"Life's a PITCH!"
This is actually the title of a book by Stephen Bayley and Roger Mavity that I like a lot. The writers have a lot of great pointers in their book. It is something I highly recommend anyone who wants to get ahead in their career, business and life to read.
To be honest, "Life's a Pitch!" is actually a pretty good mantra to live by whether or not you are a startup entrepreneur. We are constantly pitching for a job, a sales, a promotion or even a date with someone we fancy. So, if you would just pause and take stock of your day, you will be amazed how many times you are placed in a situation where you will have to convince someone to go along with you on something. That, essentially, is a pitch.
In the startup world, pitching is very much part and parcel of our daily lives whether we are a startup founder, employee or investor. I started angel investing in 2014. At the same time, I also started helping startups to work on their pitches. In the past 6+ years, I have seen a lot of pitch decks and heard a lot of pitches. There are actually a few common characteristics in a great pitch:
1. Keep it short
If you are lucky, you may get to have a face-to-face meeting with a potential investor.he And if you are doubly lucky, the potential investor may give you an hour of face-time. That’s 60 minutes. Not a lot of time to tell your startup story and convince him or her to invest in your company.
The reality is you probably will NOT even get that face-to-face meeting at all. Instead, you will be sending out your pitch decks to tens, maybe even hundreds of potential investors before you will get one face-to-face meeting. And when you do get someone agreeing to meet with you, chances are you will be given no more than 30 minutes to pitch your startup.
I get around 5 - 6 pitch decks every week. And I am just a very small self-funded angel investor who does not have a whole lot of money to invest. Imagine the big VC firms like Softbank which have billions of dollars under their management, they get hundreds of pitches every day. So, whatever you plan to put in your pitch document, it better be short and sweet.
Another reason we ask founders to keep their pitches short is also because at startup events and demo days, founders will only be given around 15 minutes to pitch. Again, that’s not a lot of time. Therefore, it is best to get into the habit of keeping your pitch really short.
VCs also tend to take meetings at coffee shops or co-working spaces. Or you may meet a VC along the corridors of a startup event that you are both attending. In all these settings, the environment is going to be noisy and distracting. You will find it really hard to hold the VC’s attention for a long time. So, if your startup pitch is long-winded, you are not going to get far with your pitch before the VC moves on.
The mental picture I like my founders to have is to imagine they are in an elevator with a VC. They must get the VC interested in their company while they are both taking a ride in that elevator. How long do you think you have? 2 minutes? 1 minute? Try 30 seconds. Can you tell the VC your story and get him or her curious enough to want to sit down with you for a longer meeting?
Bottomline, keep it short.
2. Keep it simple
The thing you need to know is that your potential investors are never going to be an expert in everything. They may invest across many different industries. Or they may not have kept up with every latest advancements in technologies or design trends. You are the real expert in whatever you are doing as you have spend the last 12 - 18 months of your life living, breathing and creating the very thing you are now pitching.
However, you need the potential investor or customer to understand your creation and like it enough to give you some money. So, the worst thing you can do is to make things so complicated that your potential investor or customer has no idea what you have created. If an investor or customer cannot understand your product or business model, chances are they will not invest in your company or buy your product.
So, don’t try to be smart and use big complicated words. Use plain and simple words. Another mental picture I like to tell my startup founders is - try imagining, or better yet try actually explaining what you do to your Grandmother or your Grandfather. If they cannot understand what you are saying, you have not made it simple enough.
3. Get to the most important things first
I am a lawyer by training. And my specialisation is in dispute resolutions. I used to spend a lot of my time in Courts or in a government building presenting my arguments to officials to win them over.
One of the first lessons I learnt as a lawyer was to always, always get my most important point(s) across first. There is no need to build things up to a crescendo where you end with your most important point. Saving it for the last is the worst possible strategy when you are pitching. You want to do it right away, preferably within the first 10 seconds of starting your pitch.
The reason is, again, the limited amount of time you will get in front of an investor. If you don’t get to the most important things first, you may not get the chance to do so. Many things can happen. You may get bogged down by the potential investor asking you detailed questions on some minor points which you started with to set the stage. Or the investor may get bored when he or she is not seeing the "bright shiny new thing". Or he or she may be called away mid-way through your meeting. A lot of things can happen to derail your pitch. So, do not waste time to build things up or think you must lay a lot of groundwork. Just go straight to your most important point and fire away.
4. Talk about the money
Remember that when you are talking to potential investors, customers, employees, partners or vendors, you are discussing a business deal. Everyone of your audience cares about money. They are thinking about the money involved when they are listening to your pitch. So, you need to talk to them about the money. There is no reason to be shy about it.
It is not enough to write in your pitch that, “This thing has a big market with unmet demand.” How big is the market in dollar terms? How big is the demand, also in dollar terms? How many people will want it? How frequently? For how long? And how much money would all that demand translate into?
And if you are trying to raise funds for your startup, you must tell the investor how much money you want from them. The worst kind of pitch is after taking me through a 30 minutes story, the founder does not tell me how much money he is hoping to get from me. Alway, always talk about how much money you want if you are trying to raise funds.
So, keeping in mind those 4 simple characteristics of a great pitch when you are next talking to an investor or a customer. I cannot guarantee that you will be successful in your pitch if you have all 4 characteristics. But I can guarantee that you will not lose your audience's attention midway in your pitch.
Now, let's look at how exactly does one go about preparing for a pitch.
If you were to do a Google search with the search term, “Pitch Deck”, you will find thousands of great examples online. The best way to develop your own great pitch deck is to look at some of the pitch decks of the companies that have gone on to become great unicorn or even publicly-listed companies.
