Firstly, it is important to understand why you are pitching. It is not, as is often assumed, to get investors to open their chequebook. The pitch’s purpose is to get sufficient demand from the audience for a follow-on conversation. Your goal is to create curiosity, not closure. Framing your pitch in this way is important as it means that you do not need to tell investors everything you have achieved or plan to do. Just enough to get them interested.
Captivate your audience’s attention
Remember the primacy and recency effect, that is the first and last 30 seconds are the ones that usually stick with the audience the most. It is useful to think of the beginning and the end like poetry and the middle like prose – in other words script the beginning and end for maximum impact. Don’t worry as much about the middle being word perfect.
• Bold claim (“we have the only product in the world capable of doing this thing with this group” or “we have found a unique way to…”)
• Quote from a customer (“this software cut our admin costs in half”)
• Piece of visionary communication (“imagine a world where”)
Set the scene
Establish the problem you are solving before launching into the product you have created. Even though it is a presentation, it should feel like you are telling a story. What is the high impact problem that only you can solve? What is your uniqueness and why are you the only one to solve it?
You want to be able to answer this within the first 1-2 minutes of your pitch. You need to be explicit to the exact level that your product or service provides benefit (i.e. our product has demonstrated a X% reduction in staff turnover or X% increase in gross margin etc). You then need to clearly state why you are the only one/s who can solve the problem.
What do you do?
Briefly talk about your product, don’t go too far under the hood, leave this for DD/further conversation. How does it solve the high impact problem you have just outlined?
Talk about your competitors
Address them honestly and don’t be shy about talking about competitors. It shows you are operating in a high value area. To that end, no competitors is a risk in investors eyes. Know your strengths and be honest and upfront where your competitors and you have advantages. Investors love transparency. Having an honest competitor analysis will allow investors to understand the market dynamics and to determine if they agree with the unique approach you have taken to address the
high impact problem you identified earlier.
(An example of this would be: “we have taken the approach of concentrating on a product that is super user friendly and our competitors have taken the approach of functionality. We believe that the key to win the market is to focus on being user friendly and add functionality later, whereas we believe that creating function first and user experience later will fail in our market”
It is also useful to provide some market specific examples to support your approach.
You’ve outlined your great product, but why is now the right time? Why are customers ready for your product now? Investors know that timing is one of the most important aspects of success. For more information on this, view this great Tedx talk ‘The single biggest reason why start-ups succeed’ from Bill Gross.
Investors, just like you, make decisions, at least partly, on emotion. Share your personal story of why you embarked on this journey and are so motivated to do this. Share your deep why. Bring investors along for the journey.
It is great to cover what you have done in the past but also talk about how your exceptional set of capabilities (as a group) make you uniquely qualified to pull off what you are attempting to do.
What proof do you have that a market exists for your product? Key to investors minds will be product market fit and market analysis. Start with something like “here is why we know there is a market”
Quantify the size of the market and show how you are going to reach it. Investors want to invest in big markets. Without a big market, it is impossible to get an aggressive value multiplier on your company and therefore high returns.
Clarity of Business model
How do/are you going to make money? If you make money in 10 different ways, just tell the top 1 or 2 i.e. licensing, SaaS revenue etc. Multiply the number of units you plan to sell with the price you will sell them at and show investors what this means for your forecasts. Show clarity. Show that you are bold and have ambition. Show you have a story/plan around how you are going to reach these numbers and commit to it.
Note Key Milestones
In a timeline show 3 key milestones you have achieved (risks you have taken off the table), and 3 you plan to achieve in the future. This is a good way to physiologically frame information as it shows a trend of goals you have accomplished and makes it more likely, in investors’ minds, that you will continue to meet objectives. Risk and valuation are inversely proportional. Every time you take a risk off the table, the valuation of your company goes up.
How will investors get their money out? IPO, trade sale etc. Provide some examples of the sorts of organization who might acquire you and why. Remember, for investors the outcome is binary, either they get an exit or the company has ‘failed’.
Be clear on how much are you raising and how will you deploy the capital you raise. Investors want to see that you know the difference between investing capital and spending capital. Tell a story around how this deployment will create value, for example ‘70% of capital will go to building the pilot plant which will demonstrate our concept at scale and provide the basis for our Series A raise of X in 18 months to X type of investor group’. Think of this as three steps, what is the one big thing you can achieve, how long will it take and what the setting will be once you have done it.
Use Powerpoint and props as visual aids
Powerpoint is a great tool used well but don’t forget it is a visual aid, not the star of the show. Do not load it with information so investors spend their time reading rather than listening to you. When was the last time someone said “you’ve got to see this pitch, they had an amazing powerpoint”, you are the star of the show.
Try use pictures rather than words, stick to one idea per slide, don’t just read out what you have on your slides, use minimal words. Keep your powerpoint deck crisp, clean and minimal.
Powerpoint is there to express things in a way you can’t, that is why pictures are good, a single quote, a simple graph etc. As Da Vinci said, simplicity is the ultimate sophistication. Props are great too.
Invest time into preparing you and your message! Put your time into being the confident mouthpiece of your great company/the opportunity/how you will deliver on the strategy.
Finally, remember to pause between key points to let the information you convey sink in.
This article was prepared in conjunction with Daniel Batten author of ‘How to change the world with one pitch.’ Since 2008 Daniel has personally coached 52 CEOs and founders of tech-companies, leading directly to multiple successful exits, cap-raises, international market entries and multi-3digit annual growth. His work has helped grow the NZ tech ecosystem at all levels.