In a previous post, we talked about the startup trinity and how everything needs to be perfect in order to raise money. The vehicle to bring those three components to life is what your pitch and executive summary are all about. This post will focus on the pitch (see Executive Summaries for how those work).
The secret to being pitch perfect is to hit the high points of your venture by telling a story. Like any great story, there has to be a hook that grabs the audience, a journey and then a resolution (funding your company). Without these elements, you will lose your audience fast. Every second in front of an investor matters. Respect their time by keeping and peeking their interest. This will get you closer to the deal.
Every perfect pitch starts with perfect slides. Each slide tells has to tell a story. Each slide has to summarize the important elements of your venture. Your base pitch should ideally be 12-14 slides and include these essential elements:
- Title Page (1 slide): The title page frames your pitch. It should have the name of the venture, your tag line and maybe a quote from a customer. This introduces you and it will be the first slide investors see. Make it your lede to the great company you just created.
- Team (1 slide): Introduce your team. CEO at the top, followed by 2-3 additional executives. These should be brief bios that contain information relevant to the venture. Include companies worked for with an emphases on any that were investor backed (including ones that had successful exists).
- Market Overview (1-2 slide): A general overview of your ventures primary market. These slides should have both US and World Wide (WW) market numbers. Describe the market in easy to understand terms. It is also a good idea to explain the market dynamics and growth rates. What factors, in a macro economic sense, drive your markets growth.
- Market Pain or Need (1-2 slides): Capture the need or pain the marketplace. This is where you start to craft the story as to why your product or service will garner sales.
- Product Offering (1-2 slide): Once the need is described, the next step is how you will address it. Summarize your offering in an easy to understand way. Don’t use a lot of buzz words. Do use some industry specific jargon that has been properly defined. If you are uncomfortable with that, then just use plain simple language.
- Technology (1-3 slides): These slides should explain the essence of your technology and why it is different than the present start of the art. If your venture does not have a special technology component then explain your unique approach. This section is also a great place to put any issued or pending patents.
- Customer Traction (1 slide): If you have lead customers that are willing to talk to investors, then add a slide for them. Just 2-3 top customers, preferably ones that are leading in the marketplace.
- Schedule, Milestones and Funding Needs (1 slide): A graphical representation of the schedule, milestones and funding required. You should include the major milestones that the investment will be used for along with follow on rounds that get you to an exit event (like purchase or IPO).
- Financials (1 slide): Include 5 years of financial projections including: Total Revenue, Cost of Goods Sold (COGS), Gross Margin $ and % of Total Revenue, Net Income $ and % of Total Revenue, Units sold, Unit ASP and Projected Market share. All of these numbers should come from your Financial Model.
- Thank You / Q&A (1 slide): This last slide should have your contact info. You may never get to it but putting it up on the screen during a question time allows your audience to remember who you were.
- Appendix (Optional): There is no harm in putting backup slides in the appendix. You may never get to them them but if a question arises, it is perfectly acceptable to jump to the appendix. Appendix slides should have more details than your normal pitch slides. They can bend the rules of form and function.
Once you have the information collected, the next essential piece is how the slides look. It’s critical that your slides not only communicate your vision but look visually appealing. Many a great idea has never gotten off the ground because the initial pitch was so wordy or complex that the potential investor had no idea what to do. Slides are outlines. They are not a speech you read from. They are meant to guild the discussion as you fill in the blanks and elaborate on the outline. There are many rules and books on how to visually layout your slides. A couple of good rules are:
- Liberal use of white space: Don’t cram your text in every nook and cranny. Make sure where is enough white space and at least a 0.5 inch boarder.
- No Animation:Avoid any kind of animation. It just distracts from your message and always messes up.
- Thirty point font: Don’t use anything less than 30 point font. The only exception is full references to sources of data, which should be at the footer, properly annotated.
- Four to Five Points: Keep each slide to four or five bullet points. You can maybe go up to seven but no more. Don’t follow a long list with another long list. Break it up so it has some rhythm.
- Clear Graphic Backgrounds: Make all of your graphics with a clear background.
- White background: It’s best to have a white background. It’s easier to view and print out. If you have a color background, make it only one color. Multiple colors are hard on the eyes.
- 10 Tips for Better Slides details Aaron Weyenberg guide on how to make great slides. He’s the UX guy for TED.
Understanding the audience for your pitch will allow you to craft a better story. Investors might even ask you for your base pitch ahead of time. Usually, if you got the meeting, they have seen your executive summary, so they have some idea what you do. They may want more details on the market or the technology. Always have some additional slides handy that dig into more details. Put these slides in the Appendix.
