The initial pitch: a quick guide for first-time founders

This blog post outlines what we initially look for in a startup and its founding team and therefore provides advice on how to put those things on display in your first pitch meeting with us.

Lesson 1: Be Yourself

The other day an entrepreneur came in to pitch me and before I could ask him how his day was, he connected his laptop to the projector, stood upright beside it, took a deep breath and, without even a preamble, launched into an uninterruptible twenty-minute monologue that had clearly been rehearsed a hundred times in front of colleagues and/or the bathroom mirror. Take it from me, this is not how you pitch an early-stage VC.*

(*This lesson is particularly relevant for founders graduating from accelerator programmes where, in preparation for demo day, you will have been drilled on how to deliver the most densely packed and compelling five minute elevator pitch without wasting precious time on unnecessary things like breathing.)

Pitch meetings should not be viewed as one-way auditions. For us, they are two-way conversations where both parties are attempting to establish certain information; for the VC, it’s whether the idea has potential (more about this later) and whether this particular entrepreneur is the right person to execute on it (more about this in a second); for the founder, it’s whether the VC will be a good value-add investor for, and effective director of, the company. In both cases, the person is being assessed on their suitability as a partner in what will hopefully be a long, although at times arduous, journey together.

Personally, since life is short, I’d rather spend those journeys working alongside people I really get along with and who inspire me to work really hard to help bring their visionary technology to the masses. For this reason, I start every pitch meeting with an informal chat. No open laptops. No rehearsed speeches. Just a conversation about who we are, what brought each of us here today and, most importantly, what motivates us.

So just be yourself. You may be able to put on a facade for an hour-long meeting, but you won’t be able to keep it for the next ten years of us working together. I always show my true colours in a pitch, which involves an honest accounting of my (multiple) limitations as a VC. I expect the same in return from a founder. No one is perfect, which is why I view a founder who tells me that they have zero knowledge or experience gaps as a person lacking any grounding in reality.

During the initial pitch meeting we’re also trying to figure out whether you have the attributes required to build a successful venture-backed business. Back when I started my VC career I was obsessed with finding an answer to the question “which attributes best predict successful entrepreneurship?” Unfortunately the academic literature on this topic remains incomplete,* so instead we tend to use less scientific methods.

(*We do know a decent amount. For example, the more abundant the characteristics of self-efficacy, ability to recognise opportunities, personal perseverance, social capital and superior social skills, the greater the likelihood or magnitude of a founder’s success. Unfortunately, those aren’t things we can easily test for in a one hour meeting.)

Lesson 2: Know the Basics

How exactly do we answer that question? It’s often said that building a startup is about solving a problem. For me, the initial pitch meeting is where I find out how well you really know the problem you’re trying to solve, and how ready you are to solve it. Here are a few things to consider being well versed on before coming in for your initial pitch meeting:

The Problem

Too many entrepreneurs build a solution and then try to find a problem to foist it on. Building a successful startup should begin first by addressing the problem. Here are some questions that you should be able to answer without hesitation:

1. What is the problem?
2. Who exactly does it affect? (I.e. how big is the market)
3. How badly does it affect them?
4. How much are they willing to pay to have it solved?

Congratulations, you now have my undivided attention.

The Solution

As an investor, once I’m convinced that a compelling problem exists, all I want to know is how it can be solved.

1. What exactly is your solution?
2. Why is it better than other solutions out there?
3. How do you know that it’s what the market wants? (I.e. do you have any early traction or customer feedback?)
4. How many people are likely to actually pay it? (I.e. how big is the addressable market)
5. How much do you plan on charging for it?

The Team

A principal tenet of early-stage venture investing is that we always invest into high growth markets, thereby consigning our risk to the abilities of the team we back to execute. Therefore, your team — and crucially your ability as a founder to build a team — is a massive consideration for us.

1. What makes you well suited to solve this problem? (I.e. what’s your unfair advantage?)
2. What’s your team’s process for solving hard problems and making difficult decisions?
3. What culture do you want to build for your company and how will you ensure that it is maintained at scale?
4. Can you talk me through your hiring process?

There are obviously tonnes of other directions the conversation during an initial pitch meeting can go, but if you have solid, well thought-out answers to the above then you have a great chance of getting invited to continue the conversation afterwards.

As a final note, VCs love when you answer their questions before they have a chance to ask them. So try to anticipate what will be asked and address it before the investor has even a chance to ask it. Look forward to meeting you at our offices soon :)

What a meeting with the Playfair team might look like