Pitching to Angel Investors (or at least to me)
Since I last wrote on this topic, I have seen hundreds more pitches and further refined what it is that I look for as an angel investor when a founder pitches to me. The founders who are doing the fundraising are typically raising their seed or some variation (pre-seed, seed, post-seed, pre-A). What continues to surprise me is the variability in the information that is presented. One would think that while the presentation of the information may be different, the basic elements should not be.
Before I listen to a pitch, I generate my mini-checklist to make sure that I get all of the elements I am looking for. These include (it’s up to you to determine the order that best supports the story you are trying to tell):
· Problem being solved, how it is being solved, and why
· Market opportunity / target market
· Revenue / monetization strategy
· Go to market strategy and scaleability
· IP protection and/or competitive barriers to entry
· Management team
· Raise and use of funds
· Bigger vision and long term strategy
· Exit strategy and opportunities (there are various opinions on this; I want this info)
There are any number of resources that go into detail on these areas including one of my recent favorites, Start Up Pitches.
The pitch length will determine how much of the above the founder is able to address but the basic objective is to pique the interest of the investor to get to the next meeting.
So much of it is also dependent on the founder’s ability to present the elements in such a way that it creates a memorable and compelling story.
Recently I was reminded of a few things that founders should keep in mind when putting together and presenting their pitches:
Remember who your audience is and what you are trying to accomplish. Twice in the last two weeks I was on panels where we gave feedback to the founder (this was the nature of the pitch event) that he had included extraneous information that distracted from the pitch and in both cases, the founders argued back and said that the details were important to them and wanted to keep them in the pitch.
Telling me as an investor that what you want as a founder is more important than what the I, the investor, am looking for is a bad signal. This leads me to wonder how coachable you are or that you may not actually care about what your customer wants. Even if you have no interest in changing your pitch, the best answer here is ‘thank you.’
We know you are excited about your product, technology, etc. and we want to be excited about it, too. But, when we look at investments, we need to understand how you are going to make money from the product or technology so that we can have some level of confidence in your ability to return our investment. This means that the business is important. The team is important (and some would argue that this is most important). We need to see you as a CEO and not as a technical lead.
Do not say that there is no competition. That is a huge red flag. This leads me to wonder if you have done any research to see what is out there or if you understand the space at all. It also makes me wonder at your arrogance which isn’t a good indicator for me.
Have a go-to-market strategy. Any time I hear a founder say in a pitch that what they have developed is so awesome that everyone is going to want it and no marketing will be necessary because the customer base will grow by word of mouth, I stop listening. I know I am not the only one.
Be careful about the amount of time you spend on the back story. Include enough to make it compelling but not so much that we are two minutes into a ten minute pitch and have no idea what your product or technology is. Remember, we are investing in more than just the product or technology. If the backstory lends credibility to the team, market size, opportunity, and the technology, leave it in. If not, go back to point one above (remembering who your audience is).
Be cautious about the data you include in your slide deck or pitch. Case in point, the other night a founder presented and included the name of a company on his exit strategy slide. I was familiar with the company and asked if it truly was an exit option and he said, no, not really. I agreed in that I had worked with the company and knew they were not in a position to acquire them or their technology. So then the question was, why did he include it on the slide? In my eyes, his credibility was shot in that he was trying to name-drop and hoped no one would notice it.
Female founders walk a very tight line in presenting their pitches but one of the things that really helps is to focus on the numbers and the data. A lot of female founders start with a soft story around why they started their companies and developed their products and lose a lot of male investors before they can really get started. I often recommend to them to use data to tell the story in terms of the market opportunity and investment opportunity from the get-go. Although, honestly, any founder who spends too much time on the sob story behind the development of the product and/or company I start to glaze. In my head I am saying, ‘yeah yeah yeah but what about the business?’
Have a monetization and revenue strategy. Gone are the days when you could simply say that you were building users and that you would sell the company or the data at a later point and that monetization early on is irrelevant. Some investors might find this attractive but for me and the investors I work with, this is a kiss of death. We’ve seen those companies come and go and while some were successful, they were the exceptions.
Here’s something to keep in mind. There are a lot of start ups right now who think they have the best thing since sliced bread. In some cases they do but not everyone does. This means that while there is a lot of money available to start ups, investors have options. In fact, we are overwhelmed by options so that the faster we can get to a ‘no,’ the faster we can move on to the next opportunity. At the same time, we want you to succeed so coming into the meeting or presentation, we want it to go well. But don’t make it easy for us to move on to the next start up.
Some other things that annoy the investors I know:
- Asking a question of the audience at the beginning. You have no idea how they are going to answer and will quickly lose control if you don’t get the answers you are looking for.
- Taking too long to answer questions. Be concise and to the point in answering questions so you can answer lots of them.
- Having too many words or data on slides. We will start to read and we will stop listening to you.
- Having too many presenters at the same time. We prefer a single presenter with supporting people available to answer questions during Q&A.
Every time I listen to a pitch I learn something new which is one of the things I love most about being an angel investor. I never know what to expect and often have to think quickly on my feet about what I know and how what I am presented fits into that. So much fun!
Actually, one more thing…don’t be dismissive (or an asshole). That’s the fastest way to get to a ‘no’ with me. I still remember a founder with a drone company who tried to school me on FAA regulations and apparently hadn’t done his research on me. So when I responded with, ‘as a commercially rated helicopter pilot…’ and he responded with ‘oh, we should have known that.’ And I responded, ‘yes, you should have.’ And in my head, I was thinking, there is no way I could work with this founder. Not a good start to what could be a 7–10 year relationship. He ended up recovering but it wasn’t easy.
If you are looking to me as a possible angel investor, I do all of my angel investing right now through Sand Hill Angels so feel free to submit your application and we will take it from there. Best of luck!