Having worked with Start-Ups and coached them in how to pitch for their funding, as well as, sat on the other-side of the table hearing from Start-Ups seeking my own (and my clients) dollars. I have seen plenty of pitches - ones that have worked superbly and others, which simply have flopped.
In my own experience and having interviewed some of Australia’s most notable Angel Investors and Venture Capitalists (VCs), we all seem to agree that this is an area that requires work from the Start-Up and Early Stage Company Community.
Don’t misunderstand me, it is not that Start-Ups and Early Stage Companies are not listening, it is that they simply do not know how to speak the language of an investor.
So with that in mind, here are 8 key points to over-haul your pitch and give you and your company every chance of funding success:
What's Your Hook?
Hook your audience. Some call it an Elevator Pitch - Imagine you are in the lift with Dr. Michelle Deaker from OneVentures (for example). You've got 30seconds between floor 1 to 24 before you lose the opportunity. How can you explain what your early-stage company does in a simple, emotive and direct way. If you can do this, you'll almost definitely get a follow-up meeting. Then you'll be given another opportunity for a more comprehensive discussion around what you do, how you are seeking to achieve it and importantly how much you need. But it is the hook and those first 30seconds, which will make or break your pitch.
2 quick tips here are:
Sell the problem in the market place, then show how the product provides the solution.
Value Proposition (VP) – What is the clear Value Proposition to your Investors? And likewise what’s your Customer VP?
Use Solid Numbers not Assumptions.
Where possible, use solid numbers and don’t assume.
In Lock Stock & Two Smoking Barrels, it is aptly quoted that "assumption is the mother of all F*&K-ups". And in pitching for funding, you will royally screw your chances of funding if you guess or assume your numbers. Know your product costs, market size and opportunity for returns inside and out.
Areas to focus on include; market size, cost to produce the product, margins, associated growth metrics, Size of Target Market, Forecasting of Revenue, Break Even Point etc etc.
Numbers are what do the talking to investors. They want to understand the potential of the returns and the commercial reality of the product based on every metric that supports them in determining whether they choose to invest or not.
Rapport in the Market Already?
Do you have trials underway? Or have you already developed a following of interested consumer? What kind of social capital do you already have?
Do Similar Products Exist?
What makes your product superior to others? What are the comparisons and contrasts – What it is? What it isn’t? – How it is different and better??
Articulate your Goals.
What are your:
Short (Operational) Goals – These are what you need to achieve to be operating commercially at a basic level.
Medium (Tactical Growth) Goals – Specifics around what outcomes do you want to achieve that allows for you to gain a tactical advantage in your industry. These are goals that build on Operational Success (e.g. operating efficiency improvement, lower production costs, medium term scaling opportunities into other markets);
Long Term (Strategic Growth) – Strategic growth opportunities are longer term and don’t always mean top line revenue or market share growth. These are can be blue sky, but also need to be data driven. It is important to highlight that these often can’t be achieved until you have worked through operational and tactical goal success. However, these longer dated goals keep you on track and provide investors with the excitement of a larger goal that you are aiming for.
Additionally, all these goals provide angel investors and venture capitalists with markers to set their milestone investment payments to. So as you achieve a goal or a Key Result Area (KRA) as a subset outcome within a goal, that can then trigger the additional capital being released to the company to support you towards achieving the next milestone.
Exit Strategy Options?
Providing clarity to Prospective Investors right from the start about what your timeline to commercialisation is provides them with clarity as to what their future exit strategies may look like. Setting this expectation right from the start supports stability to your shareholder base. Avoiding equity holders dictating the direction of the company to provide the quickest exit for them, rather than what is in the best interests of the company.
No Death By Powerpoint!
13-15 slides MAX – If you can do it in less, even better!
Be Prepared & Consistent
I was invited to the Spark Co Labs Incubator Program this week as a Pitch Judge and of the 5 pitches I gave feedback on, I found that there was one recurring theme. It was that each team all had inconsistencies in the way each team member presented. They didn’t have a unified approach. For example, one mentioned the production cost of a particular device would range between a certain price range and the other refuted it, explaining it would cost "X" and here is the rationale why. It is these inconsistencies’ that can often represent a pattern of behaviour that may exist within a team and can act as a red flag to potential investors. So ensuring that there is unity in a team in your pitch and also as a group that can get on as business partners over the long-term is crucial.
There is a real chasm at the moment between start-ups / early stage companies and their potential investors. This is largely due to both sides of the fence speaking very different languages. So, with that in mind, if you (as the venture seeking investment) can develop a coherent presentation to explain and speak to the above 8 points, you’ll definitely be on your way to building rapport with your future investors. This will then drastically improve the chances of success as you pitch for seed and venture round financing.
I wish you the very best in your endeavours!