How to Pitch to Investors using a Lean Startup Approach

When early stage startups pitch to investors it often becomes clear after only a few slides if they are pitching using a Lean Startup approach. Based on my experience (I’ve seen more than 1 000 pitches) most seed stage startup teams still pitch using a waterfall approach. Let’s have a look at how they differ.

In waterfall you come up with all the detailed specifications upfront, then you build the product, and then you launch. This whole process may take months, if not years. During the pitch the startup is often asking for significant funding to build their solution, while asking the investors to believe in their grand vision. 90 percent of the time is spent on communicating the vision and projections. Assumptions are presented as facts and no real-life data is shown to support these claims, except perhaps for a few references to market research reports by Gartner or IDC.

In Lean Startup you start with an idea but you quickly move to understand who is the customer and what problems and constraints that they are facing. The team iterates several designs in an attempt to get closer to a solution that solves a problem worth solving. Each iteration may take anything from a few days to a couple of weeks. There is a lot of testing and learning involved during each iteration or sprint, and the customer is an integral part of the whole process. Assumptions are presented alongside the experiments that the team designed, and the data and insights that they gathered from running their experiments in the real world, as opposed to an Excel spreadsheet.


In fact, when you’re “pitching” — you don’t want to pitch! The reason for this is because you want to be open and transparent in communicating the challenges that you have faced since coming up with the idea. You also want to show how your team has overcome those challenges. Smart investors invest in great teams. They know that the hallmark of a great team is being able to quickly adapt based on validated learnings, without giving up on your values, purpose and vision.

OK so now we’ve got the mindset part covered. Many people who pitch start out by describing the problem and then the solution. Some forget to talk about the problem and simply show the solution, which is a no-no, since the investor has no idea what the solution is for.

But the best way of presenting a pitch is by telling a story. Stories are far more memorable than just listing the problem alongside the solution. A story speaks to your emotions in a way that nothing else can. That’s why we love going to the movies and reading novels. The great thing about stories and emotions is that they are great triggers for your memory.

From the time you were born your mind has been wired to take in stories. So introduce the character, take the listener through the drama the character has to face, until that one sunny beautiful day when the knight in shiny armour enters the stage and saves the day.

With “drama” I of course mean the problem, the character is your customer and the knight in shiny armour is your solution. So even if presenting the usual problem vs. solution setup is OK, it’s better if you can tell a story. But what you at all times want to avoid is pitching your solution without first introducing the problem you’re solving for and for exactly what customer this problem is a gigantic pain in the *blip*.


After the initial story to get them hooked, now they are ready to dig a little bit deeper to see what’s under the bonnet. This is the time to demo your product. This could be anything from hand-drawn sketches to a fully blown live product.

However, you don’t want to get into a never ending demo of each and every feature of your product. That will just make them yawn. Instead of listing all the features that you want to develop, make it crystal clear what benefits the customer can expect to get from using your solution.

These are normally a combination of saving time, making or saving money or making the user feel good. So, rather than focusing on features you should be focusing on building customer value. Why? Well, it’s because it’s the only way to build a sustainable company. And I guess, that’s the reason why investors tend to invest in teams that build customer value and not features.

When you’re presenting, don’t present things we already know. You only have a very short time to deliver your pitch and you need to choose your words carefully. Presenting known facts, such as ”staying up late makes you tired” or ”eating too much makes you fat” is a complete waste of time and usually just leads to people rolling their eyes deep back into their heads.

Since there’s an inverse relationship between the number of eyes that roll back and the amount of funding that you will raise, stick to presenting unknowns. You want it to be jaw dropping and mind bending stuff.


For sakes of clarity, always present an assumption as an assumption and a validated fact as such. Don’t lead your listener to think that you have validated something when you haven’t. This happens all the time. Entrepreneurs are known for living inside their reality distortion bubbles while suffering from a serious state of affairs called ”confirmation bias”.

Entrepreneurs who only take in what confirms their stories, while completely disregarding anything that threatens them, are totally uncoachable and pose the greatest risk to their own success.

If you say that you have invented something that can make people bend a spoon — using nothing but their minds — investors (and any other sane person for that matter) would like to see some form of proof or validation that this is possible.

