May 22, 2018
When it comes to pitching investors, rejection is a lot more common than success. Truth be told, your only path to some serious funding is perseverance and diligence in getting meetings and being prepared. But with the right pitch tactics, you could turn those that pesky “no” into glorious “yes.”
“[Founders underestimate] how difficult it is to get a deal done, and how few deals get funded out of how many deals that are pitched,” said Thomas Flake, Founder and Chief Marketing Officer of bcause, and who has been on both sides of the table. “Ultimately they underestimate how many times they are going to have to get to a ‘yes’ and many quit before they reach that number.”
To help you crush your next investor meeting, we asked top VCs and tech leaders to share their best pitch advice. Take a look at what they had to say!
Know Your Stuff
One of the biggest turn offs for investors are founders who don’t know the basics of their business, especially their market and customer. Failing to do their homework is never a good color on anyone.
“Knowledge. Effort. Wisdom,” said Mark Cuban in a recent interview with TechCo. “They have to know their industry, know their customers, and understand what it takes to make their customers happy.”
Don't forget, homework also includes knowing your competitor.
“I’ve had many startup founders tell me that their startup literally has no competition,” said Frank Gruber, Cofounder of Tech.Co, Startup of the Year, and Established. “In most cases, that’s not true. It’s usually a warning sign that the team hasn't done their homework, or they’re just so utterly blinded by their vision that they don't realize competitors are coming at it from multiple angles. What startup teams don't realize is that having competition is good. It's validating that there is a market for their idea. Where would Pepsi be without Coca-Cola?”
Prepare for Q&A
Whether it's 10 minutes or an hour, there will be a moment in every meeting where you receive tough questions about your business. Be ready.
[Founders underestimate] the questions they will be asked,” said Bambi Francisco, CEO and Founder of Vator. “It’s definitely good to anticipate a broad range of questions and have solid answers prepared and practiced.
Try to compile all the different types of questions you could be asked about your business, like technical details, financial assumptions and projections, marketing, IP, etc., and prepare a response. The last thing you want is to be caught off guard when that much is on the line.
Less Is More
While it might be tempting to put everything you can into a slide presentation and tell the whole story, too much information could distract the investor and potentially lose your momentum.
“Try to keep the presentation tight, 10 slides is ideal,” Gruber said. “Then have additional materials ready if investors ask questions.”
Also keep the slides clean and easy to read.
“Slides should be full of whitespace and each slide should make a clear point,” Flake said. “No transitions, animations, etc. Elegant, simple, concise, memorable is best.”
Experts recommend having more than one deck ready to go depending on the length and type of meeting.
“Some investors recommend having two versions of your deck,” said Jen Consalvo, Cofounder of Tech.Co, Startup of the Year and Established. “A simple one for presenting, and one with more detail in case you need to send it directly to an investor where you won’t be able to talk through it.”
Don’t Argue With Investors
Not every investor is going to agree with you. In fact, plan on them challenging your solution and data points. When this does happen, don’t get defensive; stay positive and answer their questions to the best of your ability.
“I would advise trying not to get into an argument with an investor. Founders are understandably very passionate about their product and startup. They’ve spent years developing a hypothesis and have invested their own time and money into a vision, so it can be frustrating to hear an investor pick that idea apart,” said Charles LaCalle, Head of Sourcing at Dreamit Ventures.
“But the exact wrong thing to do is to entrench yourself in ways that can turn off an investor. Venture capitalists are evaluating you as much on your psychology as on your idea. They need to believe that you can lead an organization effectively, and that you will listen to and internalize advice when they give it to you.”
Early-stage founders want to say their company has the potential to be a billion-dollar company to grab the investor’s attention. However, with most startups failing in their first five years, it’s important to be more realistic about how you can grow a company and pay them back.
“Unless you're asked if you think you're going to be a billion-dollar company, I wouldn't say it. It shows, you're just thinking of the end goal, and not thinking about the product/offering,” said Francisco.
