Creating that Winning Perfect Pitch
Recently we have seen and judged a number of pitching events. These have varied from new businesses looking for investment to start, to established businesses looking to further their business. The most frustrating part of the judging process is to decide who to invest in because you can't realistically invest in everyone. The most disappoint part of the judging these pitches, whether it be to promote your business or request investment, is the lack of preparation and "wow" factor. This could be the difference between the next Google getting investment or be just another idea ending up in the business graveyard.
There are several components to making a perfect pitch, below is a breakdown of what this entails, ensure you add this to you pitch and only this. The entire pitch should last no more than 10 mins and you have about 30 seconds to get the by in from your audience.
Problem & Opportunity:
In order to gain the attention of your audience, you need to get them thinking instantly, you need to explain to VCs why your product is needed in the market.
What is the problem you are solving with your product or service? Why does your company need to exist? What opportunity is your company carving out?
This is probably one of the most important slides in your deck. The reason why Dave McClure advocates, “pitch the problem, not the solution,” is because too many entrepreneurs try too hard to sell their solutions without educating their potential investors on what the problem is.
What is the problem?
How do you know if it’s a problem? Do you have primary or secondary research to back this up?
Who are you solving this problem for?
Proposing the Value:
So you've established the need for your product/service and that the problem needs to be solved. It has been validated by your extensive research. Ask yourself the following questions:
What are some of the alternative solutions that people are using today? Why are they not working out for them?
What is your solution?
How is your solution better than the alternative solutions? What are the finished-story benefits?
Is there anything proprietary and unique? - Please don't use the words "There's nothing else like it"
The audience are looking for REAL validation of your solution. Most investors don't care about the finer details. Their first instinct is to evaluate whether your company is a good investment opportunity or not. You might want to answer (If you don't have any, how much are you forecasting?)
How many paying customers or users do you have?
How much revenue are you generating (monthly/annually)?
How much are you growing on a monthly basis?
Are you profitable?
Do you have key partnerships in place?
Do you have key testimonials from your customers?
This is a make or break point of your pitch. Most investors will base their decisions on financials, at the end of the day, they all want a ROI (Return on Investment). If you don't prove it to them, you will lose interest at this stage.
Now that you have proven the problem exists, you conveyed all the great benefits that your solution offers. Now it's time to give a demo of your product/service. Keep this part short and sweet, but most importantly "keep it layman's". Keep the explanation simple and concise with a few screen grabs of your product.
How does your product work?
How does it bring value to your customers?
Physical products, make sure they are well presented and they work!!
Emphasising your business model is the best way to show your investors you understand the market. It shows you know how people currently access and engage with your product and how your company is different from your competitors.
Your business model slide should outline:
From whom you will make money
At what price
How big is your TAM (Total Available Market), SAM (Serviceable Available Market) and SOM (Serviceable Obtainable Market)? If your market is niche and small, talk about how you can become the big fish in a small pond.
What does ideal customer profile (ICP) look like and who are your early adopters?
What is the lifetime value and cost of customer acquisition of your customers? What is your churn?
It’s important to emphasise not only how you get customers, but how you keep them. This is why many investors favour monthly recurring revenue subscription models because it’s easier to keep a current client/customer happy and returning than constantly having to seek out new customers. It also makes cash flow modelling much more predictive and the lifetime value of the customer easier to calculate.
The Market Opportunity:
Remember your audience wants to see where the financial rewards are, whether they are your family or a scary VC, they want to make sure this is worth all the pain and suffering you will go through for years! They are not merely looking for a solid business, they are looking for a home run. They are asking themselves: Is there an opportunity for a huge return? Your market opportunity slide needs to answer: How big is your world?
There are a lot of market research firms out there to choose from to carry out the best of all searches. Or you can think resourcefully, get to your local library and make use of the abundant free data, British Library is our favourite resources, you gain access to all the information you need for free. Get in touch for more information email@example.com.
As annoying as it is to hear "There is no one else doing this", you will also hear the words "What if Google hears about this?". The simple answer is, "Google has unlimited funds and can do it themselves", but you have first mover advantage, everyone will want to see how you do, also you have the secret ingredient that will make you stand out.
Rather than just come out with a bold statement like this, make sure you understand your top 5 competitors in the market and what they are doing. Know them like your mum knows you. Set up Google alerts to give you constant news about everything they do, follow them on social media.
Remember one thing, "Competition Breeds Innovation" - Embrace it and allow it to challenge you!!
What you could show is your confidence in adapting to the market and carving out your piece while demonstrating your current customer satisfaction and loyalty. Consider these questions:
How do you position yourself in the market?
How do you defend your market against your competitors?
What is your secret sauce? How are you going to become better than your competitors?
Going to the Market:
Whether you are expanding or entering a market. You have to ensure you have put in some serious strategic thinking in this section. Your leadership skills will have to come through here. No investor or employee will ever be buying into you, if you don't show your assertion.
