The purpose of your pitch is to convince a VC that they should spend more time with you. The first pitch requires a fine balance between cramming too much information in an hour and not providing enough information. Your first pitch matters a lot because VCs often don’t have the time to give you the benefit of the doubt if you don’t present your message clearly, and how you present your message also reflects on your ability as a founder. Everything matters!
My co-worker gave me some interesting advice recently about a blog post I was writing – she told me to step back and view how others would read and understand the article. What assumptions was I making about what they know? You can use the same strategy to approach your first pitch – assume the VC you are pitching to doesn’t know anything. How can you convince them that you have a great product, a market dying to use your product, and a great team? Meet those points and you’re almost sure to get a second meeting.
Sometimes, no matter how good your pitch is, you just aren’t going to hit those points for an investor. It might have to do with the returns investors want to achieve or the industry focuses investors have. However, I also see a lot of entrepreneurs weaken their chances of impressing investors because of their presentation skills, so here are some common mistakes you should avoid when pitching to investors.
- Don’t take too long to get to the product. Running through the vision is great, but a single mission statement slide isn’t enough to tell investors what you’re actually doing. If I have to ask twenty minutes into the conversation, “I’m sorry, what exactly are you building?”, you waited way too long.
- Be able to describe the painpoint you are addressing, and prove it! One general trend in SaaS right now is to take software and apply it to an industry that was previously run using paper and Excel spreadsheets. It’s not enough to claim that an industry is run by paper – you also have to prove that that industry is ready to adopt software and pay for change.
- Know how you calculated market size. It’s great if you pulled the market size from Gartner or IDC, but it’s even better if you’ve done your own TAM analysis.
- Understand your buyer. It’s not just about name dropping people you’ve talked to – it’s about being able to dig into the dynamics and factors that weigh into their decision making.
- Know your competition inside and out. It’s okay if a VC knows a startup in the space that you haven’t heard of yet. Knowing your competition means being able to pinpoint who your direct and indirect competition is. For example, if there are no software providers in your space, your competition would be inaction, consultants, or DIY.
- Don’t read too much into people’s questions. They usually aren’t trying to challenge you, and having people ask questions means that they are engaged in your presentation.
- Know your KPIs. What’s your revenue plan? What is your conversion rate? How does you pipeline look? How long is your sales cycle?
That’s it for me this week. Completed during football advertising breaks. Go Patriots!
Tech with Dianasaur 