If you’re an entrepreneur, and especially if you have been building a startup for any meaningful amount of time, you are likely no stranger to pitching to investors. Sometimes a founder has to pitch many, many (hundreds?) of times to get any traction at all. Other times, a founder might have her funding secured before the round is even officially open. What’s makes the difference?
I recently had the pleasure of speaking with a brilliant man who has a wealth of experience and knowledge in successfully pitching to investors. He shared some of his wisdom with me and one of my business partners, and it is such pertinent advice that I wanted to recreate it here for all of you, our faithful fellow entrepreneurs.
In all likelihood, your biggest issue with your pitch might be related to what you are talking about. Too many people get caught up in tactics: what do we need, when do we need it, what are our operational targets, etc. This type of thinking and speaking is typically very short-term and very narrowly focused. You certainly need to be able to answer all of these types of questions when asked (and you need to do so consistently across your executive team), but your pitch is the time for talking about strategy.
Investors are considering handing you large sums of money to accomplish something and give them a return at some point down the road. Every good investor understands that they may be parting with their money for several years, and what they want to hear from you is that you are also thinking about those years and how to get them a good return. Yes, you need to spend money on certain key staff, for example; but why are these resources important to the overall goal and vision that gets them the return they are looking for?
So how do you tweak your mindset to focus on strategic, long-term thinking and ensure you give investors everything they are looking for from the very first time they see you pitch?
Show investors you’re serious.
Know all of the ins and outs about your business model, market, users, and every other aspect that’s important to the solution you’re delivering. You must have done your homework and be prepared to answer any question from anyone about anything as it relates to what you are doing.
Anyone on your team who is talking to investors must use the same language as you, and everyone should be talking in terms the average investor can relate to and understand. You are asking them to entrust their hardest-earned resource, their money, to you. Take it seriously and prepare for it seriously.
Demonstrate your ability to manage change & uncertainty.
You’ve spent a lot of time on your financial forecast, executive summary, business plan, target market, market cap, and business model and revenue streams. But remember that you are a startup! All of your numbers, income and expenses, are based on a SWAG (super wild-ass guess). It might (should be!) an educated SWAG, but without history and results, you are still only guessing.
With that said, prove to your investors that you understand the volatility of what you are proposing and show them how you will manage uncertainty and handle changes that impact your plan as they come at you. There will be things you didn’t plan for, usually because you didn’t know to plan for them. Talk about those eventualities and demonstrate your strategies for handling them when they arise. This will instill a higher degree of confidence in your investor audience than the average pitcher.
We are not suggesting you get into the tactical weeds on what happens in every dooms-day scenario. We are suggesting that showing you have a realistic view of your venture, and that you’ve considered how you will handle uncertainty, will go a long way towards building investor confidence in you and your ability to execute.
Leave no doubt about why YOU are the one.
Most investors, when they hear a pitch, get right away whether there’s a real need in the market for what you are building. What they probably don’t know right away is why YOU are the right person to fill that need. It’s unlikely for most new startups that you’re solving a brand new problem and there’s no one else out there doing anything similar. That’s good! Competition helps an investor feel more at-ease that there is really a market need and puts them in the mindset of looking for what’s unique about you. Use that to your advantage and include what you do that’s different, why it’s better, and how (strategically) your solution will be a vast improvement over the others.
Most often this will come down to your abilities and those of your team. We’ve said it a million times, team is everything. It’s just as true for investors, because people are the only element in a business that can actually execute on a plan. So make it crystal clear why you and your team are THE ONES to get this thing done and into the world.
One final note: You’ll know you’re ready to pitch when you aren’t surprised by questions coming at you, when you don’t have to refer to your notes for important details, and when you’re confident about your vision and how you will get there. Knowledgeable confidence is one of the most consistent characteristics I see in the founders of companies that get funded when they are pitching to investors. Do the homework, spend the time to get clear on as much as you possibly can, and you’ll be set up for quick wins.