Nowadays it isn’t easy pitching to VCs. With the demand for series A venture capital soaring but the supply remaining steady, startups are finding it increasingly difficult to go out and make a successful fundraising pitch. An unsuccessful pitch can be the result of something as fundamental as a small addressable market or as mundane as the partner at the VC being distracted by his cell phone during the presentation a la Nikola Tesla Pitching Silicon Valley VCs.
There is no guaranteed recipe for success when making a pitch (and here is how we choose startup investments at OurCrowd), but here are some tips and resources that can help:
- The first step is getting in the door. Tactics that have worked on us in the past include bringing a celebrity musician to put on a live show in the office and offering to bring pizza.
- On a related note, always be friendly to the administrative assistants. They are the gatekeepers.
- Create an effective presentation. Guy Kawasaki’s 10/20/30 rule is a good place to start: ten slides, twenty minutes, and no font smaller than thirty points.
- Pitches should address the following key points:
- Secret Sauce
- Business Model
- Market Size
- Go-To Market Strategy
- Traction and Projections
- Fundraising Needs
- Even 10 slides is too many for some investors – Fred Wilson from Union Square Ventures thinks you only need 6 Killer Slides.
- Be on time. You are wasting your own time by being late.
- Make this a team sport and bring your co-founder(s) or other key team members along.
- Communicate what your company does in a way that is easy to understand. I support using other companies as a reference point when describing your startup if a good parallel exists. There are many formulations of referenced pitching, but the two most common examples are:
- X for Y (e.g. Netflix for Toothbrushes)
- A + B + C (e.g. Waze + Pinterest + Dropbox)
- Saying there is no competition is the equivalent of saying there is no market. Always provide a competitive landscape…
- And always be in the upper right hand quadrant of said competitive landscape.
- Get to the live demo sooner. Product demonstrations are engaging and will hook the investor in for the rest of your pitch.
- It is important to be realistic about your addressable market size. Numbers that resemble $XX billion call into question your business acumen rather than elicit excitement.
- Use graphics, charts and tables to present quantitative information. The Visual Display of Quantitative Information by Edward Tufte is a great resource.
- Dress appropriately and comfortably, considering age, sector, geography and time of year.
- Know your business really well. CEOs who know their metrics cold and are prepared to answer any question demonstrate a high attention to detail, which is as important as high-level strategic thinking.
- I hate to admit it, but buzz words, dropping the right names and making it clear how committed you are to making everyone around the table lots of money are powerful tools when wielded by the right person and done tactfully.
- Give the investors an opportunity to speak…and then listen. Keep your answers short and non-defensive.
- Coming up with euphemisms for your various positions with former employers is fine, but don’t misrepresent your past. In fact, don’t misrepresent anything…
- According to David Rose, the single most important thing about your pitch is you. You need to convince VCs that you are the entrepreneur that they will invest in and make a lot of money in return. The single most important thing about you to convince them of: integrity. David Rose on Pitching to VCs
- Study what has worked for others. Look at the first pitch decks that helped get Dwolla, Foursquare, Airbnb, and Buffer funded and you’ll see that there are no hard-and-fast rules.
At the end of the day it is important to remember that your first pitch is hopefully just the first contact between you and the investor. Therefore, it is not necessary to overwhelm them with market data or bore them with the intricacies of your technology.
If you can focus on getting across the fact that you are a talented team that has identified a real problem, has developed a unique solution to address that problem and has a clear plan for how to grow the business, then there will be plenty of time to dive into the other stuff in subsequent meetings.
|David, who began his career as an investment analyst at Blackstone in the Real Estate Private Equity group, is an investment associate at OurCrowd. David graduated summa cum laude from the Wharton School of the University of Pennsylvania with a B.S. in Economics and was a Joseph Wharton Scholar. David enjoys skiing, fishing and craft beers|