Founders & Funders: Pitching Your Business
Additional Perspective: Mickey Millsap, Alabama Futures Fund
It’s a good idea to build two separate pitch decks, one that is a visual representation of the pitch you are giving, and one that is annotated with more detail so the investor has something to refer back to after the meeting. During the presentation you want them focused on you — after the meeting, you want to give them something with detailed information
There is also value in putting together an introductory deck for initial contact. First, do your research on what the specific fund looks for, then build a 5–7 slide deck that summarizes those key points. You have limited mind share, particularly if you are emailing cold. The deck needs to be bold, concise and easy for someone who doesn’t know your product to understand.
Something that I don’t like seeing in pitch decks is the slide with grand market claims that don’t pass the sniff test. This can be a stage-specific issue, but as an early-stage investor I am way more interested in founders being honest about the things they don’t know, the assumptions they are making, and what they are trying to learn over the next 6–12 months.
Purpose:
Being able to articulate what your business does and how it generates value is paramount to success as a startup. In the article below, both a founder and funder hope to highlight some of the most important aspects of ‘pitching’ your business. Hopefully, readers will walk away with a better understanding of what an investor looks for and how a founder needs to prepare for a pitch. As always, please feel free to share and comment on your own experience.
What is a pitch?
Founder: The most important thing to remember when pitching is to Know Your Audience — aka “KYA”. When you pitch, you need to clearly and concisely say what your company does and how it creates value.
On the one hand, you need to define how your company creates value for a customer. On the other hand, you need to convey how your company creates value to an investor.
When it comes to a customer, I use two factors when pitching. I articulate how my product (or service) either saves or creates a customer time or money. Does it help the customer simplify a process or does it allow them to amplify one?
When it comes to an investor, there are two factors I also consider. First, how will it generate a return. Second, how much of a return is possible. These factors are addressed through business model, total market size, and ability to gain market share.
Going back to “KYA” — you need to know which to focus on when pitching and define the purpose of your pitch. Is it to gain customers or to attract investors? Knowing your audience is the first key step when ‘pitching’ your company.
Funder: The pitch is the opportunity for a company to excite a funding source about the business and the opportunity ahead. Too often founders will dive into why their product or service is the best thing available but skip right over the reason the market is looking for a product or service like they have. Ask yourself: Are you a problem for a solution, or a solution searching for a problem? You have just a few moments to make a great first impression on a pitch, and the first few seconds will dictate the remainder of the time you have with the Funding source. The pitch is one of the most important aspects of your business. If you have a hard time pitching to a funding source, there is a decent chance that your sales are reflective of a bad sales pitch to potential customers.
Structuring a Pitch
Founder: While knowing your audience is important, there are general outlines you can use to structure your pitch. Most commonly, you can use Microsoft Powerpoint to put together a 10–12 page slide deck to pitch your idea (and tweak depending on the audience).
In this article, I will provide some criteria on how to outline pitching to an investor and provide some useful links below. At a high level though, you will want to articulate the following:
- Why you (or your team) are the right people to do the job
2. The problem you are solving
3. Size of the problem (market size)
4. Your Solution
5. How you plan to get your product in the hands of customers
6. Business Model (how your company makes money)
7. Company performance — Financials, Projections, and Assumptions
8. How you stand apart from the competition
9. How the audience can help — Investment, Marketing, Users, Etc.
Although pitching to investors differs on how much progress your company has made, here is a link outlining how to structure a pitch deck for early investors; (example 2) or (example 3). As you continue to make progress as a company, the detail of your pitch deck may increase. Fundamentally though, the 10 items I mentioned above remain fundamental to any pitch.
Funder:
When thinking about the primary outline of a pitch, I find that founders often get caught up talking about the product as if I know as much as they do about the industry. It’s best to ask a few questions before diving in, and make sure your slides are structured in a way that tells a story. It’s probably best to start with the problem, shift into the industry landscape and what is currently being done, and then tell me about your solution and team’s ability to execute on a business plan that will be successful. I always enjoy spending a few minutes of Q&A before diving into the fundraising discussion, but be sure not to leave out an overview of how much you are raising and the use of capital.
I enjoy a founder who is able to articulate their pitch in a compelling way and use the slides as a supportive summarization of the business. It’s frustrating to have a pitch deck that requires me to read paragraphs of information (and not listen to the founder). I would much prefer to ask several questions then leave a pitch confused due to information overload.
What comes next?
Founder: Newton’s First Law of Motion states that a body at rest will remain at rest unless an outside force acts on it… This is also true when it comes to working with investors.
It is your responsibility, as a founder, to keep the investment process in motion. Investors are incredibly busy and will very rarely be the one pushing the process forward. It is your job to be diligent about sending email reminders, follow-ups, and check-ins throughout the entire process and up to close.
The worst thing you can do is not get to a “Yes” or “No” as quickly as possible. This not only impedes your ability to plan as a company but also could be fatal when it comes to runway preservation.
A question a lot of people ask me is about the “appropriate” cadence for ‘follow-up’ emails. As it relates to investors, I would follow up every one-and-a-half to two weeks. A method I use with both customer prospects and investors is to forward previously sent emails as a contextual reminder of why you are reaching out (as well as a reminder they did not respond to your last email).
Lastly, be sure to reduce as much friction as possible to get the investor to close. Have your documents ready; be quick to respond; and don’t be afraid to pick up the phone or meet in person to work out additional details.
Funder:
After you’ve given you pitch to a funding source, ask if they have any concerns or questions that can be addressed immediately while you have their attention. No business is perfect and there will be some concerns that need to be addressed, you might as well know what they are. If there are some larger concerns, see if you should address them now or if it seems like a bigger item that you can dive into in the diligence process.
To end on a good note, ask what next steps are. There is no reason to not get an initial impression of the interest level and the funding process. This also gives the funding source the opportunity to pass quickly and allow you to move onto to the next one. Running an early stage business is all about prioritization. If you are chasing a funding source that will eventually say no, each follow up is time that could be spent in conversation with another funding partner. Each funding source has an investment philosophy and just because your business does not fit within that philosophy does not mean that your business is bad. Get next steps from the call and politely follow up accordingly.
Lastly, take the feedback that you were able to get towards the end of the meeting and reflect on what you think went well and what could have gone better. Practice, practice, practice. The pitch is an opportunity for you to easily stand out from the hundreds of other companies that are all pitching the same sources of capital. If you are able to build a compelling business pitch, you will be miles ahead of others competing for capital.