What it really comes down to is for you as an entrepreneur to increase the facts to assumptions ratio and to regularly communicate your progress towards that goal to your stakeholders. The more facts that you have, and the fewer your untested assumptions, the lower the perceived risk. The lower the perceived risk the more your startup will be worth, which means lower dilution for you and your team when you raise funding. Always keep that cap table in the back of your mind.


Something else that entrepreneurs often do is to talk about the future as if it’s already here. But when you scratch the surface there’s not much there. The “customer” is not a paying customer only someone who likes the product and the “patent” is really only pending, and so on.

Instead present a milestone chart that shows where you are today, what you’ve learnt in the past and what you will focus on validating / invalidating in the future. What key metrics are you tracking right now and what are you aiming for? That’s what investors like to know.

Plans & grand visions are great, but you don’t want to go out fundraising exclusively on the back of that. Often I see pitches that focus 90 percent of the time on communicating the vision and “hockey sticks” but only 10 percent on exactly who is the customer, what problem they are solving for and real data in terms of initial user interest and initial user engagement metrics. They would be much better off if they reversed their focus and spoke only 10 percent of the time about their grand vision and financial projections and the rest on the stuff that really matters early stage.

This is not 1999 at the peak of the Internet bubble, when it was possible to raise millions on the back of a powerpoint presentation showing nothing but ideas, projections and hot air. Today it’s much harder to raise funding without first showing significant traction. The only exception are rock-star teams made up of entrepreneurs with amazing track records, or let’s face it, “dumb money”.

For example, I’m sure that if Elon Musk decides to start a new venture tomorrow, he will not have any problems raising funds. He could just scribble some notes on the back of a napkin and get millions the very next day. Sort of like Picasso back in the day.

But you’re not Picasso or Elon Musk. You have to show some data. What experiments have you launched since starting up and what have you learnt from running those experiments?

Can you show that you’re moving in the direction of problem-solution fit, and in extension, product-market fit?


When you talk about the market, investors want to know what is your Total Addressable Market (TAM), how fast it’s growing and how you are going to reach it. The world is NOT your TAM.

Your MARKET are those people that:

(A) have the means to pay for your product.

(B) can access your product via the existing infrastructure.

© that you can service given your existing business model and resources.

As a startup you want to focus on bottom-up and wait with the top-down — ”finger in the air” — type projections until you have plenty of relatively stable data to make projections from.

When you start to reach out, you want to begin by attracting your early adopters.

Early adopters are those who:

(A) have a problem.

(B) know they have a problem.

© have searched for a solution.

(D) are totally unhappy with the existing solutions on the market.

(E) have tried to piece together a solution and are still unhappy campers.

Don’t try to be everything to everyone. I see this all too often, and for a startup, it’s a sure recipie for failure. Don’t present three different products and five different target markets that you’re going to go after from day one.

Choose one target market and one product, and focus on getting traction with that. Be something to someone.

If you can’t even sell or pre-sell to your early adopters (the people who are ripping their hair) what makes you think that you will be able to scale to become a huge business?

Trying to do too much too early will kill your startup. You simply don’t have the time or resources to win all battles simultaneously. Startups are all about focus, and building strength within one key area, before moving on to the next adjecent space.


Now we’re getting to the part where you talk about how you differ from competing offers that are out there. All to often I hear startups that say that they have no competition!

This can only mean one of three things. Either you’re lazy and haven’t done your homework. Or there is no market for your product. Or you only compare yourself with direct competitors. Either way it’s not a good scenario to start from.

What you want to present is a Jobs-To-Be-Done (JTBD) perspective, where you have identified a crucial pain point and are able to show how your startup is better than the current alternatives on the market in addressing that pain point.

It’s not enough to say that you’re ”better, bigger and more beautiful”. You need to specify exactly HOW you differ from your competition.

Thankfully there are numerous ways that you can visualize this. For example, using the Blue Ocean strategy canvas, the classic competition matrix or a simple X/Y chart or spider diagram. Be specific and make sure that what you present also match with your value proposition and elevator pitch that you will have communicated earlier.


Don’t spend weeks doing detailed 5-year ”Pinocchio” projections in Excel and months presenting your ”results” to investors in the hope of raising funding.

