Is Pitching for Scaleups different to Pitching for Startups?

Recently I've been coaching teams who are pitching for investments of more than Fifty Million Euros. This is a different pitch to the usual startups, looking to raise seed money and Series A. This is the world of the Scaleup.

Here are the biggest differences (and at the end of this article, I'll tell you the biggest similarity) between a startup and scaleup pitch.

(And you can get the free One-Pager, with no signup required, at best3minutes.com/pitching-for-scaleups)

When you pitch to investors as an early stage startup, they are looking for proof that your idea has a possibility to get off the ground. The problem is worth fixing; you have executed to create a product that works reasonably well; you've engaged with customers to learn how they respond to your MVP; and you've got some first signs of traction.

Most of all, they are looking to see if you as a founder and the team you are putting together are the right people to make it happen.

This means that passion is as important as proof. As you have limited proof, you need to fill the gap with passion and certainty.

As a scale-up pitching for a number of millions, the focus shifts much more to rational facts and metrics. In the words of Manfred Krikke of HPE Capital, you're proving you have;

A High Margin, High Recurring, High Growing business.

This means the focus is on data. Market, Traction, User/Revenue Growth, User Churn, Return Users, Cost of Acquisition (CAC), Margin... These numbers all need clarity and focus.

Passion is still important and you need to appeal to the audience as a person. Nevertheless, the focus is on your professionalism and the opportunity, rather than the classic, 'Passion in thy eyes of the entrepreneur.'

When I worked as a Country Director at Canon, suppliers would come in and pitch their services. Often they spent 10 minutes at the beginning of the presentation talking about how great they were, I would think, Fine - but what can you do for me?

Therefore I recommend early stage startups to tell about the team only after they have shown they know how to solve a big problem and execute, as well as engage with customers, gained traction, have clarity on what it will take to grow - in fact, once they've shown what they can do.

Scaleups usually have stronger, more experienced teams. Therefore I advise telling the problem you solve, a few of the strongest and most relevant metrics achieved, and then getting into the team. Who is in the team and the experience they bring can steer the way the investors read the data, and tell them a lot about your ability to grow from your current level.

Market size matters

With early stage Startups I usually steer away from the classic market data. The parking market is worth 50 Billion. Investors want to know there is an opportunity, but market sizes for Startups with no or limited traction can be almost meaningless. What matters is whether you can execute on an idea, and connect with customers to learn and grow.

This is directly the opposite as a Scaleup. If you have ambitions to grow from €50Million to €1Billion, the market size and development is critical. Showing where you want to play, how big that sector is, where it can grow, and how you will lead that sector of the market will have a big influence on final decisions.

Dominance is the key for potential €Billion+ companies, and a clear understanding and plan for how to get there matters. Once again, Manfred Krikke puts it succinctly. You need to show you have;

A unique, highly differentiated, strongly defensible Business Model

Demonstrating your unique way of bringing customers in and keeping them, which is steps ahead of current incumbents and competitors will build your story. Prove you know the competitive landscape, and move onto why you will win.

Acquiring a competitor is not out of the question, as a part of a bigger strategy. If you already have significant traction and are offering something unique to the market, acquiring a smaller player could give you access to a new market or penetration into a key territory.

Note: M&A on its own is not a strategy! But as part of a grander picture, with a compelling platform-to-scale logic, it can work.

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The usual early stage startup pitch is three minutes, and you'll be pitching in amongst a range of other startups at an event or a Demo Day. If you get through the door of the investor, your first meeting will be a maximum of one hour.

As a Scaleup, investors will come to the meeting because they have done their homework and know that you have a potentially big concept. They are prepared to hear your story, and that means you'll get a two hour meeting. You'll also get more time to tell the story: 20-30 minutes or even longer.

This doesn't mean the principles of a short pitch go out the window! Get to the point, have a great opening, be clear on the problem you're solving, don't over-explain (Power of Three!) have a strong closing with a clear call to action, be thoroughly prepared and know what you are going to say in advance. All of this matters. Nevertheless, time is less of a pressure.

To sum it up, here's a rough guideline on how to build it;

1. Introduction: 10 minutes Pain, brief explanation of product, a taste of metrics, team
2. Body of the pitch: 10-15 minutes. More detail of Product, Business Model, Market, Competition, Traction and Growth
3. Ambition for the future: 5-10 minutes, what you need the money for and what milestones that will help you reach, vision for the future

And here's the one thing that never changes, whether you are a Startup, Scaleup, an Intrapreneur, a Product Manager in a large corporate or a Solopreneur starting for yourself.

The Pitch needs a combination of Rational and Non-Rational.

Sure, if you are a Scaleup you have more rational facts and proof to share than an early stage team. Nevertheless, making the problem human - describing actual human experience of current insufficient solutions - can help. Telling why you are committed to solving the problem always matters. Sharing a warm how-the-founders-met story can bring a smile, and anything that makes them laugh is good.

Don't forget - Investors are people too :-) They also respond to a great story, even when you get further down the line and need to deliver numbers and proof.

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David Beckett is an International Pitch Coach, who has trained Startups, Scaleups and large corporates in 27 countries. He is the author of Pitch To Win, and the creator of The Pitch Canvas?. Get free pitch tools at best3minutes.com/free.