No one can ignore the power of a pitch. It’s tremendously valuable for entrepreneurs, as introducing your company to the public attracts investors, clients, partners, and talents for your business. Pitching your company may be one of the most important things you have to do as a founder: it demonstrates your own understanding of your own business.
As an early-stage startup accelerator, Chinaccelerator is highly skilled in detecting “unpolished diamonds.” Once Chinaccelerator identifies these gems of startups, the program then helps entrepreneurs describe their companies in a much “better” way. By using the word “better,” we mean the ability to express clarity in a thoughtful manner.
How do we train our portfolio companies through the program? We start with sharing the best practices that we have accumulated after working with hundreds of startups for over a decade. We give customized and real-time feedback to every individual company, spurring high growth in a very short time frame.
In this article, we will eliminate some misunderstandings of startup pitches and will share the fundamental principles that can enhance your company’s pitch.
Misunderstanding #1: Unless you win, pitch competitions are a waste of time
Entrepreneurs are obsessed with pitch competitions. But if you think the only valuable outcome is a first place award, you are missing out the competition’s real value — the opportunity to improve your pitch. Thanks to the public pressure of having to deliver, you will be forced to focus and work harder to avoid embarrassing yourself. Only one startup can be the official winner, but the other participants stand to benefit from the experience by understanding what areas their pitch is lacking clarity in. Participants can also gain practice answering questions at the end of their pitch, and should take notes on which questions are asked, so they are better prepared to face Q&A in their next pitch.
Of course, winning a pitching competition is a great achievement. However, as an investor (especially an early-stage investor), we do not believe that winning competitions actually makes you a better startup. It simply proves that you are better when it comes to giving presentations.
In the past, we have invested in companies that won pitching competitions, like Miro.io, the winner of Techsauce 2018. Upon deeper inspection, most of the companies we invest in have not won a pitching competition. But, more companies in our portfolio have won competitions after we decided to invest in them, like BitMex winner of TechInAsia, LiqEase winner of Slush Shanghai or Ocheng winner of Seedstars Shanghai. This trend demonstrates our strengths in coaching our startups on how to pitch, so keep reading!
Misunderstanding #2: The only goal of your pitch is to get a check
Many entrepreneurs often fail to understand the entire fundraising process. This could possibly be attributed to an excess of reality TV shows like Shark Tank and Dragon’s Den.
Most people crave a commitment for future investment after their initial pitch, and state it explicitly during their pitch. While some startups do manage to achieve post-pitch funding, we must note that the probability is relatively low. Fundraising is a time-consuming process, which requires constant learning, building, and measuring. Bombarding all the details of your business at the first meeting is often ill-advised, and it is unlikely that anyone will remember much of what you said. It is even more unlikely that your audience will reach out to you, or even recommend you to their network.
The best outcome is simple — get attention, secure a follow-up meeting, and improve the clarity of your pitch to future investors.
Now that you are aware of the basics of a successful pitch, let’s talk about how to pitch better.
Start with an MVP: Elevator Pitch
At Chinaccelerator, it begins with the Elevator Pitch. Knowing the Minimum Viable Product (MVP) of your presentation helps to validate the pillars that your entire investment thesis will require. If you do not get the basics right, it will not be successful in the end — even if you have a very detailed financial model or investment deck.
The idea of the elevator pitch is pretty simple: successfully deliver a pitch to someone within the very short time period of an elevator ride.
The challenge lies in explaining why people need to know what you do, what makes your solution special, and why YOU — within 30 seconds or less.
In Chinaccelerator, we have 4 major elements in the basic model:
- Start with identifying the PROBLEM that your customer has, and why it needs to be solved. There lies the OPPORTUNITY.
- Next, introduce your SOLUTION in a very simple manner for the problem you have just described. Do not describe your features, just mention what makes it unique. Everyone can identify the problem, but your solution is the first thing that makes you special.
- Explain your ACHIEVEMENTS to justify why they should trust you instead of others.
- Finish with an ASK for the next step, be it an initial meeting and contact information.
Do remember that the elevator pitch should not answer every question. What you hope to achieve is to capture your audience’s interest and forge it into a lengthy conversation.
