Pitching to Pre-Seed Investors: What You Need to Know to be Prepared

Is an Idea Enough? TL;DR Nope.

When a company or team is still in the pre-product stage, often called the Idea Stage, it’s perfectly acceptable for them to start reaching out to investors (angels and pre-seed VC firms).

However, it’s essential to understand what this means: regardless of how “green” your idea may be, investors expect that you have invested a reasonable amount of time and effort into it and have done your homework.

This means that the founding team should have dedicated at least a month of full-time work towards fleshing out the idea and understanding why it is worth pursuing. You need to have your Why and What clear.

In a nutshell, being in the pre-product stage does not mean you haven’t put in the necessary groundwork.

Business Side Expectations

On the business side of things, you need to:

• Clearly explain what you do in two sentences.
• Demonstrate a complete understanding of the market and competitors. Conduct extensive web searches (for days or weeks) and try out potential competitors’ products if possible, or at least be familiar with them.
• Competitors are always there if you look enough for them. Sometimes they are well-established companies; sometimes, they are startups that raised a few million six months earlier. Use Crunchbase, Y Combinator directory, LinkedIn, Reddit, or Discord channels.
• Possess in-depth knowledge of data to convince yourself and us that the market in the US exists — that’s where we invest — is large and is growing year on year.
• Be sure that the world, society, and technology are moving in the direction you need, making it only a matter of time before what you have discovered becomes mainstream.
• Conduct user interviews in your market — the US in our case, but the more specific, the better — to understand their thoughts, whether they face the same problem, how they are solving it, and whether it is a pressing need or something without which their life is becoming really difficult.
• Use, during user conversations, mockups or screenshots (even just created with tools like Figma) to convey your idea.
• Have identified a need that can potentially lead users to interact with your product or service frequently.
• Creating a product that users only use once weekly or monthly is often not a good idea. Instead, focusing on a business with daily usage and recurrent revenue is always better.
• Have a clear idea of how to generate recurring revenue from your product/service, if possible.
• Ensure your solution is scalable over time.
• Develop a wide range of “what if” scenarios to anticipate potential changes in the market, habits, and competition. Reasoning through these possible scenarios is critical, and we want to see that you have given them a lot of thought.

Technical Side Expectations

On the technical side of things, you need to:

• Show that you’ve been proactive and have started working on your idea. You don’t need a working prototype yet, but a mockup can be very helpful already.
• Have an idea of the technical architecture you want to implement, including languages, frameworks, cloud services, DB, etc.
• Have already started writing some code — yourself, not relying on outside partners.
• Be confident in your technical choices and be able to explain why they are the best options for your product. Remember, it’s not about justifying yourself but about convincing us.

Managing the time during a meeting with a Pre-Seed investor

(Of course, we can only talk about our experience, but we think it’s still an excellent place to start).

Our meetings are usually 30 minutes. Luigi and Massimo—General Partners of the firm—usually attend every call so we can move faster.

Half an hour is not long, so we suggest organizing it well to fit everything in.

Usually, this is how it goes:

1. We’ll start with a quick 1–2 minute introduction about Lombardstreet Ventures and the key information you need to know about us: our thesis, team, and process.
2. For the pitch or presentation, we typically allocate 8–10 minutes. Sometimes we may skip the slides and jump straight into questions, depending on the clarity of the data you shared with us beforehand or our understanding of the problem. Regardless, we’ll ask you to give a brief pitch, which can be with or without the slides, you choose.
   Avoid monologuing in one breath; your goal is for us to intervene with questions or comments. A CEO needs to be able to read the room. Speak slowly, avoid assuming that the people in front of you know all the acronyms in your vertical—because they don’t—and be sure you are understood.
3. We’ll then move on to 10 minutes of questions and answers.
4. Finally, we’ll spend 5 minutes discussing the terms of the round, such as the amount you’re raising, at what valuation, and the purpose of the funds.
5. We usually also ask you questions about the cap table, other investors involved, expected runway, and next steps.

The Pitch Deck

The pitch part doesn’t have a standard structure — you can skip the deck if you prefer — so take these suggestions with a grain of salt and use your judgment, as the structure depends on the industry and what works best for your storytelling. This is where the founder’s characteristics come into play. However, it’s important to note that the pitch should be led by the CEO and no one else.

If we were to pitch a software company to an investor, here’s how we would do it:

• Aim for 7–8 slides max, including the cover.
• Start with 1 or 2 slides that help us get immediately into the heart of the industry and the problem you are addressing; we need to understand why certain people or companies have that problem and how they deal with it today.
• 1 slide to share what you’ve done to be confident that the problem you’re addressing is real, not just in your imagination. This will help us understand how you’ve validated the problem and give us confidence in your solution.
• 1 slide to describe the solution and why what already exists in the market does not solve it; you don’t need to give us a list or matrix of competitors, but it is better to guide us by using one or two names of companies in the industry and let us understand why your potential users are not satisfied, and why current services are not meeting their needs.
• 1 slide to help us understand how big and scalable the market is; while a Total Addressable Market — TAM — estimate is helpful, we would also appreciate concrete examples or case studies to help us reason on it. If possible, provide proof from your experiences or conversations with potential users.
• 1 slide to give us an overview of the founding team, not advisors or employees, only the founders; that’s who we are investing in. It’s essential that we understand how long you’ve known each other, whether you’ve done anything together in the past, why each of you is essential to what you want to create, why this thing needs to be done in the place you are based out of — we have a strong preference for the SF Bay Area, but the USA, in general, are good.
• 1 slide to tell us how much you are raising and how long the investment will give you before you run out of capital. When thinking about your company’s valuation, consider dilution and be realistic. Remember, the investor you’re speaking with may offer their terms. If you have other investors interested, let us know: it really does make a difference at this stage. We do the majority of investments as the first institutional check in the company, but it’s still interesting to know that others believe in your idea. Know the difference between soft and hard commitment.

Also, keep in mind to:

• Make the slides simple and easy to follow. Don’t go overboard with writing or numbers. Remember, we want to hear from you, not just read off the slides.
• Rehearse your pitch as if you’re preparing for a school play. Record yourself and analyze where you can improve by shortening, pausing, and eliminating unnecessary details. Be prepared to handle uncomfortable questions and use a mirror to observe your facial expressions.
• Make a list of all the questions that investors might ask you during your pitch, and then take the time to think through your answers.

That’s all, folks!

This article is based on Lombardstreet Ventures' experience reviewing thousands of opportunities every year. Most of the content comes from an article published by Massimo Sgrelli in the Silicon Valley Dojo newsletter on Substack.