Mass Challenge

Innovation Blog

Crafting the Pitch: 5 Tips on how to impress the Discerning Investor

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Pitching succinctly and with conviction is of fundamental importance during the inherently murky trials and tribulations of your companys embryonic stage. One of the most useful ways to communicate your product to an audience is to take take a top-down, holistic approach, focusing on the listeners needs rather than the vapid conventions of a rehearsed speech. Time is a serious constraint; discreetly guide the audience through their subconscious due diligence checklists and save the minutiae of your product for Q&A.

Tip 1: Introduce the Rockstar Team

Discuss the team–what are your/their credentials? Do you have any glaring holes which must be filled?

 

  • A well-balanced team is undoubtedly the most important step to a successful startup.  However, a team with a specific expertise and a unilateral focus can sometimes be a hindrance in the eyes of an investor who wants to see the foundation of a business, not simply an idea–leverage the diversity of the teams skill-set.

  • Introducing the team early on is not always conventional but is an easy way to instill confidence in the audience in regard to professional credentials and experience.

 

Tip 2: Product & Consumer Need

 

Being concise with your product description is of utmost importance in transforming investors into believers while also saving time. Paint a clear picture, impress with brevity, and set the hook by highlighting the unprecedented demand for your companys service.

 

  • Does your product attack a common and entrenched pain point? Are you supplanting a specific, existing service or audaciously delving into the unknown? (think Facebook improving on Myspace or Uber creating the rideshare market). Both strategies are great but be clear when framing your product against the backdrop of its potential marketplace.

  • Marginal improvements to existing technology or hypothetical demand for a niche product based on transient consumer trends will often represent red flags for investors. The focus here needs to be on the application of the product, not simply a personal passion for your idea; serve up an excellent thesis on why your product will solve a widespread problem and why there is sufficient market demand to generate long-term value to investors.

 

Tip 3: Target Market

 

Once you have established the projected need for your product you must describe how you came to such conclusions.

 

  • Attempt to quantify the prospective market if you are a first mover or the potential market share you can claim from existing competition.

  • Detailing realistic potential demand for your product is infinitely more important in the long-run than giving overzealous predictions to impress investors at first glance. There is no perfect number for addressable market share, especially for a pre-production company, though one proven method is to use a comparable-sales (of competitors) approach as a frame of reference.

  • Save the juicy details of execution strategy and distribution for the discussion of your business model.

 

Tip 4: Business Model

 

At the heart of a successful company is a sound business model and while addressing this in detail during a short presentation is tricky, it is undoubtedly the most essential aspect of your pitch. Think of it as the hitter batting cleanup (4th in the lineup)–there is an expectation that he will be the offensive catalyst for a winning team.

 

The following talking points are useful to mention and can be applied to both succinctly reiterate prior points and branch off into other key metrics:

  • Vision

  • Value Proposition

  • Addressable Market Projections

  • Differentiation

  • Marketing & Distribution

  • Growth Strategy

  • Recurring Revenue

  • Capital Requirements

  • Exit Strategy

 

Tip 5: Pricing and Revenue Model

 

Now is the chance to harp on important points of your business model that require more detailed explanations, such as how you will monetize your product.  Pricing is a delicate balancing act which pits your desire for making money against the fundamental market forces of supply and demand.

 

  • Understanding the economics behind proper pricing and demand elasticity is essential to growing sales volume without ostracizing price-sensitive customers.

  • If youre already generating revenue, focus on gross margins: are they industry leading? How will you keep them relatively stable as you scale?

  • How is your revenue being earned: is it based on a one-time sale or a recurring revenue stream? Is it subscription based? Recurring licensing fees? Are customers making multiple purchases across your product line or do you expect cannibalization to erode existing sales as you introduce new products?
     

This is only a brief introduction to some of the fundamental metrics which should be included in a well-rounded investor pitch; remember that with any form of public speaking, repetition leads to comfortability, which in turn directly correlates to success. In english, this means your tenth pitch will be exponentially better than your first–that fact is irrefutable, so take advantage of any opportunity to present your startup to the public.

 

Due diligence in the venture industry is the investigation and analysis the investor performs to see if an investment opportunity meets the investors criteria for funding. For angels as well as venture capitalists, the primary objective of due diligence is to mitigate investment risk by gaining an understanding of a company and its business. -Best Practice Guidance for Angel Groups Due Diligence by David Eyler
 

 

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