Once you have your MVP, you need to master 5 principles:
1. Be clear and simple
The best hack to make things clear is to keep them simple.
Co-Founder and CEO at Screea William Chiang’s advice is: “Go straight for the kill. Say exactly what you do first. Example: we make shoes that makes people jump higher.”
If your audience does not understand your business, you will not be able to achieve the impact you desire regardless of how amazing or effective your product is. Being able to articulate your ideas clearly is the most decisive aspect of a pitch. In fact, a great deal hangs on it.
The principle of simplicity does not only apply to your pitch for fundraising, but also applies to any situation when you talk about your business.
Saurabh Singh, CEO of Flickstree makes it simple and direct: “Make it so simple that a seven-year-old can understand it”
2. Be memorable
If you can make it stick in the audience’s mind, you will be able to maximize the impact of the pitch.
Co-Founder and CEO at Eristica Nikita Akimov’s personal trick to be remembered: “Start with facts that make the audience agree with you. After they agreed with you is easier for them to agree on your solution”
There are different hacks that you can implement to be remembered, but probably my favorite one is: “Surprise your audience”. Never start with “Hello,” “Good afternoon,” or the name of your company. The audience does not care about it (yet). You need to surprise them with a great opening, get their attention, and then, and only then, will they be willing to listen to anything about your company. Do not use too many numbers or statistics in your pitch.
Think about your opening as the subject of an email, or the title of an article. As a rule of thumb, more than 50% of people will decide if they want to listen or not within the first sentence.
3. Be trustworthy
The world is full of wannabe entrepreneurs with amazing ideas. However, real entrepreneurs are those who do not just talk ideas, but those that turn ideas into reality.
The best evidence of your company’s credibility is your achievements — your “traction”. The best traction is a quantitative and relevant metric that grows over time. Sometimes a ratio that shows how good you are compared to others could be more memorable. Beware of “vanity metrics,” or a metric that grows but has very little correlation with your business performance. A good traction metric does not need to be revenue, but can be any noteworthy element about your business.
Finally, name-dropping should be your last option, as it is risky and might backfire on you later.
4. The need for context
Investors, and especially early-stage investors, are not necessarily experts in every industry or technology. It can be difficult for them to understand the WHY of your company without understanding the internal dynamics. That’s where context can help.
For instance, many people do not fully understand the business environment of Esports. But if we compare it with something they know, for example, the League of Legends finals with the Super Bowl, most people will probably start understanding more. As such, context creates relevancy.
To avoid the problem of explaining something too basic to experts or assume the investors are familiar with your industry. CEO at ExpoPromoter Simon Zagainov’s advice is “make your research before the pitch”, “You need to do your elevator pitch to a targeted person. It’s like a hunting game, when you got to the forest you know what gun you have and who is your target. It’s useless to try to kill a bear with a knife.”
5. Learn from feedback
The only way to improve your pitch is practice and iteration. Pitch it repeatedly in front of different people and evaluate their reactions: facial expressions and the types of questions being asked. Below, you have a guide to understand those questions:
- Questions that enquire for more details that are on topic are the best confirmation that people understand what you are doing.
- Irrelevant questions are a sign that your communication is not clear. You can write down the questions and try to figure out why they are getting that understanding. Sometimes you should also evaluate if the problem is in the audience.
- “Wow”, “That’s amazing” and then no actual questions or interest in following on are simply ruinous empathy. Either your audience did not understand or they think they are nice but they are not telling you, maybe trying to avoid hurting your feelings or confrontation.
- The worst question is: “So, what do you do?” It means that they did not catch anything at all. As a rule of thumb, pitches are like jokes: if you have to explain, then it was not a good pitch.
Even though you have prepared your pitch very well, things not always go as planned. Don’t panic! As CEO at Nusic Adam Place said, “It’s good to have a script, but if you forget it — freestyle. If you pause, OWN the pause, no one knew what you were gonna say anyway and if you’ve got the crowd they will assume it’s deliberate unless you show them that it isn’t.”
A final piece of advice, be positive and smile! If you are not excited about your own work, then who will be?