There is no doubt that any successful sale depends on the product’s quality. Nevertheless the success of a start-up often depends on its “pitch” – presenting the project to an investor, potential buyer, or strategic partner.
The presentation varies depending on the audience you are addressing. There is a big difference between a performance on stage in front of an audience and an “elevator pitch”, which is a short pitch to the person you were able to catch on the periphery of a conference. Usually you only have 20-30 seconds to pique the interest an investor and about two minutes to tell them a bit about yourself and the project. Of course, in a private session, the situation will be completely different; you can fully disclose all the details of your project. Nevertheless, in all three cases, the pitch’s main task is the same: to get noticed and receive attention from investors, and most importantly, to ensure that the potential “buyer” – the investor – wants to learn more about the product and to continue the dialogue.
First things first
During the first encounter, you do not have to attack the investor and flood him with information. If you are at a conference or meeting designed to establish business relationships, it is likely that the investor only has a few minutes at most. You do not have to lock up an agreement then and there; the aim is to exchange details and to agree to the continuation of the discussion in order to coordinate another meeting.
Your main task at this point is to leave a good impression and generate interest from the investor to continue the dialogue. Tell potential investors a few words about yourself and what you do. Do not forget to say exactly what you need and what you expect from the engagement.
Utilize time efficiently
Have you just described all the benefits of your product to an investor and your time is already up? Of course you did not get to the slide with the numbers that is so important. This is a common mistake that is very easy to make, no matter where and how you present the project.
If you do the “elevator pitch” at a conference, you should remember that you have only 20-30 seconds to grab the investor’s attention and about 2 minutes to get his business card and schedule another meeting. It is not necessary to delay the investor with a long story about your technology and product.
In the preparation process, determine how much time you have, prepare a script and practice the presentation to be sure that you meet the time limit. Your main task is to stand out from the crowd of other developers. The clearer your startup presentation, the more likely you are to attract attention. But do not overdo it – it is doubtful that doing something too dramatic will help your cause.
In any personal meeting with an investor it is advisable to ask in advance how much time they have. It is important to be prepared to improvise, be careful not to spend too long on your background and leave time for questions and recommendations.
Take into account the nature of the investor
Every meeting with an investor is different and unique, since each investor is a different person who sees things a bit differently, from their own perspective. The main advice here is to prepare in advance for the meeting, to study what you can find from your sources of information about each investor you meet – and to try to match the message. Visit the site of the fund or investor, find out where they invest (geographically, interests, preferred stage of investment in start-up life etc.), with which partners and management they have already met, what the nature and interests of the investor are. If possible, try to talk to the founders of the companies in which the fund has already invested – so you can get valuable information about the priorities of the fund or investor from the venture that has already completed the journey you are beginning.
During the presentation of the venture to an investor or group of investors, remember to use professional terms with caution and sparingly. Most of the audience will not understand them. Do not go into details and nuances; leave them for later for those who are involved with the idea, and are looking for a separate session. It is much more important to convey to the investing audience why this project deserves another meeting (a great idea that can affect the market or change the rules of the game, a unique team, a current success, etc.).
As an attendee of many investment meetings, from the sidelines it is very sad to see a person speak enthusiastically about their project and no one asked a question. This is a bad sign, which means that none of the investors understood exactly what the project is about. Remember that the purpose of the presentation is to convey the idea and involve the audience. Everyone likes to talk about their innovative product, but they often forget to explain if it has a market and if there is a real need for it.
Remember the purpose of your Pitch
Many entrepreneurs believe that the purpose of a pitch is to get positive feedback that their project or product is good. You should understand that this is unrealistic in a short presentation, especially on stage, because investors do not usually have the ability or time to understand the project in depth at this point. Investment decisions are not made quickly, especially after the first meeting, so the purpose of the pitch is to attract interest and especially to ensure that there will be another meeting, and continuous discussion until a deal is made. Each session brings you closer to the ultimate goal of making an investment through the gradual construction of trust and working relationships.
Practice and refine
A bad presentation can kill even the best idea. Every show is good when it has brilliant moments, and humor is good only if you know how to joke. The dynamics of the presentation itself are very important, the skill of communication and the ability to “shake” the audience with voice, energy & charisma – all this is achieved through practice and hard work. Although many people think that it depends solely on whether one has the talent or not, the truth is that this skill is one you can acquire and improve – with the correct intentions. In preparation for the meeting you can watch Steve Jobs’s presentation or take some lessons on the subject.
