How to pitch your startup to an Investor – Part 1
Eva Rez is investment manager at Day One Capital
No doubt, we live the era of startup pitches, but do they really help investors find the needle in the haystack? My answer would be yes, to a certain extent, but we do not (should not) let ourselves be easily fooled by asimple good pitch performance only. Convincing investors definitely requires acting skills, but as an entrepreneur you have to know what kind of questions the investor would like to get answered. Let’s see if I can help with that!
Why are pitches important?
It is like the gold rush… Now, there are a tremendous number of startups (it’s also becoming true for investors, though) who would like to mine the gold first; or at least are one of the buoyant applicants for the available resources. But they have to find the “magic way” to the nugget buckets. Pitches are certainly a possible platform to achieve this, but only if they are credible and informative from an investor’s point of view.
And this is the essence… from an investor’s point of view. So you, one of those countless startuppers, have to do a good job here: get us hooked!
First, you need your inner actor to somehow raise the audience’s attention, become noticeable in the crowd – having an outstanding product in your hands helps; or having a good sense of humour; or even giving a disastrous presentation?!
Second, you have to be able to transform into a serious entrepreneur who consciously goes through the most important topics that an investor would like to hear about. And let me be clear: it is not just your revolutionary idea! It is much more than that: we want to know about your team or the possible exit strategies, for example.
Finally, get your salesman attitude out there to make sure that those, who got excited about your startup, can easily get in touch with you. This is the forum where you can actually make valuable contacts with potential investors.
When to pitch?
Do not fall into a trap of chasing success and collecting pitch competition trophies. Startup events are useful to a certain extent: to make yourself visible, to improve yourself and strengthen your self-confidence, to mingle with other startups and to get in touch with investors, who might take you to the next level. At the beginning, I suggest that you focus on the first couple of points. A pitch event can help you get feedback, ameliorate your idea, your skills and your presentation and get you familiar with the investors’ world.
Once you feel confident and well-prepared, start attending those competitions, where you can actually approach and, hopefully, impress your targeted investor base. I am not saying that after a successful capital raise or achieving certain milestones you should not show your concept in public, but do not get distracted from your main goal: building an enterprise!
About the genre
The Pitch Toolkit; Photo credit: Eva Rez
Having given several presentations in my life, I definitely know how it feels to be in the spotlight, but I have also realised that the world of pitches is a very different ball game altogether. A pitch usually takes 3-15 minutes and most of the time it is followed by a Q&A session. I would define it as a brief and dense information set, which should be appealing, logically well-structured and meaningful, while it should provide a certain amount of entertainment, as well.
It is not like a lecture, where your main purpose is to educate your audience or express an idea in many details. Neither is it a traditional presentation, where you can be spontaneous, tell stories or react to the feedback of your audience. Here, you have to be prepared – basically, memorise your presentation word-for-word – and concentrated – in order not to lose your own thread while talking. In a pitch you want to share the highlights of your solution and touch on all the relevant topics an investor would like to hear about.
Pitching comes in all shapes and sizes
There is always also one question: who should present?”
Strictly speaking, a pitch is what I described previously, but pitching to an investor may also happen when you catch them at a conference to introduce your startup or even when you have the first interview with a VC. Especially, in the latter case you have more time, more flexibility and more interaction, but you still have to stay focused and adapt to an investor’s mind-set.
No matter what type of pitch you give, it is always useful – if possible – to have slides illustrating your thoughts. Do not confuse this with an investment deck, where you show your concept in details, and present your business plan and financial plan in a nice format. A pitch presentation should be a guideline for the audience, as opposed to an investment deck, which is part of the decision making process.
There is always also one question: who should present? You might not think about its importance, but this is not a negligible factor. The CEO or one of the founders presenting the idea and the business case is the most credible. It is probably not a good sign from an investor perspective if you put one of your developers on stage. As the main representative of your company (or being one of them), you should have the courage and the enthusiasm to speak about your solution and future plans in public.
Make yourself remarkable to them
Take content as the most important pillar of your pitch (we will focus on this next week), but also pay attention to the “decoration”. Here are some examples for “wrapping techniques” or, in other words, convincing methods that I still remember:
- a startup working on an environment-friendly shower head caught eyes due to its team members wearing bathrobes at a startup festival
- a presenter from the creative industry, who was not aware of what a pitch should really be about, gave probably the worst pitch of the evening, but the audience still loved the character
- the slides were created in a comic book style, and investors became part of a story coming to life;
[definition title=’About the author’ text=’Éva Réz is an investor manager at Day One capital and has been on both the giving and the receiving end of pitches many a time. In this two-piece series, she lifts the veil on one of the well-guarded secrets of the startup industry with useful advice on how to get in the right mindset, choose the right information and create stellar content.’]
- a very modest founder with a no-frills presentation amazed investors with his company’s achievements and already existing client base
- my favourite one was a startup notable for its product, namely a self-heating can – no microwave is needed anymore to prepare your lunch, you simply have to push a button on the can – circulated among the attendants during the pitch.
- Last but not least: you probably want to – and have to – speak in English at most of the startup events, so be prepared for it. Losing your audience because of insufficient language skills is one of the worst mistakes.
Next week, Éva Réz (read our Investor Pick here) will focus more on the most important pillar of your pitch – the content.