Pitch Like A Pro: A Founder's Guide to Pitching to Investors
Osita James
Managing Partner @BlackCrest Law I TEDx Speaker I Business Coach | Chevening Scholar '22 I Human
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Building Digital Product (BDP) by Osita is a monthly newsletter that supports founders, investors, and startup enthusiasts with insights and principles on how to build better products and startups.
This is my 26th edition and ninth edition for the year.
BDP's theme for 2024 is "Resilience."
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Today's edition will explore the strategies for pitching to investors and business prospective stakeholders with an emphasis on what makes a good pitch, what makes ideas stand out and how to manage communicating with multiple investors.
Communication is your ticket to success if you pay attention and learn to do it effectively. — Theo Gold.
Introduction
A pitch is a short precise way of communicating the value of a business, project, story or initiative. A pitch by its very nature is short, explains the key details of the subject and convinces the receiver to buy in. This edition will focus on pitches for startup founders.
A good pitch usually has a target audience in mind and communicates the value of the business and the value for the target audience.
According to the Harvard Business Review on what makes a good pitch, they identify the following factors:
Startups who want to stand out to investors and stakeholders with their pitch have to work on making their pitch short, interesting and engaging every single time.
I will discuss in the rest of the segments why pitching matters for founders, using pitch decks effectively, principles of effective pitching, strategies for pitching to investors and Founder Pro tips while pitching. I will conclude with how understanding the principles of pitching and stakeholder perspective can make a world of difference in pitching outcomes for founders all over the world.
Why Pitching Matters?
Pitching matters because the investors and prospective stakeholders have limited time to do their work. To get them to pay attention to your idea or business, you need to present it in a way that is simple to follow and easy to decide on.
In addition to the limited time the investors have on average, with the advancement of digital technology, the human attention span is reducing.
According to the American Psychology Association,
As far back as 2004, the average attention span on any screen was found to be two and a half minutes on average.
Some reports place the adult human attention span of 2024 at 8.25 seconds.
Investors and prospective stakeholders are also human and would likely have a low attention span like everyone else.
This means that pitches that are shorter and more engaging are likely to see more positive outcomes than those that do not.
According to DocSend in their 2024 report:
The average time VCs spent reviewing decks remained unchanged at 2 minutes, 30 seconds.
While I was building Surepayy, we used DocSend to create a link to our pitch deck. Everytime we got a warm intro to a VC, they ended up spending 40 seconds to 60 seconds reveiwing our deck. And you guessed right, they never got back to us.
I and my team thought about it, and read through some reports on what VCs were looking out for. We realised that the experience of the founders mattered more than the products and business model. We updated our pitch deck and put our team profile first. The next time we checked, the VC review time had increased to 2 minutes plus.
There are several ways you can pitch your business idea to a prospective stakeholder or investor and they include:
Using Pitch Decks
A Pitch Deck is a summary of your startup's market size, problem of interest, proposed solution, business revenue model, distribution and current traction. It is usually 10 - 20 slides and very easy to read.
The pitch outcome for a startup founder is ideally two things:
The pitch should be structured to optimize the pitch outcome.
This means the founder should research the VC to understand their investment thesis, investment verticals and portfolio companies to get a sense of investment fit even before sending out their decks to such VCs or investors.
Good pitch decks should include the following headings:
Examples of good pitch decks are those of Airbnb, Buffer, Lyft, Uber, Dropbox and Tesla.
Using a One-page Business Summary
In some instances, the investor or proposed stakeholder may not request a pitch deck. They may request a one-page summary of the startup. This may be the case when you are applying to an incubator or accelerator that needs just a few details to confirm their interest in working with your team.
You can think of this one-pager as a one-page summary of your pitch deck. It should contain the following:
You have to optimize your content to manage the space. It is advisable to use design platforms like Canva to create the one-pager as a design rather than using word processing tools like MS Word, WPS, Google Docs and others.
Cold Mails
VCs and busy Angels will hardly look at a pitch deck from a startup they have no affiliation with either through a mutual third party or mutual organization. This is why a warm introduction is strongly advised.
In situations when you don't know the VC or stakeholder, a way you can reach out is by sending a cold mail. This cold mail when done right can be an ice breaker that piques the interest of your target stakeholder, who would then suggest a meeting or a coffee meet-up to discuss your business further.
A cold mail should not be more than 200 words in total. It should also not contain more than three key paragraphs outside the salutations.
The subject line should not be salesy. It should not claim that you are building the next Tesla or Facebook. These companies have been around for decades and no one has built anything comparable. They would see through your bloated self-importance and not open your email. Your one line should include a strong signal to the VC or investor. It could be YC (Y Combinator) affiliated, Ex Amazon or affiliation with a top company whose past employees have generally built brilliant startups.
