Over the last year, our team has seen over a 1,000 pitch decks and met over a 100 startups. After sifting through thousands of fundraising materials, we realized that founders can explain their product well, but often don’t provide key items required by a VC firm to make an investment decision.
Below are the 8 factors that a founder should include in his/her pitch to get funded quickly:
Are you passionate about what you’re doing? Who makes your team? Are you able to convince superior talent to join you? Do you have the right combination of domain knowledge and execution experience in your founding team?
The most important factor in any startup is the team behind it. While multiple solutions can exist for the same problem, the approach of a team is what makes a solution a market winner. There’s a reason why we cannot talk about companies such as Flipkart without naming their founders. It doesn’t matter if it is the nth e-commerce company, it’s team led it to the top.
2. Problem Statement
Why is your product needed? Is the problem deep enough? Will it be relevant tomorrow? Are you a painkiller or a vitamin C?
While the product and solution can evolve, the problem statement that you are solving for will remain the same. Go for a thorn in the flesh instead of a momentary discomfort. Create a solution for the right problem statement and not a problem statement for the solution you’ve created.
How large is the market? What part is addressable for you? How much market share can you attain in this market and by when? Are the customers willing to pay?
To make a difference, a startup needs room to grow. You can never become a unicorn in a market that is only $1 million, even if you own 100% of it. If your market analysis shows limited scope, it’s better to think things over before committing years of your life. Also, look into the user’s paying capability to see if the market can be monetized.
Is your product the most efficient way to solve the problem at hand? How does your product compare to others? What’s the moat? What would be your customers’ reaction if your product were to go away? What is the roadmap?
While there might be several ways of solving the same problem, it is important to build a product that provides the most effective and efficient solution. Creating a moat within the product itself is the best way to market it. If your customers love and advocate for the product, they will sell themselves.
What’s the traction? Are the customers adopting it quickly? Are they sticking around? Are they paying for it?
The best way to demonstrate the need for your product to investors is through early customer traction. If no one is buying it, it won’t survive despite being the most sophisticated product in the market. It is also necessary to look at how much you are spending to acquire each customer (customer acquisition cost). The most efficient way to see if there could be traction for a product is to see the offline behavior of customers and whether your solution is adding significant value compared to that.
6. Business Model
How are you pricing your product? What is your go-to-market strategy? How would you retain customers? Do you have relevant industry partnerships for growth?
While a great product in a large and fast growing market can give you an advantage in the initial stages, it is critical to build a robust business model to scale. Typically, startups spend time developing the product without thinking of the next step: distribution. Have a marketing plan, revenue maximization strategy, and go-to market strategy is crucial.
How are you differentiating yourself from the competitors? Are those differentiating factors important for the customers? Will that help you create a unique advantage for your business?
While many competitors might be offering the same solution, the most efficient and customer friendly product is usually the winner. It’s important to constantly evaluate how you are differing from your competitors, but even more so to also see if those differentiating factors will make a customer choose you over your competitors.
8. Exit Opportunities
Does it matter at this stage?
While early stages might be too early for a founder to think about exit, it is always important to demonstrate to the investors why you would be successful in raising future fundraising rounds and potentially providing them an exit. Investors don’t make money when you raise funds, but when you give them an exit.
While you are focusing on explaining the market and product, don’t forget to look at the pitch from an investor’s lens and provide them with all the information they need to give you a decision quickly.
Final tip: If you are looking to stand out from the crowd, share a pre-populated data room with diligence materials as soon you sign the confidentiality agreement.
Eximius Ventures is a pre-seed stage investment firm investing in young and dynamic Indian Entrepreneurs with a precedence for female founders. You can reach out to us at firstname.lastname@example.org.