Some angel forums have a required list of subject matter that must be included. Stick to their format exactly, even if you cover exactly the same material in your base pitch. It is important to adhere to any formats since the group of angels is probably scoring your presentation and the score sheet is in topic order. Making it easier for the audience to follow will ensure they pay attention.
The biggest single mistake most people make is that their pitch is just too long. Most angels or venture capitalist don’t have the attention span nor time to grind through 40 slides (at 2 minutes a slide, that’s just torture). The pitch is not your business plan — it’s the condensed story of what your venture is all about. Keep it short, to the point and focused on why your venture is a great investment.
You should have several different length pitches. Each one should be catered to the amount of time granted. If you are presenting to an angel group, you might only get 10 minutes (which is about 8-10 slides if you rush). If you are in front of a venture capitalist, you might get an hour or more (which should be no more than 14 slides). No matter how much time you are given, your pitch has to get to the point quickly and hit the high points before you lose your audience.
Perfect pitches are a constant work in progress. Practice is the only way you will figure out what works and what falls flat. Always practice giving your pitch with a timer. Hitting your time marks will instill a discipline that forces you to get to the point. This will assist you in refining what you stumble over or what might need more emphases. Once you hit your time, practice with your team. Make sure your team acts like investors so that any potential danger areas can be worked out.
Practice might also include “throw away” or tune up meetings where the potential investor is unlikely to invest. They may have mild interest or maybe they just like you. Whatever the reason, doing a couple of these tune ups is a great way to polish you pitch. Listen carefully to the questions. Spot recurring themes not just single events. Those recurring themes are where your pitch needs work.
Once the pitch is refined and you have practiced with a couple of people, it’s now time to prepare for the questions you may face. You should have a good idea about what questions a potential investor might ask based on your practice pitches. Some questions that almost always come up are:
- Competitors: If it’s included in your market slides great. If not, be prepared to talk about who you are going up against. Include existing players and up and coming ventures that might give you a run for your money. Have crisp answers ready as to why you can beat them.
- Exit Strategy: Some investors ask this while others already know the answer. Be ready to list a couple of ways the investor can get their money out of the company. The two most common are IPO and acquisition. Some angel forums even want a specific slide on this, so look around for comparable exits in your industry.
- Lead Customers: If you don’t have any, make sure you can verbalize who you will go after. You need to show that you understand the customer and that what you offer they will buy.
- References: These could be customers or partners or other investors. In some cases, their are technical professionals that can evaluate your technology in a objective way.
- Market Adoption: Just because you have some lead customers does not mean your product will be adopted quickly. Understanding the sales cycle and who makes the buying decisions will ensure that you have a rational and reasonable sales plan. Usually, a marketplace has 3-5 major players that hold significant market share. Know who they are and how you will sell to them (similar to lead customers).
- What Keeps You Up At Night: Every pitch I have ever been on, someone has asked me this question. The best answer is to state your single biggest risk factor and how you are mitigating it. Don’t rattle off tens of issues that bother you. They know there are risks. It’s a startup after all. What they want to gauge is how you assess risk. Keep the answer simple and honest with a plan to mitigate it.
Practice again once you have your pregame questions settled. Chances are, you will find more questions that need answers.
The big day has come. You’re ready. This can be nerve racking for most people. Relax. Take a deep breath and pitch what you practiced. Be prepared to be interrupted but don’t let that distract you. Your approach should be casual and conversational. Image you are talking to a good friend about your latest and greatest idea. Figure out how to convince them to invest.
Don’t take negative comments personally. This is not an attack on you, rather an attack on the idea or market or technology. Clearly, they just don’t get it and you need to respect that.
Once the pitch is over, ask what the next steps are. This is an important step since you want to figure out if they want to get to the next step. If they say, “we will call you”, then counter with some sort of follow up action like “If I don’t hear from you by next week, is it OK to drop you a note”, or something like that. Remember, the whole point of the pitch is to get the next meeting, so ask for it.
Once the pitch is done, take a few moments to jot down what worked and what did’nt. If you went with your fellow team members, ask them the same questions. Try and learn something from every pitch you. With practice, you will start to understand how to craft your message for maximum effect. Remember, the main job of the pitch is to get the next meeting. Good luck!
Check out Guy Kawasiki’s excellent post on Power Point pitches here.
Quicksprout has some advice on pitching venture. Check out the post here
Hat Tip to Vivipins for pointing out that my Guy link above was stale. They did their own take on the 10/20/30 rule. It’s worth a read.