But, before you think that a great pitch deck is all about awesome PowerPoint or Keynote or Slides skills, I think that is putting the cart before the house. To create a great pitch, I recommend that you start with writing out your pitch in long hand and complete sentences to tell a compelling and coherent story of your company. If you need to provide data in your pitch, try to organise the data in a visually appealing and easily understood format like a chart or in a table. We call this "script" the investment memo. If you are emailing to cold-call on potential investors, some of them may ask you to send over an investment memo before they would agree to meet.
In any event, it is always better to start by writing the investment memo. You can use it as the script to present your presentation slides. After you are done editing and reviewing your investment memo, then you can start work on creating your presentation slides - or what we call pitch deck in our industry. So, get the order correct - write the investment memo first, than you can start working on the deck.
For the sake of illustration, I will use the format of a series of slides to explain the key components that have to go into any good investment memo and pitch deck. For my example, I will be pitching a revolutionary economy-class seat for commercial airlines.
This is your opening section/slide. It should contain your company name, your company logo if you have one and a simple tag-line that sums up what your company is doing. Let’s say your startup is going to redesign airline seats in economy class. In the investment memo, you can go into a bit of details on who you are, how you come about to founding this company, when and where the company was founded and even the vision that you have for the company.
This section/slide basically lays out what you think is wrong with how the world currently is or in other words, the status quo. So, in our example here, I think that air-travel as we know it is broken because we are crammed into these tiny airplane seats in economy class. But, it is important that I provide data to show that this is NOT a problem which is unique to me. I need to find or conduct some market research to show that the problem I have identified is a really, really BIG problem shared by a lot of people.
In this section/slide, you will explain how you have solved the problem you have just outlined in section/slide #2. You should show the investor what is so uniquely special about your solution. So, maybe you have come up with a radically new and comfortable economy class seat. You may hear VCs asking you about your USP. They are asking what is your Unique Selling Point? We usually tell founders to have screen-shots of their product on this slide in addition to a link to their website or app. Just in case the website or app does not work properly, at least you can fall back on the screenshots. In the case of a product design, bring a 3D mock-up if possible. It is also useful to go a bit into the "production method" in this section. So, if you are an app, software or website, talk a bit about how it is being coded. Or in the case of something physical like these economy seats, where they are being made and how they are being made.
The biggest challenge in writing this section/slide is to figure out how much to disclose without giving away the company. I am not saying that there are a lot of unscrupulous people out there who will have no qualms about stealing your ideas. But, as a former intellectual property rights lawyer, I have to caution you against unintentionally giving away any proprietary information. But, you also cannot keep things so vague and at such high-level that a potential investor or customer have no way to evaluate the quality of your solution. It is not easy. But it can be done. If in doubt, seek out an IPR lawyer for advice.
This is the section/slide where you show the potential investors that you have found your product-market fit. Some numbers here would be most helpful like sold items, committed orders, growth rates, user numbers, unit economics, etc. If you are an early-stage startup, the absolute numbers may or may not be big. It is more important to show that the growth rate is quite significant and there is a good trajectory in your growth.
Continuing on our example of the economy class seat design startup, you will now be sharing with the potential investors how many airlines have already signed up your firm for the new seats. And you may even want to disclose how many other airlines are in negotiations with your startup for these seats.
This is the section/slide where you will need to show some dollar value - what is the total addressable market that you think is out there. It cannot be some random figure you pick out of the air. You will have to do a lot of market research here. And then you make a reasonably-attainable estimate of the market you may be able to capture - 10% in this example. To make things easier for your investors/customers, it is always useful to give proper attribution to the sources of your data. Good investors will obviously conduct their own due diligence but you providing them with the initial sources will show good faith. It is all about winning over your audience, not trying to pull a fast one on them.
I am always amused by founders who come to me with a pitch that says there is NO competition out there for their supposedly unique solution. And I am sitting there Googling on my iPhone and immediately found a competing product within seconds.
So, do your research. Be very thorough. And be honest. Not all investors are looking for a product which has never been invented before. Don't get me wrong. Some will do that do you. But, what most sensible and experienced investors are looking for is how you have made some really smart improvements such that your product is 10X better than any of the competitors out there. Remember what I said about “Ideas are cheap. Execution is King.” It is fine if you have competition. You just have to show that you are just that much better than your competition.
How do you become a gigantic company? This is where you really reel them in. Remember that all investors hope to get a big exit. So, they are hoping to find something which will, in 5 to 10 years’ time, bring them a 100X or even a 1000X return. This is the slide where you will show them that exit scenario and how you plan to get there. Again, the challenge is to find the right balance of reality versus ambitions. We all want our founders to be ambitious and shoot for the sky. But we also do not want to see a pitch which is totally unachievable.
This is the section/slide where you tell the investors why you and your co-founders are the right people to do this. Sometimes, it might be a good idea to put this section/slide at the start of the pitch if your product is still very early in its development. Then, you need to win over the investors on the merits of your winning team that will be able to deliver a runaway hit product. Either way, it is important to let the investors know who are the people who have co-founded the startup and what unique skills they are bringing to the startup.
USE OF FUNDS
In this section/slide, you should talk about how much money you are asking from the investor. It is also important to let the investor know how much equities you are handing over for their money. In addition, you should also talk about how you plan to use the money.
That is basically how you would develop and deliver a pitch to a potential investor or customer. It is really not that difficult. It is a general misconception that it takes a lot of charismas or you must be a great talker to present a compelling pitch. That is really not the case. But it does takes a lot of practice to be good at pitching. And the best way to practice is to actually do it. The more times you pitch, the better you will get. The more rejections you get, the better you can refine your pitch and improve your odds.
Happy pitching, coz life's really a pitch!