My grandmother, who passed away last year was an amazing story teller. I remember the hundreds of stories she would tell me as I grew up. She even wrote several books that were collections of children’s stories from around the world.
Why does this matter in pitching your company?
Because without story, you have nothing.
Think of your pitch as having a beginning, middle and an end. It should be a story of triumph filled with passion and vision. A story that tells the tale of belonging and battle.
Dont believe your pitch should have the same elements as the greatest stories ever told? Then you are missing out on the key ingredient to a powerful pitch, because a story will allow potential investors to relate to you and your company.
Couple of key points: This is not for your 30sec pitch (you can compress the story, but the truth is that a 30sec pitch is just problem + market + solution. – “Mismatched socks cause 5% of all employee firings. Socks.io allows people to ensure that their socks are matched correctly before they leave the house, eliminating the embarrassment and saving jobs.”)
Why did you start this business? What about the problem compelled you to act? In the beginning, you need to set the stage. Explain the genesis of the idea and why you are passionate about it. (Notice I never said solution. That will come later.)
“I have two dogs at home, and they were truly difficult to train. I constantly wished I could have a trainer in the house with me when the dogs would bark at the door or do other things that were inappropriate. Clearly, I wasnt doing a great job of training them. After doing a little research, I found that the pet market is more than $41 billion in size, and even so, there was no great in-house training solution. So rather than give the dogs away, I built PetTrainer.ly.”
Analysis: The connection point is around training dogs. Everyone with a dog had to 1) train them; and 2) can’t understand why their dog does XXX everyday. The difficulty with this pitch is if the investor isnt an “animal person” you may find that you have immediately turned them off. Hence the importance of research into whom you want to pitch.
This is the meat. This is the section where you tell the story about the market size, the opportunity. The business itself, and your secret sauce. How are you going to change the world? What is the benefit of having this investor?
Spend the most time in the middle of the story, and allow for the most questions during this time.
“Most people dont realize how important it is to be able to zombify your parents. With the rising cost of health care, its less of a burden to have a zombie mom and dad versus parents that continue to burden their children. With the market standing at $50billion dollars, our ZombieParen.ts creates a unique delivery mechanism by putting Zombie Juice inside denture cream. Over the course of a few months, elder parents no longer desire food or need costly medicines.
We have also figured out how to deal with the brains problem. We have developed in conjunction with Zombie Juice, a wide range of synthetic brains, which really allows us to sell the razor cheaply and make our money on the blades.
To date, we have 10,000 Zombies in our system, buying on average 10 brains a month at $5 a brain. We are growing at a rate of 40% month over month, and with our upcoming Facebook and Android apps, we expect that number to double. We havent built an iOS app yet, given most iOS users have clearly lost their minds.”
Analysis: Zombie brains? Really? In this case the story is a big market and a business model based on reoccurring revenue. If you are talking to investors that dont shy away from physical products, and have been successful with the Gillette model, they now have enough information to ask solid questions and get a good feel for what the business could be, and how they could generate returns from the business. More importantly, it helps the investor understand how you are thinking about the business, and if they can trust you to steward the business.
The end is the easiest part. Ask for what you want and why you want it, and then be quiet. Let the first question come from the investor. Let them absorb your pitch, your story and your ask, and then, let them respond.
“We need approximately $500,000 to fund about a year with 4 employees including myself. That will get us to the next milestone, which will be 50,000 cats herded on a monthly basis. At that point, we will probably have to raise a bit more money.”
And, thats it.
Step One was find the right people to tell the story to. Step Two is tell an interesting story. Step Three will start to cover the demo itself.
Next Post: Pitch Perfect – Demoing
- Pitch Perfect – Pre-Pitch (learntoduck.com)
- The Art of Being a Dick (learntoduck.com)
- Perfecting Your Pitch (philpresents.wordpress.com)
- Open & Honest (startupcfo.ca)
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(I am going to try something I have never done. Write a series of posts on a single topic. Lately, I have been really interested in the process of pitching a startup, and so thought I would write about it.)
One of the best parts of my life is listening to pitches from startups. Love it. I probably get pitched 4-6 times a week, and while I am not a professional investor, it has become clear as to what seems to be necessary to nail your pitch.
Lets assume that your company and team pass the smell test. What should you do to be successful?
I am going to break this down into multiple posts, and will start with the “Pre-Pitch.”
So many entrepreneurs fail in their pitch before they even walk into the room. Remember, you have started pitching a potential investor from the moment you get introduced.
Before you start to put together your list of potential investors, ask yourself two questions:
1) What is it we do? At the core of our business, what problem are we trying to solve?
2) Why am I doing it? Do I care about the problem?
If you are unclear as to your purpose or passion, it will come through in your presentation, and no investor will feel comfortable investing in that team. Your presentation could be amazing. Your demo impeccable. Doesnt matter. You are about to spend 80 hours a week to change the world. If you dont know how you are changing the world, or seem to care, why should I?
Now, start building a list of investor targets. Who do you want to raise from? Why? It can be an expansive list. And the reasons can be as simple as “they will hype us up,” or “I like her blog.” It might not be overly convincing when asked why you are pitching the specific investor, but it can work.
After you have your freeform list of potential investors, review their investments. It can be the firm’s investments or the individual investor’s investments – which boards are they on? Remember you are not having a firm invest in your initially. You need to have a partner who champions the investment to his other partners. List two or three relevant investments next to each potential investor. Are any of them competitive? Know that could be a deal killer.
Ok, you have a wish list of investors, with 2-3 relevant investments next to each name. Prioritize the list based on those two data points. And fire up Linkedin. Start checking your direct / indirect connections to each investor. Follow them on Twitter. See who they chat with. Read their blogs. Who do they list in their blogroll. Who do they respond to in the comments. Who do they reference in their posts.
Once you get through that exercise, you should have a first version of a list of folks that you want to pitch.
Take the first five in that list. Folks that you are interested in having invest, have investments that make sense, and operate in your social graph, and send them an email that looks like this:
“Hey dude – I really enjoyed reading your post on XXX (make sure you actually 1) read it; and 2) enjoyed it). I found it particularly relevant because I am focused on a startup in a similar industry/solving a similar problem/etc, and would appreciate getting 15 minutes of your time to get your feedback / thoughts on a particular problem we are facing. Would you happen to have some time next week on Thursday between noon – 4pm PST.”
If you get a positive response, set up a meeting. DONT PITCH AT THIS MEETING. Use it for exactly what you asked for: feedback on a specific problem. Think of it as pre-knowledge for your pitch.
If you are lucky, you will build a relationship with the potential investor that you can cultivate BECAUSE ITS POSITIVE FOR YOU AND YOUR STARTUP. Dont cultivate a relationship just because you want to pitch the person in the future.
Key take aways: How does the person respond to you? What was the advice? Was it actionable? Did they advise or tell you what to do? Did you feel that they cared?
Why is the above important? Because if the person eventually invests in your startup, they will act the exact same way, and you want investors that are supportive and helpful.
Now, a few weeks or so have passed. You have met with 5 – 10 folks that have given you different types of feedback. The ones that are on your list and gave you the right queues (liked the idea, were helpful, were responsive), move to the top of your list. The rest cross off. They will not be good investors and/or may never invest.
Ok, you have accomplished three things at this point: 1) you are solving a real problem; 2) you are passionate about the problem; and 3) you have focused your investment target list.
Think you are ready to pitch? Nope.
Next post: Pitch Perfect – Get Your Story Down.