I received a gift from one of the first investors I ever pitched. It was a signed copy of “Art of the Start” by Guy Kawasaki. At the time I was grateful, but I felt a bit embarrassed. I had just walked into a potential investor, given him my pitch, and was now on my way out the door feeling crushed. To be honest, I got a lot more than that book. Of the thirty minutes I had with that investor I spent the last 10 listening to his critiques on my pitch. I kind of felt like I was on my way home from my first rodeo, and my pride had the marks to prove it. It was a bit painful - okay it was really painful - but at least the only place I could go now was up.
Over the next few weeks I revamped my pitch almost daily while studying what the best of the best had to say about pitching and I also kept pitching new people every week. As I look back on what I learned 5 things stand out as being the most impactful parts of my pitch. By the way, as an entrepreneur I firmly believe that you are never done pitching. We finished our round a while ago, but I was pitching an advisor/investor just the other day.
1. Know Your Business
From the very start of your pitch investors are asking “Is this worth my money?” But the first thing they are actually wondering is “Is this 25 year old worth my time?” As in right now. In order to answer that a few of the basics must be in place besides appearance and how you came to be in their office. The first in my opinion is market size. The first two slides in my deck establish the size of the market. If you have an amazing solution to a painful problem for monks in the Himalayans with a market cap of $10,000.00 then you are wasting that investors time. They need to know the opportunity size from the get go.
2. Understand the Problem
My next few slides are dedicated to explaining the problem. I walk my investors through real life stories. My goal here is to tell a story that will engage them. If they don’t understand the problem then a solution makes no sense. I don’t move forward until I know they’ve the problem down. Stories not only help people understand better, they also help retention. That investor will remember you long after this meeting if you tell a compelling story.
Most investors I meet with start coming up with solutions once they understand the problem. I want to guide them down the path to the best solution. I walk them through a couple of potential solutions pointing out where others have failed. This helps address my competition and show why our strategy is superior. Finally I lead them to the golden nugget - THE solution. The solution is usually welcomed with a totally underwhelming “got it.” But that’s a big win! You have now turned the investor into the problem solver. You got them thinking about your problem and whether your solution is the right one.
Side note: If you aren’t confident that your solution is the right one this will be a risky bet, but what are you doing trying to start a company without confidence that it’s the right solution to the problem(s) in the market!?!
Recap - be sure to tell your problem through a story.
3. Show Traction
Once my investors know why our product is the right solution I segue right into our growth to date. Once again, it's all about telling a story. You’ve got you hooks in them with the problem/solution. Now it’s time to wow them. If you don’t have good growth, then this may not be the best tactic. We had decent growth, so I showed them the best numbers I had.
Now a days if you’re starting a tech business and you don’t already have a product with a little bit of traction investors kind of wonder if you’re resourceful enough to start a business. If you don’t believe that I recommend Guy Kawasaki’s lecture at Berkeley on the top 10 mistakes entrepreneurs make which you can find here. Honestly, you should be able to put together something in your garage with a buddy or two while going to school or working full-time.
4. Understand the Competition
The biggest hiccup for my first investor was the competitive landscape. I pitched him, he liked it and he asked for the legal docs. Over the next few weeks I received text messages or emails asking “Have you heard of [xyz] company? How are they different?” Fortunately I was able to answer all of these questions. I don’t want to know how it would have gone if I couldn’t have answered those questions.
5. Make Your Deck Amazing
If you think you can whip out your pitch deck in a day I would ask you to reconsider. One person I spoke with said “Don’t spend much time making your deck look pretty. Build your business.” I would argue that raising a successful round of financing is building a business, and that toting around a cruddy looking deck is a big restraint on being able to raise a decent round.
Your presentation is a projection of you, your company and your product. If it isn’t immaculate, well thought out, and engaging then it will be easier for investors to dismiss you.
Although it is important to really polish your deck you must also be comfortable touching on all the necessary points without it. I pitched a few investors that never even looked at a deck but still gave me money. If you spend the time on your deck you’ll know your pitch in and out.
I want to end this post back where we started. I was feeling like someone had just put a pin in my balloon; however I worked like crazy on my deck and pitch over the ensuing months. About 4 months after I received “The Art of the Start” that same investor wrote me a check and became an investor. He watched me develop my pitch for months, saw that I would do anything to succeed, and he took a chance on me despite my earlier failings. When it comes to investors keep pushing and work hard. As long as you learn from your mistakes they'll notice.
A big thank you to that investor who was willing to teach me instead of just send me away without a word of advice.