5 tips for pitching your start-up to investors
January 2, 2013 12:00 PM
I remember the first time my partner and I presented our startup to an angel investor. Many questions asked by the investor were left unanswered.
The intuitive question, “What are each you in charge of?” was answered by, “Both of us do whatever needs to be done for the startup’s success.” Does that sound like a good answer? No! He was hoping to hear that there was a clear role for each position and that each of us was in charge of a specific aspect of thebusiness without losing focus and missing something important between us.
Almost every day, I participate in a review of startups looking for investment. This experience has given me additional perspectives on what works, what catches an investor’s heart, and what is just badly put and creates antagonism.
It’s tough to criticize someone else’s vision and dream, but as I learned for myself, it’s highly important to do so and gives the entrepreneur a real chance to put their vision to the test and get feedback.
So what are the basic guidelines we should remember during a startup pitch? I’ll try to summarize them as five bullets (disclaimer: there is an endless number of bullets, but I wanted to emphasize these particular ones):
Most of the time, investors will have very little if any knowledge about what you are working on or vice versa — they’ll be expert on that particular space. If you can demonstrate your mastery of the numbers, your competitors, your budget, and everything else, it will provide a great indication to the investor that you know what you are talking about; and it will raise the investor’s confidence that you are the right team to go and execute that startup.
It doesn’t matter that you think your idea is the next big thing. If your pitch is dull, unattractive, with only dry details, you’ll fail to catch the investor’s attention. He’ll lose focus. Before you know it, another one’s lost.
Build a story around your startup, a story that people can relate to. Learn about the person in front of you before the meeting and customize your pitch accordingly. Use a pitch guru to help you build your story; I recommend a good colleague, Donna Abraham, the best corporate storyteller I know.
Fundraising is all about the people, and finding an investor is just like dating. If the interaction is bad, the result will be a rejection.
Keep eye contact, talk nicely, and most importantly, be kind. Don’t be arrogant; don’t act like a know-it-all; listen carefully; and try to answer in the most precise way you can. At the beginning of the meeting, don’t be afraid of breaking the ice. The people sitting next to you may be your next investors, so try to have a pleasant conversation and show your friendly side.
Be comfortable. Wear the clothes you usually wear. I am always amazed by the people who come overdressed and you can see by the look on their face that they are not in their comfort zone. Create an environment that will make you feel as comfortable as you can.
It’s as simple as that. It’s really important that you have fun during your pitch and throughout your startup journey in general. I know you work 24/7 and are busting your ass building your startup, but hey, if you’re not having fun, you’re in the wrong place.
The bottom line: The enthusiasm and obsession of entrepreneurs for their startups is magnetizing and very important, but the way you pitch and present your startup and ideas are crucial to succeeding in front of a potential investor, co-founder, employee, and every other person you want to bring on board.
Yaron Tal has been working on turning ideas into marketable products for more 12 years. Currently, Tal is CTO of security company 6scan and blogs at Startup Internals, where this post originally appeared.