As an investor at Sinai Ventures, I’ve sat through hundreds of pitches from founders building a wide variety of businesses. While this volume only qualifies me as a beginner in the field, I’ve noticed patterns in the pitches that stand out and pique my interest to dig in further. It’s important to acknowledge that pitching your business to investors is a completely separate skill-set from building a venture-scale business. Unfortunately for founders, it is almost always a necessary skill to raise capital. Investors spend their days meeting with founders, hearing pitch after pitch, so while a meeting with potential investors in your company may be a unique and exciting occasion for you — it’s routine for venture capitalists.
There are plenty of extensive guides and examples available online as resources to build your pitch deck. That, however, does not prepare you for what to focus on during your conversation with investors. This is meant as a rough guide for first time founders who haven’t pitched investors before. To be completely transparent, I can only speak for myself in what I look for in a pitch. There are thousands of venture capital investors, all with different backgrounds, levels of experience, and expertise — and therefore there is no “magic formula” to a pitch. That said, here are the most important areas to focus on during an investor pitch from my point of view:
- Do your homework. Since every investor and venture capital fund is unique in their focus and background, it’s important to tailor your conversation to maximize interest. Once you have a meeting secured, you should learn about the fund (if you haven’t already) and individual investor. What sector and stage of investment do they typically invest in? Are they invested in any companies in your field? Do their theses align with your company’s? Resources like Crunchbase and the firm’s website can help you research the history, team, and theses behind a VC fund. If you can find some commonalities between previous investments the firm has made and your company, be sure to draw these connections out during your conversation. Having some knowledge of the firm’s history and focus demonstrates to investors that you came prepared, and allows you to make a better case for why your company is a good fit for their portfolio.
- Stress the problem you’re solving. If you’re building a startup, chances are you know your sector very well, and may even be considered an expert. You’re very familiar with the issues facing your potential customers, and they seem obvious to you. Be cautious not to fall victim to the curse of knowledge, a cognitive bias that assumes that others have the background to understand what you already do. While investors very well may have an expertise in your field as well, it’s better to assume that they do not and over-emphasize rather than skim over the problem that you’re solving. Walk step-by-step through the problem: what do potential customers do / use today? What is wrong with this process / product? What is the cost of the problem to potential customers (time, money, productivity)? How much are people willing to pay for a solution? What is the overall potential size of the market for solving this problem, both today and in the future? Early on in a pitch, investors should have an idea of the magnitude and urgency of this problem. If this isn’t clear, your business may be perceived as a solution searching for a problem - which is not an attractive proposition to investors.
- Explain why you’re the one to solve this problem. For nearly all sizable, significant problems and points of friction for companies and consumers, there are multiple established and new companies working to find and monetize a solution. After you’ve established that the problem your solving is significant and worth solving — it’s time to explain why your company will provide the winning solution. This is a multi-faceted explanation, but one of the most important aspects for an early-stage company is the team. What education / background / experiences uniquely qualify your team to win in this space? You may also have recruited notable advisors who are established and successful industry experts, which — depending on their level of involvement — may lend legitimacy to your early-stage company. Beyond your team, be sure to include honest and thorough information on your closest competitors. Leaving a competitor out, or not having knowledge of a competitor that an investor asks you about is an immediate red flag that you’re either (1) afraid of them (because they have superior product / traction?) or (2) you aren’t well enough researched in your own sector. Relative to the competition, what’s unique about your product and approach? More than being unique, you should be able to explain why this particular uniqueness is an advantage (as opposed to being different for the sake of being different). Research, market data, and early customer traction / feedback should be presented to support your product and approach. Finally, one of the most difficult components of your pitch is your company’s defensibility, or moat. If you begin to find customer traction and success, what stops competitors (including established, well-capitalized companies) from copying your product or approach? What will make you unstoppable?
- Be enthusiastic, excited, and passionate! Here’s the thing: building a scalable, venture-capital backed company is a long-term commitment of 10+ years. In order to have the stamina to face a decade worth of challenges, growing pains, and setbacks — you’ll need to be equipped with passion and enthusiasm for your company and product. If this excitement isn’t demonstrable and obvious at the very early stages of your journey (for example, in a pitch with potential investors), it’s a warning sign that your heart may not be in it for the long haul. I’ve sat through pitches with founders who speak monotonously and seem bored by their own company. Alternatively, I’ve had meetings where founders can’t wait to tell me what their competitors are doing wrong and how they’re going to succeed. At the end of the day, excitement is contagious — and if you aren’t excited about what you’re building, it’s unlikely that investors will be.
Of course, there are many other components to a complete pitch — but if you answer these questions throughout your conversation, you’ll give yourself the best odds to excite and pique the interest of many investors and move forward in their diligence process. While it’s important to remember that you’ll likely need to pitch your company dozens (if not hundreds) of times, through practice and repetition — hopefully the process will begin to feel more natural and organic. Best of luck out there!
If you found this helpful, please “clap,” follow me on Medium, and check out some of my other articles: 25 Things that Won’t Exist in 25 Years, The Cameras are Coming, and The Future of Car Travel: Advertising & Retail?
I’m currently an investor at Sinai Ventures in San Francisco. Previously digital TV strategy at 21st Century Fox in Los Angeles. Northwestern Alum. Chicago Native. Feel free to reach out here, on LinkedIn, or Twitter.