04 May What We Like to See in Pitches
Pitching is more art than science in my opinion. I do not think there is a single set of rules for building the perfect deck, for example, and for good reason- each early stage company is unique and should be communicated as such. Depending on the entrepreneur, product, industry, etc., a wide range of approaches could be appropriate, and ultimately, the entrepreneur should feel comfortable trusting their pitching instinct. Having said that, there are a few things that I think a good pitch should include.
We had a good response to our recent “Pitching Don’ts” blog post, so I figured we should follow it up with a “Pitching Dos” post. Much like the previous post, these are simply my opinions, so understand that not everyone will agree with them and take them with a grain of salt.
Talk to Us!
There is a pretty good chance I have already read through your deck, so please don’t read the words off of your PowerPoint slides! Early stage investing is all about people, and simply reading your slides throws away a golden opportunity to connect with investors. Instead of just reciting slides, interact with us; tell stories that augment your pitch; be yourself and smile for heaven’s sake! Generally speaking, wordy slides are bad practice anyway, so “talk to” your deck instead of reading from it. We see A LOT of pitches, so try make a positive impression to help your company be more memorable. And to that end…
Show Your Enthusiasm
I’ve said it many times before and will say it many times again- starting a business is tough. Very tough. Plus, raising capital can be a full time job in itself on top of the greater-than-full-time job of starting a business. Investors get it (because often times, they have done it themselves); investors also know that there will be many times that you just want to give up, and it’s our job to invest in the entrepreneurs who will not throw in the towel. Entrepreneurs who believe in what they are doing and are excited about it will be less likely to call it quits when the road gets tough. After all, it is much easier to give up on an interesting project than to shutter the doors on your dream. Don’t be afraid to be enthusiastic and get excited about what you are doing.
Tell the Whole Story
Would you believe that I once listened to a pitch that had no mention of the company’s actual product or service? Was it a new device; was it a chemical; was it an app; I didn’t know! This is a bit of an extreme example, I admit, but the point is to be sure you tell the whole story of your company and not get lost in the weeds. Remember, we are investing in a company, not just a product, and companies have management teams, products, markets, competitors, financials, etc. And while I won’t say you must include it in your deck, I think you should at least talk about…
What Is the Deal
Often times, we get to the end of a pitch without any mention of the actual investment. Are you offering preferred equity? A convertible note? What are the proposed or set terms of the offering? I will admit that this one is somewhat controversial, and I have heard strong and quality opinions on both the never-offer-terms as well as the always-offer-terms side. From where I sit, we are going to eventually have this conversation anyway, so why dodge it? Talking about this up front can even save everyone a lot of time and effort if the investment isn’t right: for example, the entrepreneur is offering convertible debt to an investor who only invests in preferred equity. (Yes, I have seen this happen.)
Have an Exit Plan
Many pitches do not include any details about exit possibilities for the company down the line. What strategic acquirers / avenues exist when the company is big and prosperous? What have other acquisitions in those spaces looked like? Reality is that an exit almost certainly will not look like any of the examples you give; investors get that. But including information like this shows that you are at least thinking about how to create a valuable company and not just on building something cool. Remember, investors will typically only get their money back at an exit event (i.e. IPO, acquisition, bankruptcy); IPOs are usually very profitable for an early investor, and bankruptcy is clearly not good for anyone. So what does that acquisition option look like?