“Last week, I attended a Pitch Clinic run by the Seattle Foundation. About a dozen founders pitched their startups to a panel of 3 VCs, , who offered friendly feedback. It was an open clinic with another 20 startup people listening, learning, and occasionally offering feedback. A great exercise for all of us.
There are hundreds, if not thousands, of posts about pitching a startup. Still, preparing and presenting a pitch is a difficult moment. There are all sorts of pressures: time, traction, money, attention, risks, and even public speaking. A few steps can help a founder pitch the startup effectively.
Prepare the story (craft the docs)
Being prepared is the first step. Writing things down improves clarity. In particular, you should write it so the other party can easily consume it. The other party is often an experienced angel investor or VC, who has likely seen 1000s of these stories. There is now almost a science to the pitch. Here are a few specific elements that help with the pitch document.
TiE SoCal has a very successful startup support program with pitches, funding, expo, etc. Here are the 10 items that TiE SoCal’s startups pitch event looks for:
- The Vision – state the big picture view for where you are going. (ex: Move the world with new self driving cars)
- The Problem – how big and bad is the problem; who is experiencing it and how (ex: not all people drive safely and easily)
- The Opportunity – what are customer benefits and business benefits (ex: save time and lives with better self driving)
- The Solution – what specific innovation is coming to the market (ex: 3 dozen sensors with onboard processing to enable self driving cars)
- The Business Model – what are ways customer pays for the benefit and how much (ex: $1 per mile driven after an initial one-time fees)
- Validation and What’s Next – have you trial tested the product and business model; if so, how did it go? what are lessons learned and applied? (ex: 1000 miles of self driven cars with at least a dozen passenger trips)
- Marketing and Growth – how will users hear about the product and you can grow the number of users and hence the usage. (ex: offer free referral based rides, local campaigns when starting in a new city)
- The Team – Who are the founders of this venture? how did they meet? why are the right people? (ex: Roger has a PhD in sensor driven vehicles, Mary has led consumer marketing at leading B2C companies growing it to $10M revenues.)
- Financials – Revenue, expenses, cash flow, and other data (past and future forecasts).(ex: positive cash flow for 24 months with slow burn despite higher costs)
- The Ask – what are the terms of investment? What are the outcomes achieved with this funding?
Present the story (talk the talk)
Once you have a story and have made a connection, you’ll soon have to present. I had pitched my startup ideas many times. Each time, I practice by thinking about the investor, context, and the recent evolution of our product and traction. Still I get some butterflies fluttering inside before the presentation. It should be. Even if we are good at the subject matter, we are often NOT well versed in a specific investor or context (e.g., the investor had a bad exit yesterday and is still recovering).). If possible, get to know more about the investor. Arrive early for a pitch, so you can try to pick up the mood from others in the office. Plus also save yourself the sweat of needing to rush in. It is also best to practice, practice, and practice.
The folks at the pitch clinic emphasized the need for conviction and clarity in the voice of the presenter. It is ABSOLUTELY imperative that the presenter NOT read from the slides. Instead , the founder should clearly know the story and talk clearly with authenticity. Have speeches of different lengths ready – anywhere from 3-minutes to 25 minutes. This allows one to flexibly present and have enough time for Q&A. Sometimes I find founders who talk on and on for 45 or 60 minutes. Two bad things happen: First, investors are likely lost and their inputs do not find a way to come back to the founder. Second, all parties lost valuable time. So, please try to value the time and be brief.
Persist in followups (walk the walk)
Rome was not built overnight. Neither are pitch and funding done overnight!
There is a lot of work that follows the pitch. Ask for and accept feedback. Answer questions promptly. Be courteous, and yet stand your ground regarding your product and traction. Be flexible to adjust terms based on investors if appropriate. Terms are easier to adjust than product or traction in the short term.
Product should change rarely based on investor inputs, because it is the founder who has done ALL the legwork with the identification and solution for problems. Traction often takes longer time to change. I have seen founders demand and stay steadfast on terms only to lose great investors. I also had seen founders adjust terms flexibly resulting in complex and unwieldy cap table.
Keep in touch with all investors – good and the bad ones. One does not know about what their network looks like! Keep updating investors with relevant information in a timely manner (see periodic updates). I recommend keeping even the non-investors with a shorter update, if you believe that the connection can help in the future.
Rejections are a kind of gift; it is okay to receive them. Learn from the rejections and keep proceeding. All a founder needs is one or two big head nods from investors. Sooner or later a few more investors may join. So persist and keep moving. If emotional challenges show up, find a friend or advisor to sob it out and then recover soon to start the run at fundraising again.
Best wishes for pitching your startup and growing new business.