In the highly competitive world of startup investment, having a brilliant idea is not enough to win over investors. Where the rubber really hits the road is in how your team executes on its mission and how you communicate that execution to investors. Angels, VCs, and institutional investors are accustomed to hearing ideas every day. In order to truly grab attention, you need to demonstrate that your team has the capabilities to turn an idea into an actionable, scalable business.
Pitching is not only about what’s inside the pitch deck. In order to succeed, you will need to cut through the noise. Here are four ideas that will ensure you are putting your best foot forward when you finally sit down to talk with investors.
Lead with purpose
In business, everyone wants to make money. Describing your startup as merely a powerful engine for profit is not going to bring today’s investors on to your side. In the startup world, growth and scalability go without saying. You need to also distinguish yourself and your team through your purpose and motivation. Answer the question, “Why?” for your audience. Tell a story to the investor to win them over – not only with your narrative but also by demonstrating your ability to sell your idea to customers, partners, and top talent to hire.
They say that purpose is the new profit, and without a compelling purpose that gives meaning to your efforts, your pitch risks fading into the unwanted group of bland startups. At the same time, the story of your startup’s purpose, your answer behind the ‘why,’ is not simply a hammer that you take out to start pounding on nails. Purpose is first and foremost a journey of inner motivations. Being clear on your purpose will relax you and make it easier to describe all of the other parts of your business. Having a purpose that is aligned with fixing a real problem in the world can also give you an intensity and charisma that shines through everything you do.
If you are preparing to raise money for your startup and you don’t have any clear answers to what your purpose is, consider taking a few moments to pause and possibly hit reset. The most successful startup entrepreneurs lead with purpose. Think of successful startups like AirBnB, Bolt, Spotify, UiPath, and Kahoot, and you can immediately also call to mind their purposes, their stories. The most successful startups tackle real problems and build customer relationships through a shared vision; figure out your company’s purpose if you want to be among them.
Be the expert
While purpose will be the inner fire that runs your startup’s engine, most of your conversations with investors will be taking place on the level of the nitty gritty. Do not expect your investors to be your experts. They will be investing in your expertise in combination with your ability to execute on your vision. Investors should lend expertise occasionally from within their own fields, but you need to be the authority on the details of your business.
Communicating a calm expertise about every facet of your startup will telegraph an infectious confidence during investor pitch meetings. This means demonstrating not only familiarity, but fluency in how your product functions, details of your target markets, specifics about what you’re asking for from investors, how you will use the funds you raise, and details about all the customer interviews and research you’ve done. The best pitches showcase startup solutions as a pain-point killer and not just a vitamin or, worse, a feature blowing in the wind.
Be the expert on your investor as well. Who else is in their portfolio? Do they have an investment specialty or focus? Do they have personal experience themselves as a startup founder? Some of this information can be used strategically, and some might just be handy to break the ice. Either way, don’t go into an investor conversation blind.
After you’ve established your burning fire of purpose and nailed down all the details that prove your expertise, it’s time to envision your narrative as large as you can possibly make it. Investors want to be excited about something and they especially want to be part of something that has a global impact. Investors love to hear you describe and quantify the size of the opportunity for the business. Speak their language on this and make sure you can back it up with market research.
Not every product or service is going to reach for this level, and not every company needs to be a unicorn. But you shouldn’t hobble yourself at the early stages simply because there isn’t enough money around. Don’t be afraid to create a big story for you and your team.
On a practical level, this can mean not getting bogged down in product demos during your investment pitch. Rather than going through the details about how everything works at the product or service level (believe me, you will have enough time for it during your next meeting), focus instead on the business and markets that you hope to capture. It’s ok if your early-stage startup doesn’t have a ton of traction yet, as long as your roadmap has clear milestones and achievable time frames.
The pitch is a two-way street
Time is limited during a pitch meeting (or Zoom pitch), and it would be impossible to fit in your entire life story. Talking too much is a common first-time founder mistake. On average, the first meeting lasts 20-40 minutes. It might seem like you have enough time to talk about your product, but I’d recommend using that classic three-minute speech with slides, and leave 27 minutes for a Q&A. You are here to get to know each other, to listen and learn.
You want to make your pitch simple, impactful, and assured, but don’t forget that you also need to ask some questions during your meetings with investors. You are trying to persuade these people to give you money, but if you play your cards right, they should actually be persuading you about all the ways that they could help take your startup to the next level. Let them pitch to you! The best way to get investors talking is to simply ask questions.
If you do get investors talking, remember to listen! These people might not be experts in your specific field, but they are experts in startup investment. Don’t be afraid to take notes. Ask follow-up questions when relevant. See if they can connect you with anyone else they might know from their own networks. Look at this conversation as a privileged chance to move up a level. And make sure to end the meeting with clear and actionable next steps.
Final thoughts to remember
Don’t wait until you’re out of money to begin fundraising. First-time startup founders are often surprised how long this process can take. Plan at least six to nine months, or you might find yourself in a desperate situation.
Nobody can run a startup alone, and the team composition of founders and early employees can make a huge difference to investors. Try to tie in your team’s relevant experience and expertise as one of the cornerstones of your belief in future success.
Importantly, know what your main challenges are. Investors will likely ask about your perceived challenges, and it would seem silly to say, “nothing.” These are people that you will potentially go to for help for many future challenges, and it’s important they know you can be transparent.
It can be a lot to take in all at once, but remember to relax. If you’ve done your homework, are passionate about your product, and are comfortable with your team, you have all the necessary ingredients to produce a winning pitch and you will eventually raise the funds you need.