Business goals: the number of people you’re trying to reach in a specific time frame
Positioning and messaging: how you intend to communicate with your target customers about your product/service
Pricing decisions: how much you’ll charge them and how frequently (1-time vs. ongoing)
Channels leveraged: where you intend to access your potential customers
How are you going to get your product to the hands of your customers?
Which channels are you going to focus on given your current resources? What have you done to validate that these are the most effective channels?
What is your competitive distribution strategy?
It can be useful to include a bird’s-eye view of your product road map, but more importantly, it should speak to your “marketing mix” and what tactics you’ll utilise to spark interest and purchases.
If you have kept the attention of your audience until now, then you have done a great job. Now it's time to support your ambitious vision and ask for the precise level of investment.
You want to answer:
How much capital do you need for further validation/expansion of your business model?
What is your runway and what is your burn? What do you need it for and how will it be spent.
What is the breakdown of capital allocation? What are you going to spend it on?
What is the cost of customer acquisition? How confident are you that it is going to stay under a certain range?
The Powerful Team:
I have seen people who have been previous developers of global businesses not think about making them part of the asset to a business. If you have worked hard to gain great accolades, then include it, after all this is the team that will drive the business to its full potential and to put the investors mind at ease that their investments are in safe hands.
Who is on your team and what are their relevant skills and experiences
Where did you meet your co-founders and what have you done in the past together to show that you can work well together?
Who are your advisers and why are their experience relevant to the problem you are solving?
Your Grand Vision:
This is where you can get emotional. It doesn't mean start crying, you need to show your passion, whilst maintaining a REALISTIC and PROFESSIONAL view. You need to "WoW" your investors into caring about your business.
Remember, at the early-stage, investors are investing in the likelihood that you are the right person to solve this problem.
What is your vision?
Why are you driven to achieve this vision?
Breaking down the pitch in simple terms.
This is a major problem we have observed in this world. We know this is a major problem because it is validated by this credible research and stats. Through our own research, we have also confirmed that this is a major problem.
Currently, people are using these alternative solutions and they’re not working out so well because of these reasons.
We believe our solution will solve this problem because it does this amazing thing that will greatly benefit our target customers. We’ve tested this solution with a few beta customers and they absolutely agree that we’ve solved this problem for them.
In fact, our current traction shows that we have X number of paying customers with positive NPS score. Our ARR is this and our MRR is this. We are growing at X % monthly. We also have these major distribution partners onboard. We’ve been featured in these media for our recent accomplishments.
Our product is designed and built to solve this problem. This is what it looks like and this is how it works. Customers love us because it brings them these benefits.
The market size is this big and this is our obtainable market size. This market is growing X percentage each year. This is how we position ourselves against our competitors. This is why we are better.
At the moment, our cost of customer acquisition is X amount and the lifetime value of a customer is Y amount. We are confident with the support from the partners we are currently negotiating with, we can bring the CAC down to this amount and LTV up to this amount. We also plan on tackling these channels with these resources.
To support our go-to-market strategy and reinforce our validated business model, we are asking for X amount of investment at Y pre-money valuation. The discount is X % by this date. The first portion of the investment will be used to validate this experiment. From the results of this experiment, we will have a clear understanding of how to get to problem-solution fit. We will then invest X amount in hiring these key employees to help us create a scalable and repeatable business model.
This is our historical financials in terms of revenue, cost and margins. This is our forecasted based on our % of growth per month. We anticipate to hit this much ARR and MRR in the next 3–5 years.
This is our team. We have X number of years of combined experience in these areas of expertise. This is our background and past experience. We have also brought on these advisors who are experts in these fields. Given our expertise and experience, we believe we are the best team to solve this problem.
Our vision is to bring this value to these people. Having to see this problem first hand, we’re driven by and grounded by this vision. We see a real opportunity to change the way things are and we invite you to join us in achieving this.
Thank you. Please contact this email or number if you are interested in learning more.
To create the winning pitch is not hard, but it is hard work, getting in as much detail as understanding the psychological elements of your audience. Remember visual stimulants are easier for human brain to register and remember for longer period, it is also easier for the brain to process.
In most cases Entrepreneurs will deem it a given to be entitled to investment for their ideas, because they are so great. Furthermore they believe that investors have unlimited funds and they are going to throw it at you. This is what we call the "X-Factor Moment", someone who thinks they have a talent and must be rewarded with a contract.
You have to think logically and must follow the steps outlined in our series of business planning articles. Communication gaps between the entrepreneurs and investors is about 99% of the reasons behind the failure of new businesses.
You must understand how investment firms, be it private individuals or firms, work. Put yourself in their shoes, based on the information, will you invest?
Getting your pitches right is fundamental to the success of your business, whether it is for new business or new investment, you must make sure it is tailored. Research your audience, tailor and adjust the pitch accordingly, GENERIC pitches will not work or impress.
Finally you have to make sure you are an impressive presenter. Engage, communicate, excite, make sure you keep the attention of your audience. Don't use monotone, don't umm or errr, be inspiring.
If you are the founder and can't do this, hire someone to deliver it for you. It could literally mean success or failure for your business.
For templates and advice, get in touch with us at firstname.lastname@example.org.