In my job as an advisor to startup tech entrepreneurs, I often find myself as a sparring partner for founders to help improve the pitch to investors, both in content, structure and presentation style. These are some reflections and my own opinions on the topic of pitching. Comments and suggestions to improve pitching are welcome!
What’s in a Pitch?
The Pitch has become one of the most discussed topics in the startup and venture capital community. No wonder, as deals are either won or lost at this short and intense interaction point where founders try to convince investors why they have the coolest investment offer on the planet (or something close to that).
A pitch doesn’t just try to succinctly communicate a business growth opportunity, but also present the founder (or founding team) and if they are believable, or translated into VC terms: “investable”.
Venture capital is often given to companies with the right combination of an ideal founder(s), together with a big market opportunity, an unfair technology/product advantage and an agreeable VC deal structure (even if that’s always negotiable).
Investors must be convinced from the first pitch that the founder(s) can actually execute the investment opportunity being presented. Do they have the resilience, flexibility and drive to go all the way to build a multi-million dollar enterprise.
Many investors know that the secret to success is not just in a great idea, but more in executing sales, marketing and distribution (also known as Go To Market). That fact in turn means founders need to attract the best operational executive talent to join the venture. They may even be prepared to step aside and allow a more experienced CEO to be hired.
That’s why it’s such an advantage of being a successful serial entrepreneur (or a founder team) with a track record, as most investors will favor someone who has done it before, who will attract operational teams who they already know from previous ventures, and therefore will have a higher probability of delivering a good outcome again and again.
So for a founder that might not have delivered big exits in the past, the pitch is crucial to demonstrate that you and your team are made of the right stuff, but still open to coaching from investors and outside advisers. Even if you can demonstrate early evidence of customers and revenues, you still need to convince investors your ability to scale and expand the venture to the next level, internationally or to new and bigger segments of the market. Investors are picky and can afford to pass if your pitch is anything but brilliant or if you come across as inflexible and stubborn!
So regardless at what stage you are at, e.g. pre-product, pre-revenue or pre-scale, you need to hone that pitch to perfection and come across as a well rounded person that can build a kick-ass execution team.
Become the master of the pitch
When most entreprenuers prepare a pitch to investors, most always default to preparing a “slide-deck” or “pitch-deck” as the most important weapon to win the deal. It has simply become the standard way of pitching these days and many prospective investors even ask for the deck before seeing you in person to avoid wasting time with “hopefuls”.
First off, my own advice is to prepare a simple one-page executive email summary with 5-10 key bullet points that is sent to one of more general partners of VC firms that you have researched and you know are relevant to your business space. You can also create an optional one-pager PDF that summarizes the opportunity with some more detail. The email must be readable in less than a minute and the PDF in 3 minutes. These bullet points also work well if you are having a short initial phone call with an investor that you managed to get hold of. The aim with this first pitch is always to sell a meeting, and not deliver the full pitch! You gotta be patient!
More or less every investor today expects a complete slide-deck when you turn up to pitch your new venture, but the same time they want you to deliver it in 15-30 minutes (including Q&A!), and maybe give you more time if you win them over (typically a first good sign!). For clarity, a slide-deck in this case is in effect a complete substitute to a written business information memorandum (IM), less detailed financials that will often be a separate handout (a well structured excel sheet).
There are also some publically available pitches from some famous companies like LinkedIn’s original pitch from 2004 to Greenock, on how to really distill down your thesis and make every slide count.
Unfortunately, many founders use the full IM slide-deck as the basis for their first pitch to investors, or even worse at conference podiums to a group of investors. With this approach it’s not unusual that slide-decks have the total opposite effect of creating interest, putting the audience to sleep with too much content and simply too many pages. Avoid this common mistake!
Build trust before you pitch
So what role do slide-decks have in effective communications with investors, and how do we avoid using them to kill our pitch when they should be there to excite?
I believe we have to go back to basic principles of selling, as it’s the core objective of most investor presentations, i.e. to put forward a proposition and arguments for an investment in my company, which very much translates into invest in me as a believable entrepreneur!
