Pitching your startup to investors is a crucial skill for any entrepreneur. But not all investors are the same, and neither are the stages of funding. How do you tailor your pitch to different types of investors and stages of funding? Here are some tips to help you craft a compelling and relevant pitch for your audience.
Before you pitch, do your research on the investors you are targeting. What are their backgrounds, interests, goals, and criteria? What are their investment thesis, focus, and portfolio? How do they evaluate startups and make decisions? Knowing your audience will help you tailor your pitch to their needs, expectations, and preferences. You can also use this information to build rapport, credibility, and trust with the investors.
When Dropbox was in its early stages, seeking investment for growth, Drew Houston tailored his pitch deck differently: ?? Seed Stage - Y Combinator: Houston highlighted the solution's scalability and how it resonated with users, impressing Paul Graham and leading to an initial investment. ?? ?? Series A: Dropbox's go-to solution for file storage and sharing impressed Sequoia, which invested in firms with the potential to dominate a market niche. ?? ?? Later rounds: The focus shifted to market penetration, revenue models, partnerships, and competitive landscape. ?? When tailoring your pitch, understand investor bias ??, how your firm aligns with macro trends ??, and how you want to build investor relationships post-investment.????
Different stages of funding require different types of pitches. In general, the earlier the stage, the more you need to focus on the problem, the solution, and the market opportunity. The later the stage, the more you need to focus on the traction, the metrics, and the growth strategy. You also need to adjust your ask, your valuation, and your exit plan according to the stage. For example, at the seed stage, you might ask for $500,000 to build a minimum viable product (MVP) and validate your assumptions. At the Series A stage, you might ask for $5 million to scale your product and acquire customers.
1?? When Slack in 2009 raised $1.5 mn under the name Tiny Speck for a game project ??, the funding was about the vision ?? and TAM ??. 2?? When the gaming project was unviable, they started developing a communication tool ??? and renamed it Slack. 3?? In 2010, they raised Series A funding for $5 mn ?? to refine the product and start acquiring customers ????????. 4?? For later rounds, Series B and beyond, their focus shifted towards growth strategy ??, global expansion ??, and measurable metrics ??. In their Series E, they raised $250 mn ??. Early-stage VCs focus on the founder ?? while late-stage focus on unit economics ??, revenues ??, and growth metrics ??. Valuation changes from art ?? to science ?? from early to late stage startup.
Your value proposition is the core of your pitch. It is what makes your startup unique, desirable, and defensible. It is what convinces investors that you have a product-market fit, a competitive advantage, and a large potential. To tailor your value proposition, you need to understand your customer segments, their pain points, and their alternatives. You also need to communicate how your solution solves their problems, delivers benefits, and creates value. You need to show evidence of your value proposition, such as customer feedback, testimonials, or case studies.
?? The value proposition is the core of your pitch deck. Spotify ?? identified a pain point - illegal downloading ???? and the lack of an affordable, legal, and easy way to access various music ??. They offered a legal way to access music through streaming ??. Users could listen to music for free with ads ?? or subscribe to a premium ad-free version ??. This unique and defensible model ?? solved real problems for music lovers ???? and provided value for free and paid subscribers ??. They communicated this proposition effectively through their marketing ?? and app user experience ??. When you build a value proposition, understand the market ??, and iterate your offering to align with your business model ?? and revenue streams ??.
Investors are not only looking for facts and figures. They are also looking for stories that capture their attention, emotions, and imagination. Stories help you connect with investors, convey your passion and vision, and illustrate your journey and milestones. To tailor your story, you need to craft a narrative that resonates with your audience, showcases your team and culture, and demonstrates your impact and potential. You also need to use simple, clear, and engaging language, visuals, and examples.
?? No one can embody storytelling better than Airbnb. When Brian Chesky pitched his idea, he didn't just talk about a platform for booking spaces; he narrated a story ?? of belonging, community, and unique travel experiences. He shared his struggle ?? of being unable to pay rent, leading to renting air mattresses in their living room. This personal touch ?? helped investors connect with the concept on an emotional level ??. ?? I advise founders to get customer testimonial videos with an authentic storytelling framework. Real voices and real experiences can make your pitch stand out. ?? Storytelling is not just an art but a strategic tool ??? that can make the difference between a missed opportunity ? and securing investment ??
No matter how well you pitch, you will always face questions from investors. Questions are a sign of interest and curiosity, but also of skepticism and uncertainty. To tailor your pitch, you need to anticipate the most common and relevant questions that investors might ask, and prepare clear and concise answers. You also need to be ready to handle objections, challenges, and feedback. You need to show confidence, honesty, and humility, and avoid defensive or vague responses.
???? One of my VC friends told me how Zapier dealt skillfully with investor questions. When Wade Foster pitched his automation platform to investors, he knew that questions regarding scalability, competition, and customer acquisition were inevitable. ?? By preparing thoughtful and concise answers in advance, he was able to convey confidence and vision, leading to successful fundraising rounds. ?? In my experience, successful startups do: ?? Role Play to practice and refine their pitch. ?? Bucket Questions to product, market, competition, and financials to create a mental roadmap to guide them during Q&A sessions. ?? Focus on Body Language: Conveying confidence without arrogance is key.
The final tip to tailor your pitch is to practice and refine it. You cannot expect to nail your pitch on the first try. You need to test your pitch with different audiences, such as mentors, peers, customers, or other investors. You need to collect feedback, measure results, and identify areas for improvement. You also need to adapt your pitch to different formats, such as elevator pitches, pitch decks, or demo days. You need to practice your pitch until you can deliver it with clarity, confidence, and enthusiasm.
Drew Houston has shared how prior to his famous pitch to Y Combinator, he spent hours ? honing his presentation. He sought feedback from fellow entrepreneurs ?? and even practiced his pitch on a video camera ?? to analyze and improve his delivery. His relentless dedication ?? paid off, helping him secure funding ?? and eventually growing Dropbox into a multi-billion-dollar company ??. I also advise founders to leverage AI ?? and tech ??? to practice/refine the pitch. Further, my suggestion to founders is to be conscious of time ?; a good pitch isn't just about content; it's also about delivery within a set time frame ??. Practising with time constraints ?? can help you convey the key points ?? without rushing ??♂? or dragging on ??.