5 Things to Remember When Pitching VCs
A critical part of the HAX startup accelerator program is helping the 40+ teams we invest in per year raise additional rounds of capital. To help with this process, we organize dozens of meetings between potential investors and our startups. As the Program Manager for HAX in San Francisco, I sit in on almost all of the pitch sessions and am able to gather feedback from each investor after every session. In 2018 alone, I heard around 500 startup pitches to VCs. I’m in a unique position because I can focus on the interaction and reactions instead of focusing on learning about the startup.
Here are my key takeaways:
This may seem obvious, but startup founders often forget to put on a show during a pitch. It’s important to be excited, animated and engaging during these pitches—not only to keep the investor awake, but to demonstrate conviction and salesmanship. A big part of a successful pitch is being passionate. Why would you expect an investor to give you money if they can’t tell you are passionate about your product? Don’t be afraid to be laugh at any mistakes you make in the pitch. Try to instill some humor in your story. Basically, don’t be a robot.
Be willing to change your approach.
Part of our philosophy at HAX is that you need to meet as many investors as possible in order to find out what works and doesn’t work in your pitch. If investors ask the same question every time you finish your pitch, start answering that question up-front in anticipation. If you are having trouble gaining traction with investors, don’t be afraid to switch up your strategy. In Adam Grant’s book, Originals, he talks about a founder struggling to gain investor interest who eventually decides to start every pitch by laying out the flaws of his company. This allowed him to a.) address those issues from the beginning and b.) establish transparency and trust with the investor. It is one thing to remain earnest and push forward with your company mission in the face of naysayers, but another to blindly implement a failing gameplan.
Value the relationship.
It’s easy to go into a meeting with an investor and automatically go straight into the pitch — that is, after all, why you are both in the room! However, I recommend taking a minute to establish a relationship. This is a classic sales tactic that will make you memorable. Google who you are meeting with and take note of the events the person has spoken at, articles he or she has written, companies they’ve invested in, etc. Ask about these things. If you get a follow-up meeting, it’ll be your chance to ask more questions and deepen the relationship. If you really want to dive in on this subject, read How to Win Friends and Influence People (shoutout Andrew Thomas, one of our best HAX startup mentors, who makes this book required reading!).
Everyone needs to participate.
Oftentimes, co-founders of a startup will take investor meetings as a team. This is a great opportunity to display team chemistry. Investors are not only investing in products, but in founders—preferably charismatic, team-oriented ones. If you are going to pitch with a co-founder, both founders must contribute to the meeting: I’ve had multiple investors say how turned off they were by the team which had both co-founders in the room, but only one who spoke. To be effective at co-pitching, divide topics of expertise and practice the flow ahead of time. One of our most successful teams at this approach is a recent HAX investment called Pushme (swappable batteries for bikes). The co-founders effectively divide the pitch by topics: one founder covers the technical aspects and company vision, while the other covers the operational and business model details. It works extremely well and leaves investors impressed every time.
Leave with next steps.
Never leave an investor meeting without defining next steps. Many times, the investor will suggest this organically, most frequently by asking to be sent the pitch deck for further review with his or her team. If this doesn’t happen, suggest a follow-up that is attached to a milestone. For example: “I’d love to meet again to further discuss the technology enabling our banana sharing platform. Would you mind if I reached out again to show you our app when it’s finished?”. They will say yes, no, or come up with a different idea. In any case, you know if they are interested and have a plan moving forward!
There’s so much to think about when you are trying to raise money. It’s a competitive process, but there are certainly things you can do to increase your chances of success. Never underestimate the value of your network. Meet as many people as possible and build relationships. If you’re not a social person, you will need to become one. You never know who you might meet that could introduce you to your next lead investor. I know one founder who met an eventual investor at a Bluegrass festival in San Francisco. Opportunities are all over the place!
Good luck out there, y’all!