by Lee Schneider
Pitching to investors can be challenging. What do they want to hear? How long should you speak for? What should your pitch deck have in it? How do you wrap up a pitch? Should you expect an answer immediately?
To dig into the art and science of pitching to investors, we asked a few VCs and investors for their thoughts. What they said might surprise you.
Cairn Cross, co-founder of FreshTracks capital, which invests in high-growth, private companies located in New England such as tech startup Ello, offers this advice: “I want a pitch to tell me a story that outlines a customer problem/pain point, the differentiated solution to that problem and explains why this team is the right team to build the company.” Those are the bullet points every successful pitch must hit, and wrapping them in storytelling package will hold your listener’s attention. Let’s break down how that works.
Drew Banks is Head of International at Prezi, and last November helped the company raise $57 million from Spectrum Equity and Accel Partners. He is also a fan of a strong narrative.
“Design your pitch to have a distinct beginning, middle and end,” he wrote in an email, “so your audience can follow along more easily and won’t get bogged down in the detail, or worse, bored.” Prezi has an investor template that you can use as a conceptual roadmap.
Rick Coplin runs Rev1 Ventures, which funds concept-to-growth stage companies in the tech sector. He told me Rev1 will make between 35–40 investments this year. His best advice for pitching?
* Be Prepared. That means not only making a killer presentation, but being prepared to answer questions afterward. Rick says, “Know your numbers, your market, your customers inside and out, exactly what you plan to use the funds for and what you expect to be the result of applying those funds to your business. Absent this knowledge, you’re dead in the water.”
* Research Each Angel/VC. Take the time to learn about what they fund and why. Study their portfolio. You want a good fit. Rick says, “Fit is more important than money.”
* Be clear about what’s in it for your investor. Be able to answer this question: “If I invest in you, what is my upside and when?”
Leaving time for questions is key. “Assuming you can talk for 50 minutes in a one-hour meeting, when in reality the VC will arrive five minutes late, leave five minutes early, and want to ask you questions for 20 minutes. So you have about 20–30 minutes in a one-hour meeting to make your presentation,” says Rick.
Some believe that you have just a few minutes — four to be exact — to state your core value proposition, the hook that will hold your audience. Flavio Lobato of IKOVE Partners, says if your pitch is technical, work to simplify it for the non-techies in the room.
Mike Scanlin, CEO of Born to Sell, with six years of experience as a VC in Silicon Valley, recommends keeping your pitch to 15–20 slides delivered within 20–30 minutes. “That forces you to get to the point quickly,” he wrote to me in an email. “Do not include a product demo unless the investor asks for it (they take way too long, typically). Instead, use slideware to show a few screenshots from the product in action.” He says that investors are interested in the business aspects of your startup, the problem you’re solving, the quality of your team, the size of your market. “VCs want to hear about the whole opportunity, not just the product/service you’re selling.”
Another point to pitching is personal: An investor is looking for an experience. “Has the founder led or been close to the leaders of a company that successfully raised and deployed funds?” asks Rick Coplin of Rev1 Ventures. Also, be honest. “Even a hint of a lack of integrity will kill interest. Few recover,” he says. Pie-in-the-sky projections and ignorance of the risks are always red flags for investors, he adds.
Maturity — a quality many investors seek in a founder — can be expressed in a variety of ways, sometimes when the pitch itself goes bad. “I have seen several entrepreneurs completely bomb when a projector fails, or a video fails to load,” Rick said. Potential investors want to test you with questions that might challenge you or seem to take you off-track from the “perfect” presentation. Expect to be tested.
Some of the biggest pitching fails? Jonathan Kendall, President and CEO ofSucceedFast.co, a business coaching company, says being the “idea guy/gal with no real detailed plan on HOW they will succeed, short term and long term.” And, “Not understanding the language of business, that’s the language of finance.”
Also, Drew Banks of Prezi, suggests knowing the investment term norms for your industry and stage of business, because your investors aren’t going to veer too far from them.
Oh, and by the way, don’t expect to get an immediate answer, even if you think you aced the pitch. You will need to survive the Q&A after your pitch, and be prepared for investors to challenge you. They want to see what you’re made of, how well you’ve prepared for the meeting, and whether or not you are prepared to lead.
Designing a successful pitch takes time, many iterations and practice to get it ready to deliver. Learn what to put into your pitch deck in this blog from Designbook.