Keep it simple and practice, practice, practice
So, you have The Next Best Thing? Maybe it’s the Warby Parker of T-shirts, or a social network combining Untapped with Meerkat for the perfect college experience, or an algorithm for middle-out compression. Your team is all in, and it’s time to get funding. That means it’s time to prepare a pitch.
Pitches typically are categorized into time segments, each designed to gain entry into a subsequent, more in-depth meeting. The process can get overwhelming fast, but keeping it simple is most often the best option.
“In reality, there are two main questions that have to be answered in a pitch: What is the evidence that your team can execute on a business? And what is the evidence that the market cares that your team succeeds in its execution?” said John Sechrest, founder and project director of the Seattle Angel Conference. Sechrest also is co-manager of Impact Hub Bellevue and spends much of his time advising new companies at various stages of progression.
Having a well-prepared deck — a summary of answers to investors’ potential questions — is critical to combating the stomach churn that accompanies a high-stakes meeting.
“Since investing is an emotional- and relationship-based activity, there is much more to the pitch than the content. However, if the content is messed up and incomplete, it often leads to people not wanting to engage more,” Sechrest said.
Keep in mind investors are analyzing the team as much as they are analyzing the product. Gregg Bennett, founder of the Bellevue investing firm Bennett Enterprises LLC, uses pitch meetings to determine whether the team has the ability to scale.
“It could be a great idea, but a bad team isn’t going to execute. We’d rather invest in a good team with a bad idea, because good teams are going to figure it out,” Bennett said. “When times get tough, no business is executed exactly as it’s laid out in the deck. Times always change, the market changes, and the product changes as they get more information. We’re always looking for those teams that can really be creative and think out of the box.”
Bookending a meeting effectively is crucial. According to Sechrest, the presenter should grab the investor’s attention within the first 7 seconds and hold it throughout the meeting. At the end, make the ask.
“It is a sales process. Get people’s attention, hold it, and cause them to take an action,” Sechrest said. He added that entrepreneurs don’t have to ask for money; instead, they can request another meeting or social media mentions.
Here are four ways to make sure investors take notice and don’t immediately discard the pitch and product.
1. Know your audience
Be sure you are pitching to the right people. Some investors are looking for specific fields in which to invest. Be sure the pitch is reaching the right audience, and then convince the investor that this company is the right fit.
2. Hone your Tone
Be fun and creative. “The order of how you do it is a matter of style. The key for most companies is to find ways to be remarkable, memorable, and stand out from all the others that are coming down the same pathway,” Sechrest said. “We have seen over 350 companies apply to the Seattle Angel Conference, of which we have invested in 10 of them or so.”
3. Know your numbers
Be able to answer questions. The ability to flow with questions and conversation is important. Bennett said that if the pitch is presented to a panel of investors, it’s important to get through the whole pitch, which sometimes means not taking questions until the end. If the meeting is one-on-one with an investor, the entrepreneur must be able to take questions as they come. “You can’t answer in a canned way. You have to give more depth than what is in the pitch deck,” Bennett said.
4. Present high-level summary slides
“I would guess that 20 to 30 percent of the pitches I hear, I hear the pitch and I still don’t know what they do,” Bennett said. “(Entrepreneurs) create a pitch that’s intended for people who totally understand their business, so they make the mistake of thinking that investors totally understand their business, and (investors) don’t.” It’s important for the pitch to communicate the business and product to people without intimate knowledge of the business, so be sure to include basic information about the company and its purpose in the presentation. That will generate excitement and interest before you detail the server you built, integration with 11 different APIs, and the algorithm for middle-out compression.
The same principles that apply to startups building a product apply to pitching a startup to investors: develop, test, iterate, and test again. If one element of the pitch didn’t resonate with a target investor, change the pitch. And at the end of it all, practice makes perfect.