But it does not guarantee a top notch pitch experience for your audience. Most important is practice – the majority of us are not in the habit of giving speeches and presentations for audiences so there is a good chance you will be nervous. To ensure that:
Do not start with ‘I’m sorry, this is not what I normally do’. When you open like that, it shows you lack confidence. You have virtually conceded that you won’t be able to sell to the investors before you start. It means your team did not plan a good strategy for how to raise money and no one in your team can close a sale as you are the best of the worst on your team.
Frame your problem statement such that it is clear what is the problem. When you say – “The problem is the same-day delivery market, and we plan to combat the Amazons of the world,” it does not mean anything. Do not assume that investors know what you mean.
Aside from the juvenile nature of this tactic, if you don’t know your business well enough to do a 60-second pitch, nobody would be interested. If you aren’t confident enough in your knowledge about your company or your industry to look the audience in the eye, they’ll never trust you. Even if you stumble a bit, it is better than reading your pitch. They stopped listening as soon as you took your notes out.
Do not sound desperate when you pitch. If you come off as this investment is the only way for your business to survive, it seems needy and is unattractive to many investors, and can set you up to be taken advantage of. You’ll end up giving away way more equity than you should. It is better to sound confident and make the investors believe that your startup is a gravy boat that they do not want to miss.
Most investors are direct and are going to ask you the tough questions. That’s a good thing; it means they’re thinking about your idea. Don’t take feedback or tough questions as personal attacks. They have nothing against you.
If anything can go wrong, it will. Be ready for the worst-case scenario. The demo that you planned, might not work. Keep a video of the demo as backup. Arrive early and get your laptop hooked to the projector before the meeting starts. If the on-screen presentation fails, use the print copies as backup. If something does not work, move on. Do not kill the effectiveness of your pitch by wasting time.
Most investors you are going to pitch to are experienced and know exactly what they are looking for. You need to give them the right information to convince them that your company is the right company for them to invest in. Frequently presenters will go for the “data dump” – trying to offload all they got. This results in a data overload where your audience is completely overwhelmed by “all the good news”. Be ruthless and focus on what really matters and ignore all other “evidence”.
Investors will ask you a lot of questions related to your business model and technology. They want to make sure that the investment does not turn out to be a failure. Do not take the questions as a question on your competence. Treat this curiosity as a good sign and do consider all possible alternatives.
When investors ask questions, think before answering. Don’t shoot off the hip but think and subsequently provide a clear answer. Specifically, questions that ask for either a confirmation or a negation – be clear, answer with “YES” or “NO”. The one thing nobody needs windy answers that in the end don’t answer the original question or worse – you have to go back to the person asking the question and ask him/her to repeat the question because you lost your line of thoughts.
Do not try to scare VCs into investing by saying that it’s the last round of financing. It makes you look like a rookie. We all know startups need money to grow. Stay away from non-reasonable scare tactics.
Do not stand there and annoy your audience by reading your deck line-by-line. Make sure you capture their interest, lead their imagination and passionately share your ideas. This is your show, be the master of the show. If you only have a stand-alone presentation, then make a second version that is less dense in words for your pitches.
You look amateur when you say that your numbers are “conservative.” Investors want a realistic forecast and would appreciate it if you could show it in your financial model.
Now this is alright if it’s about one or two points, but if there are too many details that you don’t know cold, on the spot, it shows you are not close enough to the business.
As you keep pitching, you are going to get better with time. Use recurring questions and concerns after each pitch to revise your deck accordingly. When you pitch, you will pitch to 20- 30 different investment groups. Start presenting to the less known investor groups first, and present to your target investor groups after you’ve given 20-25 pitches already. Once you get to the big fishes, you’ll be confident to close the deal. Don’t be surprised if you need to pitch 50-200 times to close a round.
No matter how organized a pitch is, it may fail to answer certain questions your audience has. Planning for Q&A time allows your pitch to be clear to someone unfamiliar with your line of work.
Speaking slowly makes you sound more confident and knowledgeable. If you get nervous, try to calm down and have a glass of water. Do not memorize your pitch but speak from the heart.
As a developer, you might be excited about a different angle of your startup like a new backend technology, then what the investors might be interested in. Investors want to learn more about items that will help them to formulate a judgment, such as how the business is going to make money and how the company will scale. Pitch to your audience.
Investors want to know that you have a good team. They want to get to know your team. If only the CEO speaks, how will they gauge if the other members are any good. Also, don’t have the team members contradict each other.
Know your audience. Different partners in a VC firm focus on different sectors. It is best for you if you know how well informed they are in your market segment. If they are already aware of your area, you do not have to explain obvious facts. If they are not aware of your sector, be sure to introduce the critical details of the space. When a meeting is confirmed, it’s best to ask who will be attending. The answer will help set the expectations.
Make sure you appeal to the emotional side as well. Talk about how your product is helping customers, rather than your product’s features. Talk in terms of the value your customers can extract from your product, not the features that create that value. Make it easy to understand why customers love your company. Speaking of derived value is always a good bet. Sell a good night’s sleep rather than just a bed, sell 1,000 songs on your phone rather than 1GB of extra memory.
Investors are concerned with 5 major questions: the market opportunity, your team’s ability to turn the idea into a profitable business, the go to market strategy, your current & projected numbers (CAC, LTV, among others), and what you are asking for. Identify what drives each investor. Do they want to be part of a ground-breaking company? Do they want to make money and exit fast? Target what drives them! Focus on the business opportunity rather than spending too much time on explaining your product. If you focus on the opportunity, you’ll have a better shot at keeping the investors’ interest.
If you really want to hit it outside the park, make sure you get a really warm intro. Sometimes investors take a meeting with lukewarm intro, with 99% certainty of not investing, just to be courteous to the person who introduced you. The colder the introduction, the lower the chances of your success.
If the previous founders the investor has funded tell you even one thing about what the investor loves or hates, your effort was worth it. This is inside information, mostly available to the inner circle only. So go out and rummage through LinkedIn for connections, stalk them on Facebook & twitter and find their email address. Use LinkedIn premium if all else fails. But do not return empty handed from this quest.
Do not scare away investors by coming across as “un-coachable.” Your lack of flexibility, unwillingness to share control or not bringing in new executives at the right time might cost you closing the round.
Do not discuss how much ownership you’re willing to offer investors in the initial pitch. These details come up after the investors have finished researching your company. Your primary goal right now is to build a relationship with the investors. If an investor asks about ownership terms early on, simply say you’re ‘flexible.’ Do not quote a hard number, that could kill your pitch right there.
When you use words like “a lot of traction,” “big market,” ‘little funding,” it annoys investors. Vague terms have no place in an investor pitch.
If you close with “please talk to me and I can show you how to get your money back,” it looks like an insult to investors. Aside from the obvious desperate nature of this plea, investors are not worried about getting their money back. They are interested in getting a 10X or 100X return on their investment. Getting their money back is not something that excites them.
Follow up with your primary contact a few days after the conversation to suggest possible next steps that the investor can follow to learn more about the company and the opportunity. It would be better if you communicate some urgency about your fundraising process. If you get a “no,” be thankful, the worst is not hearing back. Receiving a “no” is helpful because you won’t be in a state of limbo. If you don’t hear back from an investor after three days, consider that an implied no.
Serious investors will ask for more documents than simply a pitch deck. This can be anything from a competition price analysis to a market research report to the business plan itself. There is no reason to make an investor wait for a couple of weeks while you gather these docs; it is a waste of time and momentum and can easily be interpreted as sloppy preparation. If you make this mistake, all your previous effort go to waste.
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