Is there a secret investor pitch format? Maybe there is, and it likely is more about the approach, than the presentation format itself. Recently, a colleague from MENG asked about investor pitch formats. This blog is a refinement of my reply.
To find your way on your own journey, take a moment to talk to people that have been in a VC or angel pitch-room. Go to public pitch forums. But, understand that in a private pitch to a specific VC, more open and direct dialog will occur.
Always remember, the investor is there for one reason, and that is to learn how your team, and its product and service can produce ROI. No VC, Angel, or investor is interested in an hour long meeting where you “inform them” of how great you, your company, or your product is. Experience in the room, will drive brevity.
It Is All In the Approach
No matter what you bring to the pitch room, be confident in your approach. I feel the best approach builds story that separates detail from the pitch presentation itself. It gives license to the presenter to passionately engage with the audience on both a fact-based and emotional level using story-telling skills. This approach requires control and the propensity for brevity and clarity. And finally, it requires developing a thorough business summary where detail is held until it is asked for.
How Does It Work
- Start from scratch. Force yourself to think through and memorize the key messages. Refine repeatable phrases to describe the customer, the pain, and your differentiated value claims.
- Rehearse, practice, do it live, and repeat. Practicing your pitch to a live audience generates blunt feedback on body language to facial expression. Practice until you can confidently deliver the presentation of your life.
- Don’t react to criticism. It shows weakness. Smile and show interest in the feedback. Pull out your pen, and write down what you hear. You need this information to improve your pitch for the next audience.
- Remain authentic with integrity. VC criticism demonstrates their interest. VC feedback is also a test of you, your story, and your confidence as they evaluate potential for success.
- Know your audience motivation. They are less interested in your product or service than you think. They are very interested in making money, and generating returns from their investment.
- Develop a written business summary. Hand out the missing numeric data and details AFTER your pitch. Refer to it as though you could recite it, as you answer the unique questions from the audience.
More Is Better Is Bad Advice
So many pitch coaching resources suggest 10 or more slides, and every possible content item from competitive analysis to deep market research, financials and deep numeric data. And, it’s common for first-time pitchers to enter into the pitch with a sense to have “every question possible” covered in the pitch deck. You need that information to be successful, but not in your pitch.
As you read the outline below, it will be hard to imagine getting to this point. Many entrepreneurs have heard that they should just build their business plan in PowerPoint, and keep it fluid, so it can pivot. (That issue is another post.) But the point here is that all too often, that is the starting point for the investor pitch. Entrepreneurs seeking funding believe that telling the entire story of the company, all the data collected to date, is somehow going to make the case for the investor. In reality, it will hinder, and probably sabotage success.
The Secret Investor Pitch
Here’s what I have found to be the best approach. Try to keep your pitch down to five slides with a cover and thank you slide at front and back. The best pitch I’ve ever given was all images, and the presenter told a story that covered these five chapters:
Slide 0: Title Slide
Have an effective title on an edge-to-edge slide image. It’s a placeholder to leave up during informal introductions and business card exchange. Don’t start the pitch, until everyone is focused.
Slide 1: What Is the Product or Service?
The slide should be another image, not text. The presenter’s story should be the focus for the audience. Repeat keywords and phrases eloquently and passionately, while clearly laying out the pain point(s) the customer has and that your product or service will eliminate it.
Slide 2: Why Will Customers Buy It?
The slide should be another image depicting points of pain the customer has. The presenter systematically communicates how each customer pain point is addressed by the product and service value claim. The dialog continues to be a story, filled with memorable repeated key phrases – well-crafted by your marketing person on the team.
Slide 3: How Will It Make Money?
Yet another image, but this time depicting the business model, either directly or in a metaphor (queues lined up to buy, online stores, something that conveys your business model, and the ease you will monetize the pitched product and/or service. The quantitative data in terms of addressable market, margin, pricing, volume and growth, etc. all need to be coming out of the presenters speaking as she/he continues to tell the story with passion.
Slide 4: Who Makes Up the Team?