Instead define your Go-2-Market strategy. How will you attract users? Is it going to be via paid or earned media? Don’t be afraid to offer detailed figures and media strategies at this stage. Also, depending on the phase your startup is in, you would want to pitch either from the perspective that you’re focusing on improving user engagement or from the perspective that you have reached Problem-Solution fit and are now starting to optimize for customer acquisition.

As you move closer to Problem-Solution fit you will want to shift focus towards the beginning of the sales funnel. For every phase your startup is in, there will be one key metric that you will need to focus on. For example, for SaaS getting churn under control is of key importance early in the game. If you ignore churn and continue to ramp up marketing and sales, all you’re doing is digging yourself a deeper hole. Sales may improve short-term but at the cost of long-term profitability.

Since 5-year ”Pinocchio” plans are usually part and parcel of the business plan, it’s the same reason why people who work according to Lean Startup don’t do business plans either. Instead we choose to use quick iterative tools such as the Business Model Canvas by Osterwalder, The Lean Canvas by Ash Maurya or The Javelin Board by The Lean Startup Machine (or any other variation or mashup thereof).

If you are thinking of writing a business plan, ask yourself right now if you want to spend time writing business plans (and perhaps win a business plan competition :-) or if you want to spend time doing business.

Because if there’s one thing that we know for sure it’s the old Mike Tyson truth that ”everyone has a plan until they get punched in the face”. The moment that your business plan meets reality and gets first customer feedback, you can be sure to be proven wrong.


So there is no better way, no leaner way than to introduce the customer as early on in the process as possible and to learn as much as you can from them as fast and cheap as you possibly can.

What you want is to be punched in the face many many times, but only lightly so that you can quickly get back on your feet to try again. The longer you wait with including customers in the development process, the harder you will be punched in the face once you do!

Really, what it all boils down to is for you to keep invalidating your assumptions, until you finally get to validation. Many teams say that their competitive advantage is rooted in their teams’ ”passion” or ”dedication”…. or hear this, they are ”hard working”.

If you think about it, is there any team that would go up on stage and pitch and say, we have no ”passion” or ”dedication”, or we would like to build a billion dollar company but we’re not really prepared to put in the hours to do so? I don’t think so.

What you really want to show are those aspects of your startup that other teams will find hard to copy, for example exclusive access to distribution channels, partners, some form of crucial IP, high organic search rankings, fantastic funnel metrics, unique know-how. These are all unfair advantages that are hard to copy. Passion and dedication are not.

Also don’t build your ”executive team” with lots of VPs too early. Build an ”explorative team” that goes from focused execution to listening, reflecting and learning and back again within weeks. I’m sure you’ve all heard the old age wisdom that an investor rather invests in a A-class team with a B-class idea, than a B-class team with an A-class idea. And this is true. It’s not so much about the initial idea as it is about the team and the customer value that that team can build over time.

You don’t want VPs who only know how to execute on a plan. What you want are explorers who immerse themselves in their customers lives and adapt their solution to maximize customer value. You don’t yet have a cash machine that generates two dollars for every dollar that you put in. You are still searching for a scalable and repeatable business model. You need explorers, not VPs!


Your pitch deck is not supposed to be an eye exam. Use pictures to show relationships and talk to that instead of expecting your audience to read several bullet points of small text.

Sometimes I even see people who put dark text against a dark background, making it even more difficult to see. If you can’t read it why put it in the first place? If you’re sending a pitch you can include more text, but if you want to engage a room full of investors, it’s much better to use illustrations and then face your audience while being mindful of your body language.

Just the same way that you would like the audience to SEE what you’re presenting, you want them to UNDERSTAND what you’re saying.

So please avoid fancy words that no-one really understands like ”the flux capacitor generates 10 gazillion megaflips per second while in a transient non-thermal state”. Keep it simple.

If you grandmother understands your pitch and wants to invest (and not because you’re her grandchild, but because she wants to become a successful business angel), you know that you are on the right track.

Last, but certainly not least…. Always close with an Ask. What are you looking for? A new team member to join your ranks, a specific partnership to take you into a new market, funding to hit a specific milestone. Or are you looking to expand your advisory board to help you get those warm intros, or are you simply looking for brutally honest feedback. Whatever it is don’t forget to include a clear call-to-action while showing what’s in it for them.

With that said, I wish you a successful fundraising journey.

You can also watch the video version of this article here.