The following is a guest post by a fellow Gravity Ventures member and friend, Dr. Tony Ratliff:
Learning to Pitch Before You Start Raising Capital
By Dr. Tony Ratliff
It only took about six months of deal flow and a handful of “pitches” before I realized that most entrepreneurs are really, really bad at “selling themselves” and “pitching” their ideas and companies to investors.
I cringe every time I listen to a great start-up idea or read a well-written business plan, and then watch in horror as the founder stumbles and falls down throughout the “pitch”. So many good ideas and businesses never get funding and fail to receive the benefits of a properly funded start-up - all because of a poor presentation during the “pitch”.
The sad part was that as I’m sitting there taking notes, I’m thinking to myself, if only I could have spent a few hours with this poor guy BEFORE his presentation. We could have highlighted “this or that”, deleted a whole section here, added more about “this”, not talked about “that” – the guy probably could have gotten a “YES vote” and ultimately our money.
This is not the only way to give a “pitch”, but it will help improve your presentation skills and increase your chances of obtaining funds. By following these eight simple suggestions you’ll be setting yourself apart from the other poor “pitches”.
1. Tell us what you do in as few words as possible.
Most Angels and VCs are people with type “A” personalities. We have short attention spans and don’t like to waste our time. Give us the “short version” and if or when we ask questions, then you can provide us with more details. The first thing we want to do is understand what it is that you do - in plain and simple English. Next on the list, we want to know what problem you solve and why your solution is important to the customer.
2. What’s the plan? How does it scale?
As investors, we aren’t necessarily interested in your product, but we are interested in returns. Your mission statement is important to us, but what is really rolling around in my head while you’re up there giving us the “pitch” is: Will this work? How much money will we be able to make when we sell our shares? How does this business scale? Explain to me how you are going to market and grow this business. How is it going to scale? Most investment groups are looking for ways to make a 3-10x return on their money, and if you’re business doesn’t scale - I’m not interested.
3. Talk about the team.
This is very important and you don’t want to just put up a slide of your team and their past job experiences. Tell us why you’ve assembled this team for this particular opportunity and highlight your expertise. We’re entrepreneurs and we know everyone has to start somewhere. Personally, I like to see and hear your “passion” about the product. Because, I know that passionate people find a way to get things done when they hit the “bumps in the road”, and there will always be “bumps” along the start-up highway. Passionate people see bumps as opportunities and not failures.
4. What’s your go-to-market strategy?
Your great idea is useless if no one hears about it or knows it even exists. So many people spend time developing a great product, only to find out no one wants it. How are you going to get it into the hands of your customers? What is your Marketing plan? What is your customer acquisition cost? Do you have any sale channels besides your sales team?
5. What’s your competitive advantage?
Chances are you’re not the first person to see this problem and offer a solution. There are probably about 25 people working on the exact same problem in some form or another. As VCs, we’ve probably heard a “similar” pitch within the last several years if not months. More often than not, it’s more about execution than the idea. Tell us “what it is” that your team brings to the table that can help you out-execute your competition – your IP, first to market advantage, your knowledge or your network?
6. Let us touch and feel your product.
A short demo or actual product sample is key. Is it simple, does it solve the problem, is it easy to use from a user’s point of view. We don’t need to understand all the features or any of the code – we just want to know that it’s clean, works and simple to use.
7. Expose your weaknesses before we do.
Successful people understand their strengths and weaknesses. Go ahead and acknowledge your weaknesses because I guarantee that everyone in the room is asking themselves, “What is it that I don’t like about this? Where are the holes in this plan? What’s holding me back from investing in these guys?” Let us know about the risks you see moving forward and tell us how you plan to handle them.
8. Show us the FINANCIALS.
It’s hard to forecast projections for an early stage company, but show us what you’ve got – we know they’re wrong anyway. Explain what it will take to double or triple the sales, and what kind of timeframe you need to accomplish it? We also want to know how long it’s going to take to get to “breakeven” or cash flow positive. Plus, as investors we don’t particularly like to see the funds going to Founder salaries – we want you spending money in marketing, development and sales. Oh, and make sure you tell us how much money you’re trying to raise. What’s the Ask?
This isn’t the only way to get funded, but I hope it helps. If you nail these 8 key points in the “pitch” and can answer some basic questions about your product, valuation and your competition you’ll have a much better chance of raising funds.
Dr. Tony Ratliff is a dad, dentist, entrepreneur, investor and advisor for several start-up businesses in Indiana, and a member of Gravity Ventures II. He practices dentistry throughout the week, but also enjoys technology and start-ups. He likes mentoring, advising and discussing business strategies with young entrepreneurs in the start-up community.
~~~~~~~~
See also:
Entrepreneurial Law - Developing a Good Business Model
Culture of Private Equity
A World of Private Equity
Rules of Funding
Entrepreneurial Law - Proof of Concept & Proof of Scale
Fatal Flaws in Leadership
Keep the Good Ideas Coming but Stay Focused
Business Law - 10 Common Negotiation Mistakes
Funding Law - Presentations to Investors
Learning to Pitch Before You Start Raising Capital
By Dr. Tony Ratliff
It only took about six months of deal flow and a handful of “pitches” before I realized that most entrepreneurs are really, really bad at “selling themselves” and “pitching” their ideas and companies to investors.