Again, use an image to convey the essence of your team. Headshots are stiff, a humanized image of some sort is better. The inclination to include long (or short) text bios for each founder will put your investor audience to sleep. Investors want to know that the founder/presenter knows his team, and can eloquently introduce and defend their contribution. This is also an opportunity for the investor to understand the broader potential for leadership and collaboration among the team. As a baseline, investors will look for the following 5 roles/experience:
- Expert domain experience – someone who knows the market and its users
- Entrepreneurial experience – someone with prior entrepreneurial experience and success
- Product development champion – someone that can make, or lead the making of the product service
- Aggressive marketing expert – someone that can market and sell the product and service
- Innovative finance expert – someone that can count, manage and effectively steward the investor’s money
Slide 5: How Will The Investor Make Money?
This is “the ask” be able to confidently and clearly state how much money you are raising, what it will be used for, and how fast you expect to generate results and financial outcomes for the investor. Again, dominate this slide with an image that conveys return for your product and service. This slide does have – and perhaps the only slide that has – quantitative text. But just three to five points
- Amount of raise – A number. How much funding the capital raise is targeting.
- Equity to be offered – A number. What percent of the company is being offered.
- Structure of the deal – Simple one line description to spark questions later.
- Timing for returns – A date and timeframe. When the investor can expect to see initial returns, and over what time period
- Return metrics – A number. What is the anticipated IRR (internal rate of return) for the investment
Slide End: Thank You and Questions
Leave this slide up and stop talking. Allow the investors to collect their thoughts and prepare questions. Catch your own breath, then move into questions.
The After Pitch
Hand out AFTER THE PRESENTATION a perfect-bound business summary. Details are found in the handout. As questions come up, refer to the detail in business summary document in front of them. You can also accurately gauge the interest and key points of concern of the investor by their questions.
Use this document to hold the bigger spreadsheets, financials, bios, competitive analysis, market research, and such. This is where the detail material belongs, not in your presentation slides. Use the after-pitch time period to take careful note of the room. Who is examining the business summary – they are the interested people you need to follow up with.
Questions from the audience are a good thing – no matter what the attitude of the VC/angel or other type of investor. They won’t ask questions, if they are not interested (or you bombed). With direct and indirect questions, they are trying to rationalize in their own mind, the following:
- Is what they heard “credible?”
- Will it make “money” in the shortest timeframe over other available competing investment opportunities?
- Is this the right team?
Don’t Understand the Value of Marketing. Even the best closer / sales person can’t sell a product that has not had its value claims been properly positioned with clear repeatable messages that resonate. We’ve all been there, and had a sales executive sit in our office postulating wild suggestions that we knew were being made up on the fly. Scalable marketing is more important than having a sales people who come and go.
Don’t have a Business Strategy. Arrogantly suggesting that the technology is so good, that it will sell itself, never works. This shows a lack of understanding around three important factors: various business models, effort required to monetize a product or service, and the fundamentals of running a company. When asking an investor for two million dollars, you need to demonstrate a strategy to achieve an outcome. No one will invest in the “Field of Dreams Strategy” – build it first, then hope customers will come buy it.
Weak management team. Len Bland validated this approach time and time again at BNC meetings. A gap is fine, only if it can be explained and the gap is adequately covered. What will never work is to suggest that one or two founders can do it all. That’s not credible, and rarely possible.
Misfire on the dress code. Find out the dress code. Call another portfolio company and ask. In general, the more money you are raising for, the more you probably need a tie. Factors that make dress vary – you have built a company with Guy Kawasaki – dress anyway you want. Your company is a fitness company – dress to show you know the industry. Use good judgment – but don’t show up unwittingly.
I must thank three sources for helping me refine 15 years of experience in these thoughts about the secret investor pitch. First, the opportunity to have attended the school of hard knocks (experience). The second credit goes to Len Bland, who really runs a tight ship for pitches at BNC’s VC meeting every month, and keeps me thinking about how to do better pitches. And, of course, I should thank Steve Jobs, the master pitchman.
Some of you know that in addition to helping companies here in Chicago, I spent 16 years in the Bay Area, and 4 years commuting to New England, and 2 years to Research Triangle Park working to help start-ups and grow expansion stage technology companies. I’ve seen success, won over a few VCs, and even been asked to leave (at least once).
That’s a full spectrum of experience from “learning from failure” to “we did it, now what?” I have presented an approach guideline here. How have you refined your own approach? What have you learned from experience?
Share your thoughts in a comment.