Pitching angel investors and venture capitalists, whether in person or electronically via pitch deck, is perhaps the most complex piece of marketing you’ll ever do. Your pitch has to be crisp and concise, yet cover nearly every important aspect of your business, and ideally make me beg to give you money!
So here is how to make your pitch deck rock…
Rule #1: Tell me what your company does
This sounds obvious, right? Nevertheless, many entrepreneurs wait until the middle of their pitch deck
to reveal what their company actually does, instead of right up front in the first few sentences.
That’s OK. If you’re pitching me in person, droning on about market size gives me more time to catch
up on email while waiting for your big reveal. If I’m reviewing your pitch deck electronically, you make it easy to put in the kill pile.
Rule #2: Tell me how you make money
Surprisingly, many pitches omit any discussion of revenue model. Are you fee for service, subscription model, straight product sale, advertising based or razor and blades?
If you’re asking me to invest, I need to know the basics of how you’re going to make money. Even if
you don’t have it fully sorted, at least give us your current thinking.
Rule #3: Astound me with your company’s traction
If you have revenue, beta testers, letters of intent, or even just eyeballs, please tell me as quickly as possible. Angel investors and VCs are growth junkies, and there’s nothing sexier to a growth investor than traction.
“But I need to raise money to launch my product!” I hear you say. That’s a classic rookie mistake. You need to start engaging with prospective customers the moment your idea moves beyond the stained cocktail napkin stage.
Customer feedback is hugely important, and with a bit of savvy, you can get your customers to actually pay for your product’s development. That’s one way to know you have product-market fit. In a previous life, my business partner and I launched company this way – and ultimately took it public.
Rule #4: Use simple terms and language
Angel investors are sophisticated, well read and knowledgeable, but we probably aren’t experts in your field. You may have spent the last eight years of your life studying cancer, but we haven’t, so use simple language to describe the problem you’re solving.
You are pitching us to invest in your company, not to help develop your product. So focus your pitch on your business, not product and market details.
Rule #5: No long stories please!
I have a short attention span, and if you tell me a long tale, I’ll get confused and start checking my email. It’s my safe space. If you do tell a story, keep it short and simple – 20 or 30 seconds – leaving plenty of time to discuss your revenue model, competition, and team, the things I really care
I’ve encountered only three great founder-raconteurs in my life and I’ve been blessed to have worked with two of them. The third is Steve Jobs. So unless you’re Steve Jobs, please consider whether your story really is compelling enough to hold my attention.
Rule #6: Tease your product … but don’t demo it
As arms dealer Chevy Chase said after blowing up a general’s jeep in Deal of the Century, “Never underestimate the power of a demonstration.” Showing a screen shot of your app or passing
around your device can go a long way to helping me understand what you do.
At the same time, your pitch deck is not the place for a product demo. By all means do include a
link to a one or two-minute YouTube video or demo on your website, but don’t attempt to demo during a pitch. There will be plenty of time for that later in our due diligence meetings.
Rule #7: Prove your business scales
Investors love businesses where each dollar they put in yields multiple dollars in revenue. The fancy term for this is unit economics.
I want to know how much it costs to acquire a new customer, how much that customer will spend over
their lifetime and how much profit and gross margin you’ll generate from that customer.
One dollar in, ten dollars out! That’s what I want to see.
Rule #8: Prove you can scale your business
Building a company isn’t just about having a great idea. You must execute an aggressive, yet sensible sales and marketing strategy without running out of money in the process.
If you don’t have a sales and marketing processes in place and running, then it’s too early for you to be pitching angel investors. Without regular, repeat customer engagement, you are wasting your time and my money. I need to see customer validation – paying customers, customer trials, beta testers – anything – that demonstrates customer interest.
How are you reaching customers and who on your team is responsible for that? What marketing channels do you use?
Rule #9: Your team is crucial
By team, I mean your co-founders and managers who are driving sales, marketing and product development. What are their backgrounds? What experience do they have?
In my experience, you can’t hire an entrepreneur, so I have to believe you and your team can aggressively grow your business and pivot when obstacles appear. And obstacles will definitely appear.
Angel investors hate investing in one-man bands. We like to see two or three high-quality, complimentary founders. For example, if you’re a tech company, it’s best to have a CEO, a CTO and sales and marketing leaders. If your co-founding team is three engineers, then be prepared to answer the inevitable question who is leading sales and marketing?
Rule #10: Be realistic about your competition
Yes, you do have competition, so embrace it and tell us how you are different and why you will succeed when others before you have failed.
Why exactly are your customers buying your product and not the competitions? In which market
segments do you shine and where do your competitors shine?
Bonus Rule #11: Add something special
Great pitches reveal one or two pieces of information or observations not generally known to the public, revealing why there’s a compelling business opportunity. They provide an “Aha!” moment to the investor.
What that special somethin is, exactly, depends on the individual company. It generally is not some
generally believable market statistic, like “Diabetes costs $86B per year.” Everyone knows it’s a big number so adding precision doesn’t add anything special. Instead, it’s probably something more like, “23% of coin operated laundry machines are running at any one time.”
Bonus Rule #12: Your investment terms must be realistic
Angel investing is a hit record business. I know statistically that one in ten investments is where all the money is made and pays for the other nine that flop. So when I invest, I need to believe you’re at least a 10-bagger and more likely a 20- or 30-bagger.
A reasonable valuation also works to your advantage. When you stumble, and you probably will at
some point, the worst that can happen is being forced to raise money at a lower valuation. You look like damaged goods to new investors and your existing investors will be angry. Neither is good.
Bonus Rule #13: Ask me for help
You can most use my help and my network’s help at your company’s early stage of development.
That’s one of many reasons to consider taking angel investment. You might be afraid of exposing a weakness in your strategy or deficiency in your team, but don’t.
Most angels view your willingness to have honest and frank discussions about your business as a sign of maturity on your part. We like that you’re coachable.