Does Your Startup Have Perfect Pitch?
Isadora Teich wrote this article
It’s no secret that successfully operating a startup is a lot of work, uncertainty, and chaos.
Outside of all of the other responsibilities of getting an enterprise off the ground, you have to be ready to secure funding, which is no easy feat. In fact, one large source of funding is venture capital, and it’s not exactly simple for most young startups to get.
Venture capital firms only invest in about 5% of the startups that pitch to them each year.
So, if you want to get funding and support, your startup better have a perfect pitch. Whether you are getting ready to deliver your pitch for the first time, or the 500th, these tips can help you sway investors.
Understand The Current Climate
According to Docsend’s startup index, investors are more active now than ever. It has grown 38% compared to activity around this time last year, and up 71% compared to 2019. More investors are more actively finding startups, which is great news. We are essentially in a startup boom.
However, increased interest in funding startups is being met with an increasing number of startups. The US also has the most startups in the world currently, with over 60,000. Keep in mind that more pop up every day. Roughly, data shows that the 5 most common niches in which startups operate are:
-Life Sciences and Healthcare (6.8%)
-Artificial Intelligence (5.0%)
These areas take up about a quarter of all startups. They are where many of the famous startup unicorn companies emerge and are current favorites for investors. Investors are not favoring these types of startups, and startups in general, for no reason.
Startups account for about 15% of companies in the US, yet they provide about half of all new jobs. They generate income effectively, create jobs, and push society forward.
However, more buzz, more interest, more startups, and more investor interest mean more competition. Investors, on average, spend less than 5 minutes reviewing each pitch, as they have so many.
So, how do you make the most of those precious minutes?
Know Your Numbers, But Also Know Your Story
It is critical that you know your company’s metrics before any investor meetings. If you want to get more in-depth about important metrics that we suggest all startups have a handle on, check out our blog post on the subject.
Essentially, if you show up to any meeting with investors and you can’t answer basic questions and have no idea if your company is actually profitable or not, that is a huge red flag.
Many investors do not necessarily invest based on what a company already is, but on what they think that it can become. If the people running a company have no idea what’s happening within it, why would anyone trust them?
However, while you want to solidly understand some metrics, it is critical that you do not fall into the trap of simply rattling off numbers.
People are ultimately emotional creatures at the end of the day, and we do not make decisions as logically as we like to pretend we do. If you show that you are passionate, have strong branding, and a good story, you will definitely draw more people in.
People are comforted by, crave, and organize and remember information through narratives.
It is how we connect with each other and even more complicated ideas.
Especially if your startup does something that would be difficult for the everyday person to understand, you need to figure out how to describe it in a digestible and quick manner that inspires confidence!
A Pitch Framework To Consider
Ericsson, who operates internal startup accelerator Ericsson ONE, says that they look for specific things in pitches and offers some sobering data relating to why startups often fail.
They say that roughly a third of all startups fail due to a lack of capital or profitability. However, shockingly, 80% of startups fail because they are simply offering a product or service that no one really wants.
That is why they say a successful pitch conveys all of these things:
-Desirability: Prove that what you provide solves a problem and that people truly need and desire it.
-Feasibility: Is the solution that you provide practically and monetarily possible?
-Long-term Viability: Will your solution generate profit in the long term? Do you have a sustainable business model?
Know Who You Are Pitching To
You don’t need every investor to say yes. You just need one to be passionate about what you do and believe in it. While you want to lay the solid groundwork so investors will have confidence in what you do, you also want to connect with them. A strong business is all about strong connections.
Research any firms or individuals that you are meeting with. See what they have invested in in the past and what their interests are. What do they value? Of course, you do not want to go overboard and come across as strange.
However, proving that you are relevant and making a connection could be the difference between getting funding and being forgotten.
It is likely that you will only have a few short minutes to pitch. However, this can vary. Sometimes investors will give you the space to decide on a time limit, and in other cases, they may choose it. Whatever the case, you want to respect their time.
No one wants to sit at a presentation for hours. Formal presentations (especially with powerpoints) are notoriously maligned. You don’t want to bore them with a pitch that is way too long. Even worse, you don’t want to stand in front of other people and read off of slides extensively for any length of time. No one appreciates that.
Use your time smartly. Keep things moving, but don’t rush. If possible, leave time for questions.
Rather than simply ending suddenly, take the opportunity to engage investors. Ask them if they have any questions. This is a great opportunity to show off your passion and expertise.
Also, generally, a longer conversation is necessary if an investor is going to get involved. Take power into your own hands and start that conversation.
Know Your Audience
Sure, you have a great idea or product. You have an incredible solution. But, do you know who needs it? Do you know who you are trying to sell it to? You need to convey that you understand your target market and how to reach them. Here is one place where having concrete data is a necessity.
Don’t just tell investors you have a general audience in mind, show them the research including demographic data and psychographic features. Show them the numbers that back up who this group is, and why targeting them is a smart decision.
Ultimately, you want to get an investor to believe in your mission, business, and overall plan in a snap. This is not as easy as it sounds. Creating the perfect pitch takes work, especially because even the perfect pitch is not perfect in every situation. Consider your time limit and who you are pitching to always.
Hopefully, this post provided some helpful tips to help you nail that pitch! Best of luck!
About ChopDawg.com: Since 2009, we have helped create 350+ next-generation apps for startups, Fortune 500s, growing businesses, and non-profits from around the globe. Think Partner, Not Agency.
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