my current role helping companies ranging from pre-seed to “B” stages secure their funding needs, I see many of the same mistakes made over and over, especially by those who are new to this process.
In advance of launching a capital campaign, it is vitally important to practice the pitch numerous times, especially if you are a first-time founder. But this mainly helps with confidence. Practicing alone doesn’t prepare you for the intricacies and pressures of what you will experience while pitching, most of which are 30-minutes or less, and sometimes with mercurial characters.
There are plenty of very good broiler plate best practice articles on pitching – Crunchbase, Pitchbook, any accelerator or incubator website. On the other hand, here are 5 street level pro tips on how to deliver a solid pitch, consistently, and with a goal of avoiding giving an investor easy reason to walk.
Further Qualify the Investor Upfront
By the time you get the pitch scheduled you should have some details about the individual, group or fund you are talking with. You should know their investment interests, thesis, or mandate ahead of time. But it’s still important to ask them to review it with you and why they are interested in your company specifically. First, they like to give their elevator pitch, and this is a great icebreaker. But secondly, investors nuance their investment decisions over time based on several factors like poor deal flow, competition for good deals, over-saturation of deals in their areas of focus and so on. With your question to them you are looking for late-breaking nuances to what they are seeking right now and why that may help you adjust your pitch to them accordingly.
“Thank you for your valuable time this morning Marley. We are excited to share our story and plans with you today and the Cannabis Ventures Club team at some point if it makes sense. Based on our research we think we have a decent picture of your investment interests and boundaries as well as stage focus, but if you don’t mind providing any current context it would be helpful, especially as to how it might pertain to us.” That should do it.
The Pitch is a Story – Tell it Like One.
Your pitch should be communicated like a story with a beginning, middle and end. Investors are looking for all the same important deal qualifying information, and in a particular sequence. I know you’ve done your homework, but as a reminder we are talking about stating the problem and them rolling through your solution, market size, competitive differentiation, team, projections, investment offering and some slides in the appendix to answer questions about the technology, exit scenarios, cap table, etc.
But all of this should be told within a story line arc that makes it more interesting and compelling to the investor. The beginning is who you are and why you are here. No slide necessary. Beginnings are quick but important context. The middle is the meat from problem through the projections. You’ve made your case. Middles take most of the time. The end is the investment “Ask” and closing on next steps.
Know Your Audience
Like I said, all investors basically want the same set of information: How big the problem really is, how your solution fixes it, can you make money with the fix, do you and your team have the right stuff to execute, and does your investment offering make sense. That’s it.
Investors who see a lot of deal flow have an evaluation process centered on finding the red flag(s) as quickly as possible. They are in the business of saying NO to move on to the next deal to save them time. Your job is to not give them any red flags that enables the NO.
Here’s the tricky part.
They prioritize and consume the information you are presenting – differently. For example, Sally Struthers with the Nifty 50 Micro VC Fund is mostly interested in the team because she’s looking for diversity which is in her investment mandate established with her Limited Partners. She indeed wants to see all your great stuff on the SaaS offering and how it’s going to be the next Unicorn in #FemTech, but do you have any Fem’s on your team? Which means she would like to see your Team slide sooner rather than later.
On the other hand, Jack Sparrow with Pirate Ventures, likes to say, “If you were waiting for the opportune moment, that was it”. He’s mainly a numbers guy. He wants to see the deal first and then back up to other numbers like market size & pricing and eventually getting around to who the scallywags are running this operation – aka the team.
This is precisely why you get interrupted with questions from impatient investors. Their priority in consuming your pitch is misaligned with your story line. So, what do you about this?
Here’s what you don’t do. Don’t change your story line and do not re-sort the deck based on what you ‘think’ they are mostly interested in. Keep the story line consistent and control it. Own it. Do not let them take control by bouncing you back and forth switching from slide to slide. If that happens you’ve lost them. Crimson red flag.
Be authentic while maintaining control. They actually prefer strong founders who are confident without being arrogant. If they ask a question that is out of sequence quickly address it at a high level, acknowledge that you sense this is an important topic for them, and that you have an upcoming slide that further addresses the topic in detail. They will wait and be appreciative the sheriff is in town.
Don’t Deviate from the Story
You only have 20 minutes to pitch with 10 minutes going to Q&A. You do not have time to go off script going on about your technology stack and IP or getting gooey eyed over your startup team. Be brief, succinct, authentic, in control and keep on pace. Entrepreneurs must have passion, or they are in the wrong line of business. But don’t let that passion derail the effectiveness of your pitch. Deviating from the story has the same bad outcome as not knowing your audience – it’s a red flag to the investor.
Answer the Question
I’m not talking about the previous example. I’m talking about a legitimate question asked about the topic on the slide you are currently presenting. Too often a pitch presenter, both newbies and experienced alike, are nervous or passionate such that they don’t hear the question correctly and before asking for clarification they go off on a rant that just burned up five minutes and irritated the investor. Yellow Flag at a minimum. Do it twice and your chopped liver.
A corollary to this is to answer the question but no more. Again, you need to keep pace and control. You want to nail the answer like a Produnova, the vault of death, in women’s gymnastics and get right back to the story line.
In summary, you only have 20 minutes to acquire and hold a prospective investor’s attention and avoid raising any red flags that will ultimately result in a response of “Not a Fit”. To avoid this possibility, use these five-street level pitch tips:
1) Deeper qualify your prospect’s current investment interests and areas of focus,
2) Communicate the pitch in story form,
3) Know your audience and their preferences,
4) Don’t deviate from the story. Stay in Control,
5) Answer the question, no more and no less. Close next steps.
Happy hunting and closing!
David Karabinos | CEO | Healthcare Technology Strategist