Jon Maroney and Julianne Brands - February 2019
How to pitch an investor
Venture capitalists love metaphors. And nowhere is this more prevalent than when we talk about a good startup “pitch” – the first meeting with an investor where you get to tell your story.
We like to say things like, a good first meeting is like a good first date. You want to the person you are meeting to remember you and think you are interesting enough to get a second date. No one should be getting married after a first date.
However, one of our favorite metaphors refers to the pitch itself. And, whenever we work with companies on their pitch, we often say…
The best startup pitches are like a four-act play that even Shakespeare would be proud of.
First Act - The Problem (“The Why”)
This is the time to paint the problem that you’re solving. Address the questions of...
- What is the problem in the world that you are solving?
- How big is that problem and is it growing? (ie, market size)
- Who does the problem impact? (ie, target customer)
- And, who else is trying to solve the problem, and why are those solutions failing? (ie. competition and opportunity)
Second Act - The Solution and the Plan (“The What and the How”)
This is the meat of the pitch! This is where you describe what you do and how you’re going to execute (at least, for now, anyway)
- How you are solving the problem you just laid out?
- What is your product?
- What does it do and why it’s better than the other solutions out there? (ie, competitive differentiation)
- Why is it resonating with customers?
o What have you learned so far– customer surveys? revenue? Beta tests? (ie, traction)
- How are you going to get the product into customer’s hands (ie, go-to-market)
- How do you plan to make money, or current hypothesis you’re testing for your business model (business model)
- How much money are you raising? What are the milestones you’ll need to hit to raise your next round? (ie, fundraising plan)
- And if all goes well, where does that get you in 5 years? What’s the big, hairy, long term goal? (Vision)
Third Act - The Team
- Why are you the best people in the world to solve this problem and create this company?
- Who is on the team that’s going to execute on this idea and why are you well positioned? (ie, team)
Final Act - The Goal
This is the peak of your pitch! It’s time to bring it to a conclusion. Discuss…
- When people as great as you (Act 3) have developed a product and plan as strong as yours (Act 2) to target a market opportunity as large as this (Act 1), here is what happens to those companies (ie, the exit). It’s a time to compare your company to something that has done really well and that you are going to be like. Just don’t be the “Uber of xxx”. Your goal is to show that your market is acquisitive – that there are existing companies that buy companies like you are building.
Like any good play, you want your audience to come and see the sequel! You don’t have to go into detail on each aspect of the vision. However, you want to create a clear, concise, and compelling story.
You want the investor you are meeting with to come away saying, “Wow! Interesting team, big opportunity, and seems like a reasonable plan. I’m excited to learn more.” Tada! You got a second date!
And remember, raising money is like courtship – it’s a process that’s building towards a long-term, mutually beneficial relationship filled with ups and downs…and that can be expensive to get out of. Making sure you are on the same page takes some figuring out, and that takes time.
Epiloque: This 4 act play metaphor, like much of Shakespeare’s work, is stolen directly from a panel discussion on investing where it was so eloquently laid out by one of our great collaborators and partners, Peter Horan. Also, like Shakespeare’s work, it was immediately memorable and quickly embraced. Thank you Peter!