Asking for something using a pitch is necessary to captivate people and reel them into your product and services.
When planning my startup, I had to research and learn how to pitch to a VC, especially by using a pitch deck instead of talking myself, the differences of whom you speak to in which setting, the time you have and what your opposite wants to hear. This was hard, as I prefer sharing over positioning and demanding.
My key takeaway is, that you need to know exactly whom you pitch to - a seed round 2 VC wants to hear different things than an Angel or early-stage investor, or a customer, or a partner company.
From their point of view, building a portfolio is extremely important (for VCs in general), and especially early-stage investors do not invest in everything, but carefully select the opportunities, as each investment is essential to their overall portfolio balance and with it, the success they have. So we researched the people we pitched to, reverse engineered what they would want to hear and built our pitches around these frameworks.
The Classy Elevator Pitch
Most of the times, you will hear or read that you have about 60 seconds only for the entire pitch. That is a short period, so you have to keep it simple. But even if you have more time, there are a few best practices that work pretty well and are generally recommended everywhere.
They all have three things in common:
the pitch is not spontaneous.
the pitch is concise.
the pitch is general enough so that non-experts can follow.
The best way to do this is to prepare the speech in advance. It is like if you apply for a grant during a seed round. The VC's will ask you to state the company's mission in one to two sentences, at maximum. If the aim and goal are clearly explicable in one sentence, people can get it and read it. The same idea applies to a pitch.
There are different ways to structure the pitch. Let's look at an outline of a Classy Elevator Pitch first, the 60 seconds network pitch.
Ask yourself what your story is that you want to tell. Either you start with the product and company name and then go to the problem you solve, or, you start with the problem and then introduce the company name. I prefer the latter most of the time, as I can make the entrance of the company name sound a bit more dramatic.
If you have not connected with the one you talk to, spend a sentence on this. Building rapport makes you immediately more likeable and shows that you know who your audience is. Use whatever connection you have to the one you pitch to.
Then, I usually start with the market problem or my main target groups problem that is prevailing, pointing out what is missing and the potential market.
I declare that my company addresses precisely this problem. What follows is the way how my company does that and the product range in a comprehensive outline, so that it is clear what the general idea entails and how it is relevant to the problem, how we make money from it, who we are, and what could be the opportunity for someone else.
To the end, I want to have my role added or how I fit in, what I am looking for, and that is was, in a nutshell, what my company does.
And I can add a smooth 'if you are interested to hear more or join our community I'd love to chat with you some more and answer your questions'.
All the rest can be explained through follow up questions. If they are not interested, they will leave, but they heard the name of the company at least twice during that pitch.
The important thing is that you answered the things that everyone is interested to hear: What is the problem, how does the company solve it, and how can I come into play?
How do I bring the product to the market?
What is the business model and generate revenue?
What is the potential of the market, and how do I plan to grow the business?
What’s in it for the others?
I propose that you structure your pitch in a way that includes all of the critical points and also feels natural and logic. Depending on the situation you have to adapt the pitch, so it feels natural to tell - is it a warm introduction to a private meeting, is a networking event, at a party where you meet someone interesting by chance, in a co-working space.
Pitch Deck or Powerpoint
A pitch deck presentation is not like a networking event pitch, but the same applies. Usually, a pitch deck is at a later stage, where you already have some customers and numbers. Key take away is that you need to know your numbers and units because you will not be there to explain it to them. There are also things like pitchbook.com, where you can input all your numbers and it creates a nice overview, that you can send directly to investors, as all numbers will be there and ready for them to see for themselves. (Not affiliated, just, saying)
The Investor wants to see that you are clear about what you talk. You have to understand your stuff, especially finances. I learned this the hard way.
According to Forbes, it should always include
Vision: What is it that do you do, and how do you do it?
Problem: What does your product do, and why does someone care?
Solution: Show why your product is the solution. What makes it unique?
Milestones: Share growth statistics, including notable client, wins, milestones met to date and the total number of customers
Business model: How do you make money?
Growth strategy: Show the growth horizon and why you are ready to launch to the moon if they invest now.
Team: Here you have to brag, why you? How can you build that and at the same time, a disruptive company that has vast potential?
Investment needs: What you need and how much money do you want to raise? How exactly will you use it?
This leads to a deck, consisting of about 15-20 slides, max.
Mac the VC (@MacConwell) shared what he looks for as VC recently in a twitter post (03.08.2020)
He stated:
Intro
Problem
Solution
Market Size
Business Model
Traction
Pipeline
3-5 Year Projection
Go-to-Market Strategy
Competition
Team
Ask
Closing
Of course, every VC looks for something else in a deck. The 3-5years planning can be impossible because of pivoting, market change and economy. Yet, Mac likes it to see what the vision is, how would you scale it and grow, how do you assume it could be? So it is an indicator what you want to achieve and how you defend that scale, where you would want to bring the company if all went in your favour. If you look at the preference of Mac, there are more finance and data related slides than anything else.
finance slides and the TEam are important
According to IfJ Startup Campus, they say that an investor looks at a pitch deck for about 3minutes 26 seconds on average. Their main foci are on
Finances (23 sec)
Team (22 sec)
Competition (16 sec)
This means these parts need to be straight to the point, concise and attractive. A VC invests in a team that they think has the potential to over-deliver.
An elevator pitch covers the same that you have in a pitch deck, but you only have about 150 words.
Thus, the deck should be friendly as well. A friend in user experience told me once that if a product is shit, but looks great, people still buy it. If it is incredible but looks like crap, it takes a lot more convincing to have them buy anything, even trying it for free is done reluctantly.
So it has to pop visually, and the numbers must be there.
Want more resources to continue reading?
I researched 72 pages for this, some I recommend, the rest was...medium, at best.
Start with these:
piktochart.com (examples of pitch decks!)
More on pitch training can be found for example at swissstartupfactory.ch
Happy Pitching
If you would like to practice your pitch and get feedback, shoot me an email and I give you a hand or help you to find a coach or mentor so that you can craft one with them.
Cheers
Andreas