We are living in the age of the entrepreneur — more people are starting up, and it's ever important to stand out in the crowd. When pitching investors, then, it's crucial that entrepreneurs do their research, understand what's expected of them and pitch accordingly.
We spoke to a handful of venture capitalists and startup entrepreneurs to get their top tips on how to put together the ideal startup pitch. Here are the best five tips we heard.
1. Start With a Great Company
"Having a great startup pitch has more to do with setting up and running a great company than optimizing some type of sales process to investors," says Ken Howery, co-founder of Founders Fund and PayPal. "Great investors can see through most tactics that you will use in the pitch process, so the best fundraising strategy is to build a great company."
Easier said than done, right? Well, tough cookie — go big or go home. If you haven't got a good idea, get outta here.
While you're at it, put a little passion behind your pitch, says Howery. Share the story of why you got started. The founder of physician-finding tool ZocDoc, Cyrus Massoumi, started the company based on a personal experience — he burst his eardrum while travelling and it took him days to find a doctor. "That made the company's story and his motivation for building the business compelling," Howery says.
2. Don't Forget the Basics
There's plenty of material out there on what exactly an entrepreneur should include in a pitch, and for the most part it comes down to a list of nuts and bolts that should all be there, says David Teten, ff Venture Capital partner and founder and chairman of the Harvard Business School Alumni Angels of Greater New York. ffvc has invested in the likes of Contently, HowAboutWe, Indiegogo and Klout, and recommends that startups cover a list of very clear points when pitching to them or other early-stage investors.
To put it short, the pitch should include details on the company overview, team, market, solution, business model, customers, competition, financial overview, funding, vision and of course, a demo — or at least a mockup — should be available for viewing.
"Cover everything investors want, or you look like you're ducking the questions," Teten suggests.
He evaluates about 700 pitches per year, he says, mostly via email, with less than 5% graduating to a phone call or meeting.
RxAnalytics CEO Deepak Gopalakrishna hasn't seen quite as many pitches as Teten, but in the past two years, he's judged a few dozen in the Carolina Challenge and the Duke Startup Challenge and sees pitches weekly through his roles as an Entrepreneurs Network Fellow at Blackstone and as a .406 Ventures fellow.
Gopalakrishna points out that the investor pitch is all about building trust. Do whatever you can to convey that your team, your product and your approach are all the best out there. In an email exchange with Gopalakrishna, I got an entire rundown on what he thinks should be included in a pitch, but I was most intrigued by his thoughts on how much (or little) technology speak should be included. He says that many entrepreneurs go heavy on the technology and how it works, taking up about half of their pitch with those details and only leaving a smidgen of time for competition and market details. He recommends the bulk of the presentation be about the current landscape and competition. "Beat this to death," he says. "Your potential investors will love you. More importantly, they will trust you."
Furthermore, Gopalakrishna advises startups to very narrowly identify their core secret sauce. "You are never cheaper, faster, better and of higher quality. Pick one." And while you're at it, know that your financial projections are always wrong, he says. "Be consistent with the industry and understand that you will take a haircut on all revenue/EBIDTA numbers and your costs will be too low. Account for this. This will show that you have thought about everything. If you can show you're thinking in assumptions, you are already ahead of 90% of founding CEOs."
3. Razzle Dazzle 'Em
No one wants to hear a lifeless nimrod pitch his company. Where's the passion? Where's the excitement?
Todd Medema, COO of AutoRef.com and winner of several pitch competitions, including AlphaLab's Elevator Pitch competition, likens pitching to acting. You're an entertainer, so razzle dazzle 'em, as the song goes.
"Be human, entertain your crowd, and use your body and voice to help convey your message," Medema advises. "If presenting is acting, then you need a good story to tell. Think about how movies and books draw you in, make the experience personal, and keep you engaged over several hours."
"Imagine trying to keep an audience engaged with your talk for several hours. The greats can. Why? Because they using pacing, they keep changing things up so that you never get bored."
Allyson Downey, founder and CEO of weeSpring, says she gives her startup's pitch at least half a dozen times per day. It can get tiresome, but it's critically important to bring the same level of energy and passion to the sixth pitch as you bring to the first one, she says. Downey also confesses that she's had to become more comfortable with public speaking over time. "When you truly, truly love and believe in what you're doing, it's a lot less scary to get up in front of a bunch of strangers to tell them about it," she says. In agreement with Medema, Downey agrees that storytelling is essential and that the old adage of "show, don't tell" is huge here. "What will illustrate the need for your product?"
For some final tips of advice on owning a stage, Downey says, "Be yourself. It may sound obvious, but it's possible to over-prepare. Being too scripted means you'll sound canned, and no one wants to hear a canned pitch." And when it comes to silences, use them as an opportunity to gauge your audience's reaction to what you're saying, she says, especially in smaller, one-on-one settings. The more feedback you get, the better.
4. Be Honest and Thoughtful
In the act of razzle dazzling it up, don't go overboard. It's not about throwing glitter in the air and using 5,000 Keynote or PowerPoint animations. Remember that trust is still the goal here, so be honest and thoughtful when pitching and answering questions, says Samir Housri, principal at Rho Ventures.
"Don’t massage your numbers, omit critical information that will impact the business or exaggerate the extent of your business partnerships," says Housri. You want to display your business in the best light possible, but a good investor will do diligence and uncover anything you might have strategically left out. If you misrepresent yourself or your product, you hurt your own credibility and this can start the relationship off on the wrong foot.
"Be able to explain the decisions you’ve made as a CEO or team leader. What we look for in a leader is someone that can think for themselves and makes rational decisions with the information they have available to them," says Housri.
5. Do Your Research
Your honesty and thoughtfulness will only take you so far, and that's where preparation comes in. "Have a deep understanding of the key drivers of your business, your largest customers and what your team is focused on," says Housri. "The best CEOs are able to get inside the heads of their customers, investors and employees and know what they are going to ask in advance."
"If you have good, well thought-out answers to our questions, it makes us believe that you’ll also have them for your customers and employees," says Housri.
While you're at it, make sure you've done thorough research on the people you're pitching to, says Howery. Who you pitch to is nearly as important as what you pitch. You should know why this specific investor would be a good partner for your company. Otherwise, investors might see a red flag — either that you will take money from anyone, or you are trying to create a bidding war — neither is a good situation on the investor's end. Getting an investment from the wrong person can be a decision you'll later regret, as not every investor offers equal value.
By Erica Swallow