Selling is all about building a trusted relationship between two parties as a foundation for doing business. Most experienced sales people know that you never start pitching your proposal without first establishing a level of trust, and ensuring that the audience is indeed interested in what you offer. In other words, are you pitching an opportunity that fits the investor’s area of industry focus, funding stage (pre-seed, seed, series A etc) and available investment amount?
Trust also comes in the form of personal recommendations and reputation, which is why it’s important that your on-line profile and customer references are up to date.
So how do you build trust if you are pitching to people who don’t know you, or you are an aspiring young entrepreneur with no track record? Assuming that you get your first chance to pitch, practice telling your authentic story inside a few minutes, highlighting how you came up with your idea to solve a real problem that became the genesis of your venture. Invite two-way questions and answer honestly, even if you don’t know the answer. Honestly goes a long way. BS doesn’t!
Ask questions back to the investors about their investment focus and strategy, what they know about your space, why they invited you to pitch and if they have made any similar investments. Make it a two way conversation and find out of this investor is really someone you want to invite into your company (more on the topic of founder/investor fit in my earlier blog).
With this quick intro conversation of maybe 10-15 minutes, show maybe 3-5 slides that summarizes key facts on achievements so far, e.g. product readiness, real customer anecdotes, real revenues, sales conversion numbers, customer acquisition costs and other factual evidence that makes sense for your specific business model. Also cover your own researched market/competition data with key data analysis assumptions that underpins your thesis why your business has legs. Make comparisons with similar businesses if you have their real data. There´s only one more thing investors love more than entrepreneurs with passion and drive, and that’s evidence in the form of data! (and big exits)
The objective with this kind of conversational pitch is to display competence, preparation, confidence, passion and at the same time humility that you have lots of work ahead of you, you don’t have all answers, but that you are on to something big (as the evidence indicates) and that you are agile and fast to adapt to new realities.
In this kind of conversational peer-to-peer setting, both parties will develop a feel for each other and sound out if it makes sense to go to the next step. You also allow for your personality to shine through, as someone who is authentic and truly interested in building a strong business relationships, which is exactly what you need when you invite investors to your company!
The natural next stage will be to set up a longer meeting running through the full slide-deck, and the underlying financial models. That meeting has all the reason to go well now that you have established a foundation of interest and trust. However, if in that next meeting new partners and investment managers are introduced, you should go back to square one and make sure that you develop a trust with each group of new investment partners as typically all of them have to say “yes” before an investment is made in your company.
Other pitching techniques?
An underrated tool for presenting while actively engaging with your audience is to use the white board to both present and document questions and answers. In situations where you are in a restaurant or a hotel lobby where there are no white-boards, use a note pad!
I once raised a VC round of investment of $7M without once using a slide deck. It might sound absolutely crazy but instead I practiced to draw the solution on a white board (or once on a napkin in a NYC restaurant!) and engaged the audience actively by telling a story that they understood much better than a series of static slides. After the investor meetings, the drawings and notes were still there to summarize all the questions and concerns that came up as a perfect summary of the meeting! Remember to take a photo of the whiteboard so that you can use it for future reference.
I’m not saying that you should dump all your slides in favor of just having conversations and white-boarding, but you can not hide behind pitch-decks and have them substitute the human interaction that is what makes people say “yes” to a deal! Don’t forget that people buy from people and not from slides. We get convinced and start believing in an idea or product using both sides of our brain, and our gut instinct about people who can make things happen!
So when you do use slides, it’s important to understand the purpose and the stage/maturity of your conversation and when to flip open your laptop. If it’s a sit-down conversation where you have already established trust and need, you are well advised to have story-based slide deck with structured facts about your company and products. This slide deck will naturally extend your initial conversation and also work as handout material for the audience to share with colleagues.
If you are building slides to support a podium presentation you need to cut down the number of slides and the content to only provide key point illustrations. You are the focus of the presentation and not your slides. As a simple tip, think and practice of how you want to present without slides first, then add a few slides to hit home on the one point you want your audience to walk away remembering the most.
Don’t be a slave to your slides, be the master of your pitch!
Good luck pitching and don’t forget to breath deeply before you start…and afterwards!
P.S. Feel free to contact me on firstname.lastname@example.org if you want to discuss this topic and maybe want more customized advice how to execute your fund-raising and/or M&A projects successfully.