The art of pitching 🎨
Pitching to investors is one of the most important, most nerve wrecking and most rewarding things you will do in your entrepreneurial career.
It takes courage to introduce the idea you so profoundly believe in to someone, who can basically make or break its future.
To become great at pitching, you need to understand your audience. Your pitch should inform them, excite them and set you apart from all the other, hopeful, investment-hungering startups demanding their attention.
A winning pitch communicates the most important parts of your business with razor sharp precision and is coated in the secret sauce of any good presentation: The story.
The art of storytelling in investor pitches is tricky. Do too much and you’ll cover up what’s really important. Do too little and by the end of your 20 minute speech you’ll have everyone sound asleep. But keep reading, and we will show you how to do it.
When you're done reading, you'll know
- How to use storytelling to get people excited
- What information investors are looking for when you pitch
- How to structure your pitch clearly
- How to present traction in your pitch
- Who the young founder we introduced in the beginning is - and if she ever got funded
The problem with startup pitches
Investors turn down 90% of the startups that pitch to them. To make it through, you have to present them with the right information in the right way. Knowing how to do that is difficult, but we’re here to help.
So how do you become one of the 10% that succeeds?
A common mistake in pitching is focusing too much on what you want to say, rather than what your audience needs to hear. But that will get you nowhere.
Your pitch should first and foremost present your business in a way that leaves your listeners excited and convinced that you, your idea and your business are worth investing in.
The solution? Wrap the right information in a great story
So you need to know exactly what makes investors tick - and how to present it right.
Let’s start with the latter. After all, a pitch is a presentation - so you need to know how to master that.
All great presentations tell a story. They have a beginning, a middle and an end. They spark emotion, build curiosity and teach the audience something about themselves or the world around them, they didn’t know before. And they hook people from the very beginning until you say “the end”.
Wrapping your startup pitch in an intriguing package is just as important as the information you give in itself. And if you manage to do both, you’re bound to leave an impression.
What information should you give?
When investors are listening to your pitch, they are looking for two very specific things: Return and risk.
They want to know how big your business potentially is going to be - that is, how much money they can expect to get in return on their investment.
And they want to know how big the risk is that they will never get that - or any of their money back. The main risk factors they are looking for are product risks, market risks and execution risks. So focus on lowering all three.
In other words your job is to dollar-excite them - then give them peace of mind about it.
So, what's the story?
So how do you build up a great pitch? One that has it all? You need a storyline, a structure and some traction.
We’ll start with the story, so let's go back to the young founder, we introduced in the first few lines.
Her pitch story was an ambition to change an entire industry - and she wasn’t afraid to say it. Although it drove some investors away, who didn’t share her vision, she believed that it would draw the attention of those who believed in the same thing she did. That it was time for a change. Even through all the no’s, she didn’t stop believing in the vision - and she didn't stopped pitching.
When finding and telling your story, don’t be afraid to paint the bigger picture. Go back to why you started your business. How did you come up with the idea? Why is it important? Who’s lives will it change? Turn that into a story.
Start with a basic storyline, then work on making it shine.
Want to find out more about what investors are looking for and how to engage and excite them? Here are some pretty cool resources.
Resources to help you understand investors
Venture hacks give you the answers to some of the more basic, simple questions you have when you are a new entrepreneur. For example: "how to pick a co-founder" and "how to write like the great entrepreneurs".
Startup School Radio
Aaron Harris of Y Combinator, starting point for startups like Airbnb and Dropbox, dives deep into founder stories and get some of the brightest startup minds out there to share the experiences they encountered along the way.
The million dollar structure 💰
All good stories have a clear structure, and your pitch is no exception. The structure of an investor pitch is pretty widely agreed upon, although you will meet variations out there - again, it’s all about the audience, so make sure you are aware who you are pitching to.
We would suggest you go for this structure:
The big idea
Introduce the story, hook the audience.
What are you going to speak about?
Clearly explain what the problem is, who has it and how big it is.
Present the solution to solve the problem.
Introduce your product clearly - no technical terms, no unnecessary details.
How will your business make money?
How big is the market? How much is it growing?
Introduce your biggest competitors, their strengths, weaknesses and how your business is different.
Explain clearly how you will grow your business.
Show them why your startup is already worth betting on. Present the main results you’ve already made. Dress to impress - but be honest about it.
Present your startup’s current financial situation and forecast the next 2-3 years.
Introduce your team, their skills and why they are exactly the right people for your startup.
How much are you asking for?
Summarize the most important highlights of your pitch once more and finish on a high note.
Oh, and one more thing. While it's important that your slide deck makes the structure clear, don't forget about the power of headlines! Name your slides in an engaging way to grab and hold on to the attention of your audience.
Finding an investor in a huge market
Although there are a lot of startups out there seeking funding, there are also a lot of investors dreaming of getting their hands on the next Airbnb.
In fact, Crunchbase projects that around 295 billion dollars of VC capital went into startup investments in 2019 alone. So while getting funded is hard, the investor market is huge. And there’s always someone out there you haven’t talked to yet.
Experienced investors know that to find that one needle in a huge stack of hay, they will have to take the risk of investing in businesses, before they know the outcome. They also know that smaller scale startups can be very profitable assets to their portfolio - if the idea, the team and the business model is good enough.
With that in mind, here are two things to help you find an investor in a huge investor market.
Find an investor that suits your business - and you
In a large market, there will always be those (okay, probably many), who don’t understand the fuss about your idea. But there will also be someone who does - again, if you have the most essential parts down.
So like with your target audience, try to find your target investor. That person will not only be more likely to invest, but will also be a much better advisor and ally to your startup.
Although the relationship between startups and investors can feel very unequal, since they have something you need, remember that your business has the potential to be their next gold mine. Show confidence (without being cocky). If you don’t, then fat chance they will.
Stand out from the crowd
Even if you find the right investors to target, you will have to compete for their attention. This means you have to set your business apart from the masses and show how and why you are different and better than the rest of them.
It takes effort! But then again, when has anything worth having ever come easy?
The essence of being investable is to have a great idea, backed up by traction and a team ready to execute, even when things get tough. Combine this with excellent presentation and communication skills, and you have what it takes to stand out in a truly crowded space.
We can’t do much to help you with the first part. That’s on you. But we can help you with those presentation skills. Here are four steps to delivering a dressed-to-impress pitch:
- Get to the point - and be clear about it.
Don’t talk too much, for too long about things that aren’t relevant. Instead, keep it simple, short and relevant.
- Take the room, be confident and engage your audience.
- Know your numbers - Not just the ones you want to present. All of them.
And one more tip, free of charge: When you start pitching, people will start asking questions. Improve your pitch by adding answers to all the important questions you got in previous pitches before anyone asks. That way you'll eventually impress even the toughest crowd 💪🏼
Are you worth the money?
Like we said in the beginning of this course, investors are looking for ROI. The bigger, the better. One way of showing that is to be super clear about how you will grow the business.
Be very specific about your growth strategies and answer these three questions:
- How will you acquire new customers?
- How will you work with customer retention?
- How is your product development team going to keep improving and developing the product to satisfy customers?
Keep it concise and back your strategies with numbers like:
- How much does it cost to get a new customer? (CAC)
- What is the lifetime value of a customer? (LTV)
- How long is the payback period? How long do customers have to stay with you, before they’ve paid back their own CAC?
And speaking of numbers...
Traction attracts attention
If story-telling is the secret sauce of your pitch, then traction is the roux.
The better your traction, the stronger your pitch. And while there’s an actual slide dedicated to traction, it should be the foundation on which you build your entire pitch. Great traction proves that you can deliver a strong ROI at minimal risk - the exact two things investors are looking for.
If you can, present updated numbers an acquisition, retention, engagement and revenue.
These numbers will lower the risk of investing by showing that there’s a market for your product and that your product is competitive.
If your startup is at a very early stage and you don’t have these numbers yet, there’s other traction to look for. Focus on proving the concept and show that you and your team have what it takes to make the business a profitable reality.
Present major milestones you have reached and how you will reach even more of them. Do you have an MVP? Signups from early adopters? Have you made key hires? Or secured additional funding? Although still risky, presenting these things well will lower the risks of investing in your business case.
From traction to future
When you’ve presented your current numbers and traction, it’s time to project the future. As best as you can, present your current financial situation and the forecasts for the next three years. The important thing here is to show that you have a good sense of your financial situation and the future of it.
Present numbers such as how much you burn, how much you earn, when you expect to break even, how long your runway is and how that changes, if you get the investment you're about to ask for. Your forecasts should be believable (not so incredible they are unlikely) and show that you expect a reasonable cash flow over time.
Present your team of execution superheroes
The only way to lower execution risks is to present a team that are both motivated, skilled and hard-working enough to get things done. So naturally, your pitch should include a convincing presentation of your squad of super heroes, including their roles, responsibilities, skills and main experience.
For the young founder, who set out to change her industry, setting the right team was a main challenge for getting funded. In fact, the lack of a technical co-founder was the very reason her first pitch didn’t put money in her bank account.
Setting the right team is another story (one that we’ve actually already written: Hiring for skills will kill your startup).
We’ll tell you this much: You need people on your team who truly believe in your vision, who are prepared to do the work and who compliment your skill set - not people who look like you.
Need help with your financial forecasts? Cuttles makes it simple to do budgets and forecasts.
Sign up right here and get started 🐙
Know what you are asking
You are almost there. Now it’s time to get what you came for. The cash.
If there’s one thing that can punch a big fat hole in the excitement balloon you just spent 20 minutes blowing up, it’s not being specific about what you’re asking. So don’t go sloppy on us now.
In reality, too many founders just give investors the ballpark when asked how much money they need. This happens for one of two reasons: Either they are afraid to ask for too much - and not getting anything at all. Or they are afraid to ask for too little - and not getting as much as they could have.
But just throwing a random-ish number out there gives the wrong impression. It shows a founder, who doesn’t have a clear picture of the financial situation or what needs to be done to scale the startup properly. Worst case, you will come off as too lazy to bother making the calculations - and no one wants to invest in laziness.
On the other hand, knowing exactly how much money you need shows business skills, a sense of realism and ambition. So… How much exactly do you need? Ask for that.
Finishing touches ✨
A great pitch has some of everything. It realistically skyrockets potential ROI and lowers any risk of investing by presenting your idea and traction in a relatable, exciting and, air-tightly structured story - and it’s delivered with the confidence, ambition and communication skills of a true CEO.
This is a lot to ask of anyone. Which is why more than anything, becoming great at pitching takes practice. Prepare for shut doors, prepare for no’s, prepare for frustration, prepare to get back up and prepare to do everything again. And each time, find out how you can do better.
That’s what Melanie Perkins did. She is the young woman whose story we told throughout this course. Eventually, she got there. In fact, she went from endless numbers of pitches to building a unicorn at the age of 30. Today, Canva is worth 3.2 billion dollars and they’ve only just begun scratching the surface of her vision to change the industry.
So go on, start pitching your story. You will get there. Eventually.
Useful tools for creating great looking pitch decks
Canva is an online design tool that enables anyone to do beautiful graphic design in a matter of minutes. Design anything. Publish anywhere.
Want your presentations to be awesome and professional at the same time? Slidebean has more than a hundred presentation templates for small businesses and startups.