How to Pitch a VC
No matter the person’s background (entrepreneur, investor or speech writer), they all agree that the old adage “practice makes perfect” rings true. Put in the time if you want to raise money for your startup idea and bring the product to market.
by Boonsri Dickinson
Pitching can be learned if you understand the components of what venture capitalists expect and what they respond to. From both an entrepreneurial and investor perspective, Usama Fayyad described the art of presenting, emphasizing that a prepared speech can make all the difference when it comes to getting funding for your startup idea.
Fayyad is an entrepreneur who has founded a number of companies, including DMX Group, which was acquired by Yahoo. In addition to being a serial entrepreneur, Fayyad is an angel investor and executive chairman of Oasis 500, which is focused on funding and growing the early-stage technology ecosystem in the Middle East.
Fayyad was surprised that he was able to train young companies to pitch well in places like Jordan. The secret was to put the entrepreneurs through a focused-training program.
To find out more about the art of pitching VCs, I sat down with Fayyad and other entrepreneurs at the Intel Capital Global Summit, a venture capital event where entrepreneurs and CEOs from around the world gather to discuss business plans, possible partnerships, and display their latest inventions.
Intel Capital is Intel’s venture arm, so many of Intel’s portfolio companies were at the summit. Business plans and product validation were casual conversation at the summit last week. Even I, who was there covering the event, was asked to deliver a pitch about my plans for my short films and the possible business models.
But let’s face it, when an elevator pitch becomes a necessary form of communication in order to find people who believe in your idea enough to write you a check, you should invest some time in delivering a good pitch — one worth remembering and better yet, one worth repeating.
What was the secret? Lots of practice!
“Pitching is almost a science. You can train someone to pitch. It’s well understood what the components are. Here’s what you need for your elevator pitch, here’s what you need for your 10 minute pitch, here’s what you need for your long business plan pitch,” Fayyad said, who was one of the speakers at the Intel Capital Global Summit.
Recalling the times when entrepreneurs tried to do pitches when they weren’t ready, Fayyad told me, “they were so far from getting what a pitch was all about and if they pitched in front of an investor it would have been a guaranteed disaster. With practice, they were delivering pitches, that in my opinion, are better than most Silicon Valley pitches.”
To nail the elevator pitch, Fayyad said it takes about two days with intensive training. However, most companies to get to a pitch where they can raise money from the Oasis 500 fund, it takes them a cycle about four to five weeks.
“For an elevator pitch, it’s a two minute pitch. If you repeat it 20 to 30 times, you got it. For a 10-minute pitch, then you need to design a pitch. We have a template. It has to have the following components: comparison with competitors, a value proposition…etc. Each component is a science. [The 10-minute pitch] takes about five weeks, with 30 to 40 hours of pitching,” Fayyad said.
Fayyad said that it is important to teach entrepreneurs the value of time by keeping their pitch short.
Understand the Purpose of The Pitch
The goal of the elevator pitch is to get a meeting. If you didn’t get a meeting, it’s a failure.
The goal of the 10-minute pitch is to get the person that is listening to you to be able to give your elevator pitch to someone else. Why? “Because most people you talk to have a boss they need to convince or they have a committee,” Fayyad said. “Most of the time, they repeat the idea badly.”
The goal of the longer pitch is all about getting the money, which can last half an hour to infinity. In this meeting, the VCs want to dive in deeper without you being prepared. “They want to stress your model by asking what if these customers don’t respond. They want to see if this person can pivot. Most VCs understand that whatever idea is being pitched… it’s likely not the right idea, so they are looking for the person’s way of thinking. Is the person open minded, will they listen to customers?”
Make Yourself Attractive Through Targeted Pitches
Gavin Gillas, co-founder of The Magazine Channel, said he’s pitched his company over 100 times. For example, Gillas said he has had eight meetings and took components of his pitch and made it relevant to each one. “The better you can target your pitch, the better reception you will have. You can highlight your case and that will make you more attractive. It’s like Tinder,” Gillas said.
Be Specific
Avi Gupta, president and CEO at SmartZip Analytics, Inc., said he won an elevator pitch competition a few years ago.
“What I found is that VCs look for three things. The first one is what’s the pain point and is it big enough for a big company to be in existence to solve that pain point? The second one is how unique is your solution and what is the barrier of entry for someone to catch up with you? How disruptive is it and how unique is it in terms of being defensive? The third one is what have you done to prove the concept? Can you vouch for the viability as a product and as a business that someone is willing to pay for? You can do this through a marketed option or through beta customers who have used it for some period of time and have seen a return of investment for it,” Gupta said.
Short and Sweet
When you are pitching, it’s important to think about the next round, as you will always underestimate how much money you will need to take your product to market.
Maria Walker, partner at KPMG, said in a presentation at the Intel Capital Global Summit, an effective pitch is: short, factual, confident, credible, and passionate. An effective pitch is not: all about you, a history of the company, a jargon festival, technical product specs, and a dry recitation of facts.
According to Walker, the pitch should: (1) describe your product or service, (2) articulate customer benefits, (3) establish your credibility, and (4) leave a lasting impression.
Larry Shoop, who prepares a lot of the talks for Intel executives, said during the joint presentation with Walker, decisions are made emotionally, so it is important to be enthusiastic and passionate when delivering your pitch.
Below is an animated video I made, based on the conversations I had with the sources listed in this story.
Full disclosure: This is the first of a five article series about startups and venture capital. This series received support from Intel, who sponsored and invited me to attend the Intel Capital Global Summit last week.
