One key ingredient all startups need is money. Even if you are working out of homes and coffee shops, there are unavoidable expenses, like legal services, accounting, travel, compliance certifications, and prototyping.
And if you and any co-founders aren't in a position to bankroll activity until product revenue (or crowdfunding) comes in, you'll need to ask for money -- which means looking for investors.
And to get potential investors to invest, you need to pitch them.
Pitching to investors means telling them what they need to know. Here is some advice from experts who have been on one or both sides of the process.
1. Start With a Quick Who/What
A few years ago, I was in the audience at a pitch event, and at least half the presenters never actually said the name of their proposed product, what it was or did, or who it was for, fast-forwarding directly to, "We look to be profitable within two and a half years."
Before you launch into financials and business plans and time frames, set the stage:
- Give your company's name
- What product(s) and/or service(s) you are creating
- Your target customer or market sector
For example: "We are creating a multipurpose 'Recorder'-like medical diagnostic add-on for use with smartphones, for use by medical professionals, first responders and others, replacing large, costly, and often non-portable devices."
2. Key Information Every Pitch MUST Include
"Every investor pitch must include market opportunity, revenue model and your ability to execute," says Brenda Christensen, CEO of Stellar Public Relations.
And Brenda is an expert.
She has raised $10M and then another $12M respectively for a major multinational publicly traded tech company and advised the startup that won the Demo God prize (for "Best Start-Up") in 2011 at Demo, which is the oldest startup competition in tech, now 25 years old.
According to Brenda, these are the four areas any venture capitalist (VC) will use to judge whether to fund or not:
- What specific market gap are you addressing?
- How are you addressing it?
- How are you going to make money addressing it?
- What team do you have in place to address it?
3. What NOT to Say in Your Pitch:
"Don't say, 'These are conservative estimates,'" cautions Ben Littauer, who has been an angel investor since 2008, and is a member of Walnut Venture Group. "Everybody does it, but investors have grown to hate it."
And don't over-geek it, says Brenda. "Anything that is heavily product/solution focused that goes into heavy technical detail is a deal-killer."
4. Do Your Homework
"Know your market space and be prepared to answer very detailed questions on how you are going to specifically execute," advises Brenda. In addition, you should also be prepared with the following knowledge on the investors:
- Background on the participants
- Who they've funded
- What their future funding focus is on
5. Tune Your Presentation Materials
"Understand that you have to have several pitch decks," says Ben. "One for investors to read, and one each for presentations of different lengths (speed pitch, 5 and 10 minutes, deep dive). For an in-person pitch, most decks ought to be really sparse so that the investors can focus on you.
Ben adds that if your company has been around a bit and done a pivot here and there, start from a fresh: create a new presentation and tell the story again; however, ultimately, what works will vary, Ben acknowledges:
I was judging MassChallenge a few years ago and had back-to-back pitches that were completely different. The first, for a financial tech play, was about ten slides in stark black and white, a bullet or two on each page or maybe a simple graph, with a couple of words or lines in bright red. Extremely effective.
The second, for an entertainment tech company, had perhaps 90 slides full of bright imagery - all for the same ten minutes. The CEO there ran the deck as though it was a stop-motion video. It was equally effective. The moral is that you need to fit your deck's 'personality' to yours and your company's. Rules can be too stringent.
6. Speak to Relatable Pain Points
"I met with a room full of very high level bank execs on a road show and most were not very engaged during the presentation," recalls Brenda. "When we showed them a feature of the platform that impacted them personally in their everyday working lives, they shot up and said, 'How much money do you need?'"
The takeaway: personalize the presentation to the investors pain and you will most likely walk away with funding.
7. DO's and DON'Ts for Screen Content
When it comes to screen content, whether it's for an on-stage display or table-top, don't make it more than fifteen slides!
"Overly detailed tech diagrams are non-starters," says Brenda. "If you can't pitch your idea in less than fifteen slides, VCs assume you can't execute on anything effectively."
8. Follow-up Info You Should Have Ready
"VCs will want to see detailed background on the executive team," explains Brenda. "Any presentation will highlight top-line achievements, so it's best to follow up with details post-pitch immediately."
What investors are looking to see is that teams have successfully executed with a proven track record - particularly marketing execs.
9. Presentation Tips
This might surprise you, but according to Brenda, VCs aren't that interested in your appearance or apparel. What they are interested in, is your pitch.
"Be yourself and keep it on-topic - show enthusiasm and passion with your ability to execute," explains Brenda. "Did I mention, 'ability to execute' again? I can't emphasize that enough."
10. Understand Your Goals For Pitch Events
"Remember that the goal of all but the last pitch is to get to the next conversation," says Ben.
Do you have any pitch tips? Add them in the comment section below! Looking for more great tips? Check out our other pitching tips blog posts: