Mastering Investor Pitches (pt 3)

Written by: Seth Robinson

Every story has a beginning, middle and end.  Put another way, a premise, a conflict, and a resolution. Point is, even with a compelling story you won’t go very far unless the story is easy to follow. Structure lubricates understanding. The best structure I have found for investor pitches is Guy Kawasaki’s 10-20-30 deck.

10-20-30 deck stands for 10 slides, 20 minutes, 30 point font. The ten slides are (1) Title, (2) Problem, (3) Unique Value Proposition, (4) Underlying Magic, (5) Business Model, (6) Go-to-market Plan, (7) Competitors, (8) Team, (9) Projections & Metrics, (10) Status, Accomplishments & Timeline.  

These ten subjects give potential investors a comprehensive view of your company. They cover all the basics investors will need to know before they can consider further engagement. These slides function as the jump off point for additional engagement. The order of these slides isn’t important, and I would highly recommend changing the order to compliment your story.

Twenty minutes means you must be quick and deep. A quick and deep overview is always possible, but not usually easy. Refining your story will take practice, work and feedback from others. For practice, look into your local 1MillionCups groups. Investor pitch feedback is what those groups exist for!

Keep the presentation compelling, not exhaustive. If you do it right, investors will have follow up questions. An absence of questions means an absence of interest. In other words, the story isn’t compelling, or they had trouble following. Investor questions engage potential investors. It draws them into your story. Leave the bulk of your allotted time for their questions. The pitch will hook them; their questions will bring them on board. Do not vary from the 20 minutes! You can keep it to this time.

Thirty point font means don’t use any font less than 30. This is more important than it seems!  Thirty point font forces judicious use of slide space. It helps drive home important points, but keeps you focused on the story. With 30 point font, you can’t just read your slides, because there simply isn’t much text (don’t read slides anyway.  Bad form). Thirty point font complements a quick and deep approach because it doesn’t allow you to be exhaustive. 

Also, investors tend to be older, and they can’t see small font. An unreadable slide is a fast way to lose interest.

The 10-20-30 deck provides the structure that makes your story easy to follow. This has become an industry standard of sorts, and most investors expect this type of presentation. Use this to your advantage. Do not focus on the presentation! Use the presentation to focus on your story. Every slide should be telling the story of your traction, quick and deep, compelling and easy to follow.

Don’t focus on your idea. And don’t lose your story in your story’s structure (or slide deck). A compelling and easy to follow story maximizes investor engagement. Making a case that you are the smartest person in the room is not only problematic and difficult, but even if successful, it won’t have the effect you think it will. Stories do have that effect.

Mastering Investor Pitches (pt 2)

When assessing startups, look at the problem, look at the customer, and look at the market. The combination of those three categories will show you traction. There are many different definitions of traction. Whichever one you use, you’ll be in good shape. For today, we’ll go with: traction–your startup’s evidence of success within the market. 

So let’s talk about what traction looks like in a story: movement. 

Can you move people? Do people care about what you are doing? Do they sign up for more information? Do they gasp and smile once they “get” what you are doing? Do people want to give you money but can’t because you don’t have a product?

The more people you can move, and the more profoundly you can move those people, the more traction you have. This is the evidence investors look for in the context of problem, customer, and market. This is how investors identify opportunities.

Traction is the compelling force behind the story of your venture. In a presentation, the story is how you make traction matter. Here are some real investor stories of companies. Which do you find most compelling? 

“I am not a marketer or sales person, but with the few sales I have achieved, people come back and buy more. One in four customers returns and on average and buys 3x more the second time. Over half of our site’s new visitors come from entering the URL, not from search results or ads. How do they know our URL? People are talking, not searching. The product is sticky. I just need more places to stick it.

“I thought people would use this product because it was convenient.  They tell me they actually buy it to avoid interacting with our competitor!  It turns out our go-to-market strategy allows us to not only avoid 90% of our competitor’s overhead cost, but charge 3x the markup and get 8x more repeat customers.  Help us rescue customers from our competitors!”

“This market doesn’t resist change, it’s simply been skipped over for 30 years.  When we apply basic technology used elsewhere, and apply it to this niche, we see a 100% sales conversion rate even though our price point is 50% higher than their current costs. Without marketing we have more inquiries than we can service.  We don’t need help with sales, we need help with onboarding!”

Each example shows traction. Proof of traction builds investor confidence in the opportunity; the story builds investor confidence in the entrepreneur. Good business models are built on good information, not on good ideas. Investors invest in people, not ideas.

Mastering Investor Pitches (pt 1)

Written By: Seth Robinson

I once heard an experienced, lifelong storyteller take questions during a Q+A session. An audience member asked a technical question about story structure, conflict development, and how to make stories more engaging. The storyteller responded to the question with the following story:

“Bill shot out of bed, heart racing, even before the alarm went off. He listened carefully, but couldn’t figure out what the problem was. In fact, he couldn’t remember listening to the morning  with this intensity before, and the experience unsettled him. Everything seemed quiet. It wasn’t just the absence of sound, but this quiet was so profound that ordinary silence seemed absent as well. Bill got up. His padded slippers seemed to scrape across the ground in a new and altogether sickening fashion. The soft swish, swish of his toothbrush echoed cavernously, and by comparison, the crunch of Bill’s breakfast cereal was ear splitting. While he sat, he ate.  While he ate, he thought, uncertain of what to think about. And then, all at once, everything from that morning, and every previous morning came together at once.  In that very moment Bill realized: a story doesn’t need a point to be engaging.”

Presenting a business opportunity to potential investors has more in common with being a good storyteller, that it does about being a good presenter, making a good case, or saying the right thing. Investor presentations by design have a familiar form, but what separates the best presentation from the average ones is the story.  

Every startup has a story, and this story is what carries your opportunity to the hearts and minds of investors better than a presentation of an idea ever could. Don’t present your idea to investors, tell your story. Your story doesn’t need a point, it simply needs to be engaging.

Idea: “The more people use our platform, the more valuable it will be to everyone. If we could get 1% of the market, we would have $100M in revenue.”

Story: “Guys, I’m not totally sure what I’m doing here, but for some reason people keep giving me money and they want to give me even more. You might want to take a look at this.”

See the difference? Which was compelling? Which was engaging? Which demonstrated a conservative plan for achieving impressive returns, and which one actually mattered?

In fact, in pitches ideas don’t matter. Investors looking for an investment, not an idea. And do you know how many good ideas fail, and bad ideas succeed? The first law of analyzing startups is DON’T EVALUATE IDEAS! So, before your next investor pitch, take some time to refine your story.

How to Give the Winning Pitch

Written By: A.J. Rounds

As a member of the founding team at RevRoad, I’ve reviewed hundreds of pitches and learned a few things that may be helpful for you as an entrepreneur. 

Bring Your A Game

When you pitch your company to venture capitalists, investors, or other partners, bring your A game. I’m not just talking about the 10/20/30 rule coined by Guy Kawasaki (although, also extremely helpful). I’m referring to answering crucial questions in your presentation.

Pitching is an art, and there are few who do it well. Out of the entrepreneurs I’ve seen pitch, about 25% present extremely well, while 20% pitch on an average level and give the basics. The remaining 55% need to read this article. 

My goal in writing this is to help you secure the resources and partnerships (in some cases Venture Services) you need to succeed. 

What should you include in your pitch?

Let’s dive in. 

Know your customer

Before you begin building your pitch, answer the following questions.

  • Do you know your audience? 
  • Have you identified your target market by needs, demographics, geography, and ability to pay?

If not, that’s step 1. It is also helpful to understand what their experience level is when it comes to using your product or service. What do they currently say about your company?

Now you are ready to begin constructing your pitch.  

Problem/Solution

Can you explain what you do or offer in one sentence? If not, please practice.

Frame it in terms of the problem your target market has and how you solve it. 

Additionally, ask yourself if your market is big enough. Is your solution good enough? Putting your audience through a long, tedious exercise of trying to understand what your company does, the problem you solve, and how you are different from other options in the market will not help you.

Make it quick, easy, and obvious.

Revenue Model, Projections, Timeline, & Financial Outlook

Remember, often you are pitching to an audience that is financially minded. Be sure to spend time on your business model or revenue model. 

Questions you should answer include: 

  • What is your revenue model? Is the revenue recurring (preferred)? 
  • Do you have multiple streams of revenue? 
  • What is the price point of your product and corresponding profit margins?  
  • What is the lifespan of your product or service? 
  • How have you funded your business to this point? 
  • Who else is on your cap table? 
  • What does an exit look like for you and when?
  • What is your current valuation?
  • Are your financials and projections realistic? 
  • What is the timeline to revenue milestones? 

Traction 

One of the things I expect to hear about when listening to a scalable company pitch is traction achieved.

Maybe that’s a revenue number. Or, if you are pre-revenue, maybe that traction number equates to followers, an email list, or even submitted pre-orders. 

Market Size 

Closely related to traction is your market size. You should also be very familiar with this information.

Please don’t present an unrealistic TAM when pitching your business. I often hear the statement, “If I can just convert 1% of the population of China or the U.S. market, then we will have achieved our goals.” This is an instant turnoff for educated investors or partners.

Talk more about your Serviceable Obtainable Market (SOM) or what portion of the market you can realistically reach.

Defensibility & Competitors

In your pitch, include how your product or service is unique and defensible. Do you have intellectual property or patents filed?

Risks are mitigated when your closest competitor can’t easily copy your value proposition—which brings me to competition.

Who are your competitors? Are they well-funded? Do they have large market share? Where might your product overlap with theirs? There are many templates available that can help you create a competitor analysis report.  

Team

Discuss your team. Who are you? Who are your teammates? Why did you get into this vertical? 

Talk about your successful exit(s) or epic failure(s). Maybe even both. This shows you’re an experienced entrepreneur that understands the roller coaster ride of entrepreneurship. If done right, talking about these items will give you credibility and show your passion for your company. 

If you have an advisory board, which is highly recommended, discuss who those individuals are and the value they bring to the table.  

It’s also helpful to mention who’s working full time in the business and who is not. This is critical. At RevRoad specifically, we seldom work with companies that don’t have at least one founder working full time in the business.

Summary and CTA

Include a concise summary and clear call to action as the last slide of your presentation and boom, you are ready to pitch!

As someone who listens to entrepreneurs pitch for a living, I recommend that you follow these guidelines. Your chances of a successful pitch will skyrocket. 

Whatever the pitch event, be it the annual Entrepreneur Competition hosted by RevRoad, a pitch to become a RevRoad portfolio company, or a community pitch competition like the Silicon Slopes Tech Summit Competition, incorporate these tips and you’ll nail your presentation.

Good luck! 

Applications to join RevRoad close on April 30, 2020.
Apply to RevRoad here
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