I cringe every time I listen to a great start-up idea or read a well-written business plan, and then watch in horror as the founder stumbles and falls down throughout the “pitch”. So many good ideas and businesses never get funding and fail to receive the benefits of a properly funded start-up - all because of a poor presentation during the “pitch”.
The sad part was that as I’m sitting there taking notes, I’m thinking to myself, if only I could have spent a few hours with this poor guy BEFORE his presentation. We could have highlighted “this or that”, deleted a whole section here, added more about “this”, not talked about “that” – the guy probably could have gotten a “YES vote” and ultimately our money.
This is not the only way to give a “pitch”, but it will help improve your presentation skills and increase your chances of obtaining funds. By following these eight simple suggestions you’ll be setting yourself apart from the other poor “pitches”.
1. Tell us what you do in as few words as possible.
Most Angels and VCs are people with type “A” personalities. We have short attention spans and don’t like to waste our time. Give us the “short version” and if or when we ask questions, then you can provide us with more details. The first thing we want to do is understand what it is that you do - in plain and simple English. Next on the list, we want to know what problem you solve and why your solution is important to the customer.
2. What’s the plan? How does it scale?
As investors, we aren’t necessarily interested in your product, but we are interested in returns. Your mission statement is important to us, but what is really rolling around in my head while you’re up there giving us the “pitch” is: Will this work? How much money will we be able to make when we sell our shares? How does this business scale? Explain to me how you are going to market and grow this business. How is it going to scale? Most investment groups are looking for ways to make a 3-10x return on their money, and if you’re business doesn’t scale - I’m not interested.
3. Talk about the team.
This is very important and you don’t want to just put up a slide of your team and their past job experiences. Tell us why you’ve assembled this team for this particular opportunity and highlight your expertise. We’re entrepreneurs and we know everyone has to start somewhere. Personally, I like to see and hear your “passion” about the product. Because, I know that passionate people find a way to get things done when they hit the “bumps in the road”, and there will always be “bumps” along the start-up highway. Passionate people see bumps as opportunities and not failures.
4. What’s your go-to-market strategy?
Your great idea is useless if no one hears about it or knows it even exists. So many people spend time developing a great product, only to find out no one wants it. How are you going to get it into the hands of your customers? What is your Marketing plan? What is your customer acquisition cost? Do you have any sale channels besides your sales team?
5. What’s your competitive advantage?
Chances are you’re not the first person to see this problem and offer a solution. There are probably about 25 people working on the exact same problem in some form or another. As VCs, we’ve probably heard a “similar” pitch within the last several years if not months. More often than not, it’s more about execution than the idea. Tell us “what it is” that your team brings to the table that can help you out-execute your competition – your IP, first to market advantage, your knowledge or your network?
6. Let us touch and feel your product.
A short demo or actual product sample is key. Is it simple, does it solve the problem, is it easy to use from a user’s point of view. We don’t need to understand all the features or any of the code – we just want to know that it’s clean, works and simple to use.
7. Expose your weaknesses before we do.
Successful people understand their strengths and weaknesses. Go ahead and acknowledge your weaknesses because I guarantee that everyone in the room is asking themselves, “What is it that I don’t like about this? Where are the holes in this plan? What’s holding me back from investing in these guys?” Let us know about the risks you see moving forward and tell us how you plan to handle them.
8. Show us the FINANCIALS.
It’s hard to forecast projections for an early stage company, but show us what you’ve got – we know they’re wrong anyway. Explain what it will take to double or triple the sales, and what kind of timeframe you need to accomplish it? We also want to know how long it’s going to take to get to “breakeven” or cash flow positive. Plus, as investors we don’t particularly like to see the funds going to Founder salaries – we want you spending money in marketing, development and sales. Oh, and make sure you tell us how much money you’re trying to raise. What’s the Ask?
This isn’t the only way to get funded, but I hope it helps. If you nail these 8 key points in the “pitch” and can answer some basic questions about your product, valuation and your competition you’ll have a much better chance of raising funds.
Dr. Tony Ratliff is a dad, dentist, entrepreneur, investor and advisor for several start-up businesses in Indiana, and a member of Gravity Ventures II. He practices dentistry throughout the week, but also enjoys technology and start-ups. He likes mentoring, advising and discussing business strategies with young entrepreneurs in the start-up community.
~~~~~~~~
See also:
Entrepreneurial Law - Developing a Good Business Model
Culture of Private Equity
A World of Private Equity
Rules of Funding
Entrepreneurial Law - Proof of Concept & Proof of Scale
Fatal Flaws in Leadership
Keep the Good Ideas Coming but Stay Focused
Business Law - 10 Common Negotiation Mistakes
Funding Law - Presentations to Investors
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