Often good start-ups do not attract enough attention, because those who present them, do not know how to present or the presentation itself is not interesting. Find your knack and use every opportunity to improve your performance. Repetition and preparation are 100% guarantors of success.
For the investor, you & the team are the main asset of your start-up
For investors, the team is one of the most important criteria for deciding whether to invest in a project or not. Naturally, a startup product can change, but the founding team or the person behind the venture will probably not. It is important that all the key people who are essential to the success of the project are present at meetings with investors. Each one will introduce themselves at the beginning of the meeting and will briefly describe their role in the start-up, and their experience relevant to their field of work. Be sure to stay professional and relevant. If you’ve come to a meeting alone, tell the investors about the people you work with and what you have in common. Each of you is unique, and together you are the main asset of the start-up. Do not miss the chance to present the team in a positive light. The strong bond between you will assure the investor that the chance of future personnel reshuffle is small. For example, if the founding team consists of childhood friends, or members of a military unit, this is an important point to note. The closer the bond between your team appears, the more likely your investor is to view your team as a unit as opposed to a collection of people.
Think about the impression you want to make
Investors mainly invest their money in people and only then in the product; never forget this. So, a lot depends on the impression you leave in the first meeting.
It may seem obvious, but sometimes not being careful about the simplest things can cause damage; for example, failure to comply with basic etiquette. Why create communication difficulties if you can avoid it?
- Punctuality: Nothing spoils the mood like being late for a meeting.
- Dress code: It is recommended to dress formally and according for the type of meeting. To dress properly, you need to know where and with whom you are meeting. Try not to overdo it in an effort to attract attention.
- Ability to listen and not to interrupt: Often, when you try to convince someone of something, you forget to listen, and miss the purpose of the meeting. If the investor is talking, stop before you interrupt them and do not go on the defensive if they ask questions. It is important to know how to listen and respect those you talk to. You can and should be sure of yourself and your understanding of your field, but if you leave the impression of someone who does not know how to listen and a person who is unpleasant to communicate with – nothing will come out of the meeting and you have wasted your time.
In general, venture capital investments are a very personal matter and therefore the most important thing is to build a reputation of a person who can be trusted and is pleasant to work with. Think about it, would you be willing to give money to a person you do not like? It wouldn’t matter what they promise you. The younger the start-up, the greater the weight of the team and the entrepreneur, and the lower the importance of the business component (the greater uncertainty). Personal charm – this is one of the main elements of success.
Be an expert and be ready for dialogue
You will see that you understand the domain better than the investor, or at least at the same level as they do. Be prepared for the fact that the investor has already seen a lot of projects in your area, especially if you have approached the right investor. If you do not know the answer to a question, thank the investor for the query and ensure them that you will come back to them with an answer after the meeting. The worst thing to do is to make something up (if you end up in this situation, then the investor probably knows about the subject); if you tell lies, trust will be lost forever.
Do not try to make the entire meeting a slideshow and monologue, give the investor the opportunity to ask questions and share ideas. The more interactive the meeting, the more likely it is that you will meet again.
Do not ask about the money
Do you know anyone who likes being asked for money? There is no need to talk about the money before the investor brings up the subject, give them the opportunity to initiate the question. If the investor decides that the project is interesting, they will ask how much investment you are looking for and why. It is important to show that you understand how much money you need and for what purpose; the budget should be clear and based on your start-up’s business plan .
Agree on the following steps with the investor
Finally, it is important to end the session properly. Ideally, the outcome of the meeting should be agreeing on a date for the next meeting, or some practical steps that will allow the investor to get to know your startup better. If the investor expressed intention to invest, it is advisable to talk immediately about the necessary steps to ensure that the transaction will take place, understand how the investment is going to work and how long the process should take.
You must understand that one good meeting is not enough to secure the investment. It usually takes four or five meetings just for the investor to makes a decision to invest, and much more time to reach an agreement on all the details of the deal. It is therefore important to be patient, to be prepared for gradual progress and to maintain alternatives in case of withdrawal.