STORY INLINE POST
Sweating out the 40°C that is hitting the Austin area, my new hometown, I am running to my new office kind of tired from my 7 a.m. tennis match and eager to meet a new startup in the Latinx insurtech industry. When I step into our boardroom, just in time for the meeting and with a hot coffee in my hand (great combination for a hot day), I realize that the founders had just come in a couple of minutes before me and are settling in to pitch their idea to me and our analysts logged in to Zoom. The meeting is set for one hour and we started 15 minutes late due to several issues, especially from their side, regarding technical errors on the founders’ laptop, Wi-Fi connection, time to search for the PowerPoint in their drive, settling down, ordering a coffee, among others. Finally, after several attempts, they hit the Enter button and started with the first slide: “Please sign an NDA before we continue.” I stood up and left the meeting.
When an investor receives tens or probably hundreds of startups per week, no matter if you are the best entrepreneur in the world or your idea is going to be the next Tesla, Dell, Tito’s, Vrbo, Oracle (these are for my new Austin friends) you must make a GREAT first impression. And the best way to make a first impression is by creating and presenting an amazing pitch.
Learning from the thousands of pitches we have received in the past six years, I strongly recommend following the next points to create the perfect pitching session or at least enhance it:
Getting Ready for the Meeting
Prepare, prepare, prepare! Take time to practice your pitch in several ways and with several audiences. Pitch to people who you don’t know, for example, and take time to overpass each slide with a large magnifying glass. Be your own critic, destroy your slides with red marks, use the “Spelling and Grammar tool” (it is quite sad that a great number of people don’t use it, or worse, don’t know it exists). Print the presentation, review it three times at least, make someone external review it, and even better if that person is a pro.
Once you prepare and know you will present the perfect pitch, then you must understand your audience. It is very important that you investigate the investor you are going to pitch, understand their investment thesis, go onto their web site and do your own due diligence. Crunchbase is a great tool to see how this investor invests, in what industries, in what stages, how much money they invest and where they invest. Don’t waste your time and don’t waste the investor’s time.
Time and Length
Several studies indicate that you may lose a person’s attention after 20 minutes. Time is money so you need to make a pitch fast enough to communicate your outstanding idea and always leave enough time for questions. I recommend a 20-minute pitch with a 10-minute window for questions. Additionally, a very basic factor is to be prepared: try to get there 30 minutes before your meeting, organize yourself outside the office or in your car; consider getting to the actual office 10 minutes before and ask the front desk if you can get to the conference room to start setting everything up (presentation, seating map, laptops, samples, etc.). Regarding the length of the pitch, try to do it in 10 slides and take 2 minutes for each slide.
Taking a reference from Sequoia (one of the largest VC firms in the world), content is king when pitching to investors, so take your time to structure deep but short messages on every slide of your pitch. Slide per slide, this should be the structure:
Slide 1: Define your business in a single line. I personally like short videos.
Slide 2: State the problem you are solving or the pains of your customers. How are these problems addressed today?
Slide 3: State your value proposition that solves the problem in slide 2. Show the state of your product and provide use cases.
Slide 4: Set your product/startup’s track record in a timeline. Point out trends that make your solution conceivable.
Slide 5: Describe your “buyer persona” and the market you are servicing. Graph the Total Available Market (TAM), Serviceable Available Market (SAM) and Serviceable Obtainable Market (SOM). I recommend watching Sara Blakely’s Masterclass for deeper understanding.
Slide 6: Graph your competitive landscape either in a quadrant or a list but always including your closest incumbents and showing why you are better or different.
Slide 7: Describe how you are making or going to make money. Explain your pricing model and your commercial key performance indicators (number of users or clients, customer acquisition cost, churn, lifetime value, etc.). If you are a B2B startup, this is the place to put those clients’ logos.
Slide 8: This is the place to intro your awesome team but only the founders, management team and advisers. Put logos of their background (i.e. schools and past jobs). Describe their roles and state who is 100% working at your startup and who is there part-time. How is the team complementary to each other?
Slide 9: Financial achievements. If your startup is in the pre-revenue stage, leave this one behind and don’t use projections. Most of the time, they are incorrect or not achieved so don’t worry about that huge excel. If you are at the revenue stage, include past sales, cost of goods sold, operating expenses, EBITDA, cash flow, assets and debt. Always show margins and percent change. Financials are recommended to be shown on a quarterly or yearly basis, depending on your starting date.
Slide 10: The deal. How much you are raising, how much you have raised, what investment instrument is being used and the general details of the deal (cap, discount, valuation, etc.). Show your cap table as well.
General tips: Use a pro designer and put some money into it, be brief and don’t use more than two lines per idea. Use visible and large fonts, be precise and avoid over-selling.
Top of Mind
I highly recommend being intense but avoid being invasive. You want to be on the mind of the investor by doing the following:
- Send the follow-up tasks on the same day.
- Add the investor to your newsletter.
- Send use cases of your product/service or any relevant papers, news or work you have published.
- Ask the investor for a connection on LinkedIn and Twitter or any public platform where they can see or read about you.
- Have other founders or other investors talk about you with the actual investor.
- Go to events where the investor will attend (difficult task).
- Follow up every week until getting approved or rejected (do this only if the investor is actively investing).
- Prepare yourself to pitch to multiple funds and luckily get one to three invested. Odds are against you.
I almost forgot, venture capitalists don’t sign NDAs. Don’t ask for it because you might end up alone in a meeting room with a hot and undrinkable cup of coffee.