October 12, 2020 8 min read
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When it comes to pitching, the odds often seem stacked against startups. Investors reportedly look at pitch decks for only 3 minutes and 44 seconds, and for every 1,000 pitches an investor hears, they only fund 100 companies. But investors aren’t in short supply, so there has to be another reason why the window of opportunity is so slim. What if the problem is how founders are telling their startup story?
Think back to when you were a kid. What were the stories that engaged you most? Had you sat upright on your bed, wide eyed, and pleading for your parents to keep reading? Probably the ones that had a strong main character, a detailed background, and were just short enough to get your full attention. In many ways, the best investor pitches have the same traits.
Here’s how to create the perfect investor pitch, with tips from the experts:
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Know your value, market, and investors.
Before you find yourself in a room full of investors, there are three core areas you need to dive into. First off, define exactly what your value is—that means, what customer pain point you’re addressing, how you’re solving it in a new or better way, and why people will be willing to pay for your solution. Start by conducting a number of user interviews to get qualitative data and direct quotes from your targeted audience. Then collect any early traction like sign-ups to free trials, social media engagement, and letters of intent to include in your presentation.
Next, look at your market size. This is arguably the most important element of your pitch, because if you can’t demonstrate that there is a sizable group of people who need your product or service, no investor is going to consider you. You also need to show that you’re aware of your competitors, and how your market is changing. Look at relevant trends, reports, and expert opinions to ensure that you know your market inside and out; the more in-depth your understanding of it, the stronger your case will be for your new offering.
Third—and this is something founders often forget in the pitching process—research the people you’re pitching to. The more you know them and understand what they’re looking for, the better your chances are of securing investment. Check their online presence and ask your network if they have crossed paths with them and can give you an insight about what makes them tick. Christoph Sollich, aka The Pitch Doctor, says you need to consider what types of companies they have invested in in the past, where they have been successful, and the key question: what are their hypotheses about the future?
Keep your story short and sweet.
The layout of your pitch presentation will speak volumes to investors. If you upload a 40-slide deck filled with dense text, expect a collective sigh from your audience. Investors’ time is valuable, and the reality is, most investors are looking for reasons to say “no” to your pitch. From the very beginning of the meeting, you need to be convincing them otherwise.
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Fortunately, formatting is relatively straightforward for a pitch: make it as short as possible. A pitch should be a document that makes it easy for readers to digest your core messages even if they only skim through it. A good guideline is the 10/20/30 rule from Guy Kawasaki, which advocates using 10 slides in 20 minutes, with 30 point font. The slides should then be listed in the following order:
These next slides can vary in order depending on where your startup story is strongest:
For your last slide, state the amount of money you’re asking for, and leave your contact details.
Gabe Zichermann, chief executive at Failosophy, suggests checking out pitch decks from other companies for inspiration. Decks from the likes of Google and Airbnb can be found with a quick online search, as well as videos of them being presented. Aim to review pitches from companies in your industry to get an idea of where to place the most emphasis in your pitch; but don’t simply copy them. Recognize the differences in today’s moment in time, technological developments, and market demand. There are no magic pitch templates that work across the board, so the more you study a variety of pitches, the more you’ll be able to find a mix that works for your company.
When you come to making your pitch, Zichermann also stresses that one version is all you need. “Investors talk with one another and will communicate what you’ve presented to each of them,” he says. “If you’re selling different stories, it will come to light, and investors will be less likely to trust you and your idea.” You can modify how you talk in your pitch if you’re pitching to investors in different sectors, but keep the core deck the exact same.
To listen in to Gabe Zichermann and Christoph Sollich discuss how to create a killer investor pitch sign up for a risk-free trial of the Start Your Own Business course and check out our live webinar on 10/14 at 3 pm ET.
Showcase your product or service.
The proof is always in the pudding, as the saying goes. For investors to really buy into your idea, they need to see it in action. Of course, a live demo of your product depends on if it’s actually been built, how it works, and what scale it works on. Still, if you can provide a snippet of your solution, a video of it being used, or a mockup, you’ll be a step closer to convincing investors.
Remember that your demo should be smoothly integrated into your pitch presentation. Avoid disruptions by setting up equipment in advance, loading web browsers, and testing (multiple times) that the product is working flawlessly. If your company is focused on an app or service, be sure to highlight the ease of use and any personalization features. Be cautious not to use heavy tech terminology either, as investors may not be familiar with it and will quickly switch off.
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Tell investors why you’re the right person.
A common misconception founders have is that investors want to see huge financial projections in your pitch. Really, they want to know that you’re the person who can make the business a successful reality. Numbers mean nothing if the person at the helm of the ship isn’t capable.
To prove that you’re the right person for the job, begin your pitch by establishing a fact that reinforces how deeply motivated you are to solve the problem at hand. The more personal, the better. Sollich says, “make it emotional. Show real people, and show examples. Show your own emotions, your passion, and how much your care about working on the idea.”
For instance, if you’re innovating food packaging, you could share the fact that you have a relative with a nut allergy who has experienced anaphylactic shock due to cross-contamination in packaging factories. As a result, it’s now your mission to ensure that packaging is clean and clearly labeled for all.
Although it can be tempting, refrain from asking rhetorical questions when you frame your story. Many founders think that “how many of you have experienced X?” is a strong opener, but it isn’t. This kind of question is a gamble because a large chunk of investors may have never experienced the situation you’re using to relate to them, and that means you’ll lose their interest very early on. Generally, it’s best to concentrate on telling your story in the most compelling way, rather than trying to get investors to connect personally with the issue.
The perfect investor pitch has to persuade people that your startup is going to be successful, but also that you’re the one who will take it there. It’s a combination of personal and professional, and it goes beyond making money – it’s an invitation to be part of an exciting new journey. By concentrating on “why” (why this solution, why now, why you) and offering proof that validates your company’s hypothesis, your pitch will not only be believable, it’ll be investible.