“It also suggests that you may be the type to get caught up in getting big, and you'll end up doing way too many things that you won't be able to do one thing well. No CEO/founder I've ever met when they had under 10 employees (Larry Page, Mark Zuckerberg, Airbnb) ever said that to impress me. Be extremely optimistic and confident about your roadmap and how that can lead to a big exit. But don't focus on the exit.”
Also be careful about exaggerating when it comes to your company’s traction.
“If an investor discovers you stretched the truth, you’ll lose a lot of credibility,” said LaCalle. “This often happens with B2B or enterprise sales pitches when founders include letters of intent (LOIs) in their calculation of traction. You should be upfront with investors from the get-go, because if they do actually dive into deeper diligence, they will discover these things anyway.”
Non-Verbals Speak Volumes
Giving an investor pitch isn’t just about what you say and the slides on the screen; they are also paying attention to the delivery of your pitch.
“55 percent of what you deliver is body language, 38 percent tonality, and seven percent text,” said Stewart Bewley, Founding Director of Amplify UK. “The stats speak for themselves. People forget this and don’t even think about how they stand and speak. Your attitude should always be: I am here to tell you a story, serve you and help you.”
Tell Your Story With Passion
The best advocate for your company is you. It's important to remember that investors can sense if you have the passion and obsession to push through and build a company.
“Obsession about the product and the customer is a common trait among startup teams. Total, complete, unyielding obsession,” said Brad Feld, Cofounder of Techstars via a previous interview with Tech.Co. “This is not just a founder trait, but a team trait. It has to be woven through every part of the business.”
If you can, tell the story through a personal experience that can help the investors connect with the vision of your company.
“Associate an emotional story with the vision,” said Flake. “Why is it your passion? How did you come to this vision? And it better be a big vision, something that captures people’s imagination and makes them want to be part of the solution.”
Enthusiasm in your delivery will make a difference.
“Once you have your pitch down, make sure you practice it with enthusiasm. Delivery matters!” Said Consalvo. “If you can't exude excitement and show your passion for what you're building, why would anyone else get excited about it?”
In the end, you’re selling your team and ability to execute.
“You're selling your dream but you're also selling yourself and your team as the best people to execute on this dream,” said Gruber. “You'll want to be as polished, genuine, trustworthy, and confident (without coming off cocky or arrogant) as you can be. Of course, if you're none of those things, you might want to have someone else pitch.”
Our leaders had some additional advice to share to help improve your pitch for the next investor meeting.
“The one thing in life you can control is effort, said Cuban.
“Remember people invest first because they like you and second because they like your idea,” said Flake.
“Pretend you are explaining your startup to a 5th grader. Start with the most basic, easiest to understand explanation and then build upon it. You need to make sure anyone listening can comprehend it within the first minute or else you've lost them,” said Consalvo.
“Be confident. Be humble. Be passionate and earnest about the opportunity. You have to show that you’re in it for the long haul,” said Francisco.
“Tell a story with a beginning, middle and end. Start with a headline – the one thing they are doing, then talk about the problem. Not too much but enough to make me feel pain. Then tell the story of the solution and how you are going to get it out there,” said Bewley.
“I think the most powerful pitches include proof of why the startup’s customer thinks the product is better than the competition,” said LaCalle.
“Just remember, that you're telling your investors a story, so make solid eye contact as you lead them on this journey into your world,” said Gruber.
It’s More Than Just Pitching
Ready to test your pitch in front of top tech investors and industry leaders? Then apply for the Startup of the Year Competition today.
It’s here that top startups from around the world come together and pitch to the biggest names in tech for prizes and investment, as well as gain valuable connections to people who can amplify your business, join the Startup of the Year alumni group who have gone before you such as Uber, GrubHub, Groupon, LivingSocial and Desk, and be a part of the most diverse and inclusive startup competition.
Deadline for applications is May 31. APPLY HERE
Read more pitch advice on TechCo
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