VCs hear thousands of pitches in their careers but only say “yes” a few dozen times. Getting their attention in the initial pitch meeting is important because you won’t get a second meeting without the first going well. Here are 10 tips to help your pitch game:
1. Research the firm and the people you’re meeting with. You have the Internet at your disposal so use it to learn everything you can. Learn about the firm, the investments they’ve made, their big successes, recent financings, etc. Some investors have blogs or write about their companies or are active on Twitter. Some have been panelists at conferences or have made TV appearances and videos might be freely available. Internalize what they like to invest in and who they are. Simple statements that show you’ve done your research matter. I watched your panel about X. I love how active you are in the Y sector. You want to show you know who you’re talking to and that you believe they're a fit for your business on a professional level.
2. The best pitches are fluid. Internalize that your pitch deck is an organized series of slides that tell a story one specific way. The slides are nothing more than placeholders for discussing the components/aspects of the business you’re building. But recognize that the logical sequence you’ve designed into the Investor deck is only one way of narrating the bigger story. The skill is being able to tell the story in any order and allowing the conversation to take on a life of its own. The best way to lose an investor is to constantly try to force a conversation back “on track”. It’s difficult for some Founders to internalize this but the Investor is actually behind the steering wheel. Sometimes they let you drive but they’re still in charge.
3. The best pitches are concise. Have you ever started to read a book and realized that you were 50 pages in and had no idea what was going on? Believe it or not, there are pitches that feel the same way. I was on a pitch call that went poorly because it took me 40 minutes to understand what the business did. Once I understood it, in 90 seconds I was able to spit back a very cleanly articulated description of the problem being addressed and how his business was attacking it. The founder declared that I “got it” and was thrilled. He went so far as to proclaim that we’re the first VC firm to understand his business and that we’re the experts he’s been looking for. What’s sad is that the founder came away impressed by my ability to simplify his business and articulate it back to him while he should have realized that it was his responsibility to provide me with this view. We didn’t invest.
4. Your background is usually 2 minutes interesting but rarely 15 minutes interesting. This one is really tough for many founders to realize because they hear all the time that “team and TAM” are all that matter. The reality is that if an Investor wants to underwrite an investment based on the team they’ll ask lots of questions about it. Prepare a 2 minute intro, a 5 minute intro and a job-interview-depth intro but always default to the shortest version.
5. Contextualize the business. You’re not building a business in a vacuum so it’s critical to know everything you can about the ecosystem you’re playing in. Be able to put your business in the context of what’s going on in the market, who your competitors are, and the trends that favor or hurt your business. Be able to talk to the structure of the market and why the problem your tackling exists. If you show a slide that has one of the VC firm’s investments on it you better know a lot about the business. And if you show it as a competitor to your business then you’ve reduced your odds of getting funded to less than the chances Trump’s orange glow is natural.
6. Don’t fall into the “1% of a big market” trap. TAM is important but solving pain points is more important. Study the ecosystem and know how much market share various players have and how long it took them to get there. Respect the “time factor” of growth. You can’t jump into the market leadership spot overnight so knowing how you’re going to get your next batch of customers is more important than fixating on the top dog. Recognize that you have to pass the #5 player before you get a chance to pull ahead of the #1 player.
7. Your “ask” better be well thought out. You’re pitching because you want money and help so make sure your “asks” are buttoned up. Be able to describe how the money is going to be deployed and at what pace. If you can’t describe a business that’s materially different in 6-12 months then you’re not moving quickly enough for most investors. And if you ask for too much money relative to your maturity level, there’s a good chance you’ll wind up in the “pass” pile.
8. There’s a huge difference between debating and defending. Having an active discussion about the major drivers of a business or what one would have to believe about an ecosystem or consumer behavior is healthy. But you might as well pack up to go home if the debate slips into defense mode. Knowing how to discuss opinions that are different than your own is a skill. Engaging to understand the logic/grounding/intuition behind different perspectives is what’s important.
9. Navigate the valuation conversation with humility. Throwing out aggressive market comps or strongly stating that “my company is worth X” are bad paths to go down. Remaining open minded until you have options to choose from is critical. Remember that unless you can sell your company lock, stock and barrel today for $X that it isn’t worth $X. It’s worth whatever you can sell it for today OR the option value of the company you might end up building if things go well. And the option value isn’t nearly as valuable as many Founders think it is. They believe that the future is going to unfold in roughly the way outlined in their business plan but the truth is that they’re statistically wrong (in a negative way) a high % of the time. And remember, until you have 1 signable term sheet in hand you have 0 term sheets. What’s the business worth without an infusion of additional capital? Chew on that and you’ll appreciate the value of getting any term sheet that allows you to continue operating.
10. Don’t come off as a jerk. I won’t dig into this one too much because it’s pretty obvious. Internalize that self-confidence and arrogance can slip into “jerk mode” pretty quickly. If you’re a naturally confident person, be careful how you come across to others.
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