In the email body, the first paragraph can be a summary of the problem and your proposed solution. The second paragraph should be bullet points of your traction or track record. Things like 40% Month-on-Month growth can make you stand out. If you have secured a lead investor you can include this. If you have been accepted into a top accelerator like YC, Techstars or Startup 500, please make sure you include it.
If you want to read a more detailed strategy for cold emailing, you can read it here, for fundraising strategy and tools you can read up here.
Principles of Effective Pitching?
Pitching is a form of communication. And like every skill can be learnt through study and consistent practice. The principles of effective pitching are also intrinsically linked to the core principle of business communication. Business communication is comprised of arguments in favour of actions beneficial to the proposing business and listening audience. Aristotle comes to the rescue through his work in Rhetoric where he describes persuasive speeches as comprising three elements: Ethos, Pathos and Logos.
According to Indiana University,
Aristotle taught that a speaker's ability to persuade an audience is based on how well the speaker appeals to that audience in three different areas: logos, ethos, and pathos.
1, Ethos
Ethos is the aspect of your speech that speaks to your credibility as a person. The more established your Ethos is, the less assailable your arguments will be to your listening audience.
If you watch the first 2 minutes of Steve Jobs' presentation, you can see that he talks about Apple's credibility by discussing its past achievements.
For a founder pitching this can be:
2, Pathos
This is another persuasion technique that has to do with emotionally connecting with the audience. There are many ways to do this and they include:
The emotion to be employed depends on the narrative you choose as a founder. You can choose the narrative of someone with personal experience with the problem you are solving. This makes your solution more relatable to your audience.
3, Logos
This is the third in Aristotle's persuasion techniques. It has to do with the logic of the persuasive speech. The speech would not be fully persuading without an underlying logic that convinces the audience that the argument is valid.
You can meet this requirement by providing data and statistics to support your pitch. You can refer to World Bank, IMF and World Economic Forum Data to make a case for your market size. You can also use data from UNICEF, WHO and Red Cross to justify how big a problem in health care currently is.
Founder Pitching Pro Tips?
Founders can follow the following tips to pitch better.
Why should you care what I have to say;
For context, less than 1% of startups raise up to $50k in Nigeria.
The tips are as follows:
1, Tell a Story
Founders should strive to tell a story that resonates with their audience related to their startup ideas. The more personal the story is, the better. A founder building a fintech for savings that ties his motivation to losing a parent over no savings to pay for hospital bills is more likely to resonate than a founder who merely thinks it is the logical thing to do.
2, Emphasize Your Impact
Many VCs are interested in startups and their operations also impact their communities of operations positively. Some VCs have 'impact' as part of their investment thesis. When you pitch, ensure to include the impact you believe that your startup would have on the communities of operation and the environment. If you plan to use green mobility, provide explanations as to how you would achieve it. Remember that the best arguments have evidence. The more evidence you have, the better.
3, Speak to your traction
Many founders don't document their progress. This is a mistake. To meet the Logos criteria of a persuasive pitch, if you don't have current numbers on your current progress, you will struggle to justify why they should trust you to accomplish bigger tractions and numbers.
4, Create a Demo Video
Even if your product is live, create a demo video. Many founders have lost deals simply because when the VC requested their demo, they didn't have it handy. Don't assume you can connect to the internet because you may just have your PC and be pitching to an investor somewhere you can't access the internet. There are currently tools for creating Demo videos for founders, you can take advantage of any of them. You can also just screen record your PC while using the product.
5, Talk about your differentiation
This is a pretty common topic that comes up. So many startups have similar products. A good way to reduce the doubt of an investor regarding your differentiation is by researching their current portfolio companies. That way, you know the portfolio companies that are similar to yours and decide if you still want to pitch them or not. Secondly, the startup founder can provide details of what their team is doing differently. Uber and Lyft are in the same market vertical and yet Lyft was still funded.
BDP Recommended Reading List
The BDP-recommended readings were carefully selected for relevance, insight and ease of reading. If you want to improve your pitching outcomes as a founder, start from here:
Conclusion
Founders have to pitch to stakeholders to get their buy-in to scale their business operations. Pitching has key outcomes which founders can improve by focusing on the VC interest areas, improving their storytelling and overall pitch delivery. Founders who pitch better have overall better pitch outcomes.
In all you do, keep building.
Remember that you only fail when you stop trying.
I am rooting for you.
If you loved this edition, share it with another founder.
Keep building,
Osita of BlackCrest.
PS: I am going to be offering a free 30-minute business strategy and clarity session to 5 founders in Europe (preferably the UK or France) through October.
How to qualify - Repost this newsletter and comment "I am interested" below and I will send you my calendar link to schedule a time.