The 3 T’s for Investor Presentations and Startup Elevator Pitches

What are investors looking for in a pitch deck presentation or elevator pitch?

The shortest answer, and one of my favorites, was first shared with me by former VC, Alex Osadzinski:?Team, Technology, Traction.

Address these three items early and often in your investor presentation (and elevator pitch) to capture investors’ attention and improve your chances of getting funded.

Let’s double-click on each of these three investor hot buttons.

1. TEAM

Does the team include a solid mix of relevant business, domain, technology, and startup expertise and experience? Does the team have a business leader who owns the business vision, and ensures team goals and execution remain aligned to this vision to ensure desired outcomes?

Ditto a technology leader who owns the product/service vision and roadmap, and knows how to translate the business vision into a robust, scalable product or service?

A marketing leader who knows how to correctly position the product value proposition, build awareness and demand across the ecosystem of potential prospects and influencers, and generate sufficient prospects/leads for the sales team at a reasonable cost.

A sales leader who knows how to build and lead a sales team that delivers the marketing story to prospects and converts them quickly and efficiently to new customers.

A business development leader who can identify and build an ecosystem of channel partners that supports and amplifies the efforts of the sales team.

And a customer service leader who knows how to manage customer satisfaction and retain customers in the face of relentless new feature requests and defect reports.

How well does your team understand its target market and customers? And the technology you plan to use to build your solution? For example, if you’re building a cloud-based platform for financial services delivery, does the team have deep expertise in cloud technology and the financial services industry?

If you’re looking for early funding, does the team have prior experience scaling startups from scratch, taking an interesting idea from concept to MVP to launch to scale? If your 3-year goal is to scale customers from 0 to 10,000, and revenue from $0 to $50M, does each member of your team have that experience?

The bottom line, has the team “done it before”, and done it well? While few teams will ever get to 100% yes, the closer you get the better.

2. TECHNOLOGY

Does your technology product or service address a substantial and growing market? Does it solve an important/urgent problem for your customers? Is it a “must-have” or a “nice-to-have” product? What are customers willing to pay for your product, and what is their preferred pricing model?

Is your product materially and sustainably better than current/potential products used by your target customers? Specifically, what are your top 3 advantages over incumbent product providers? Ditto new product providers? Are those advantages sustainable? Do you have a significant time to market lead over competitors that might build similar products? If those competitors already exist, how will you beat them now and in the future?

Do you have any current or pending patents that cover important aspects of your product and will make it harder for competitors to deliver similar products? Are there any other barriers to entry that might dissuade competitors from entering your space?

What is the customer ROI for your product? Does your product represent an ongoing expense or can it drive incremental profit for your customers? Is your product an operating expense or cost of revenue? Where is your product currently? Concept stage or MVP or launched? Can you demo it? Can you provide customer case studies?

3. TRACTION

I often say that “traction speaks louder than words.” Traction means you are selling your product and growing your customers, partners, and revenue. It means “the dogs are eating the dog food.”

When comparing investment opportunities, investors are looking for?maximum upside with minimal risk. The upside is driven, short term, by the spread between your current valuation and your likely valuation, on a revenue multiple basis, if you hit your 3-year financial projects.

Risks include:

1) Market risk — There is no significant market or demand for your product;

2) Product risk — Your product is not competitive, so nobody will buy it; and

3) Execution risk — Your team lacks the experience and expertise required to translate a competitive product, targeting a substantial market, into a rapidly-growing, highly scalable, nicely profitable business.

Traction helps to mitigate investor concerns regarding market, product and execution risks. If you are generating sales then clearly there is a market for your product, your product is competitive, and you know how to reach your customers and sell your product The only remaining questions are can you scale your new customer acquisition efforts while retaining existing customers and can you continue to innovate your product in order to remain competitive.

Traction is measured using key metrics or KPIs. These are usually related to customer acquisition, engagement, and retention, plus obvious financial metrics. For a SaaS company, these might include: Customers, Daily Monthly Users (DMUs), Daily Active Users (DAUs), Average Time per Session, Retention Rate, Up-Sell Rates, Cross-Sell Rates, Customer Satisfaction measured using Net Promotor Score (NPS) plus, of course, Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR) and margin.

On the marketing front, Customer Acquisition Cost (CAC) is a key traction metric and should ideally be less than 35% of your Lifetime Value of Customer (LTV) to demonstrate you can acquire customers profitably at a “reasonable cost”. Similarly, for the marketing folks, Return on Ad Spend (ROAS) is an important measure. Higher ROAS means the marketing team is generating more leads (and sales) per marketing budget dollar.

So there you have it. The 3 T’s for investor presentations and elevator pitches: Team. Technology. Traction. Hit these early and often to hold investor’s attention and improve your chances of getting funded.

I hope you found this interesting. If I missed anything, please let me know with a comment below.

I’m currently available to advise companies that need help with their investor presentation. Angel rounds, early stage, late-stage, or IPO, the principles driving content and structure remain the same. If you need my help, message me here on LinkedIn. More info @?https://pitchdeckcoach.com/