The perfect business pitch is as elusive as perfect pitch in general - but you should always try for it!
First, let's clarify that there are many, many different ways and approaches to pitching a business idea. You might be pitching an idea on TV (Shark Tank anyone?) or on a podcast or to a reporter doing an print/text article. You might be pitching to recruit a co-founder or key employee. Or perhaps to secure a lease for a new office space (yes, you sometimes even have to convince a landlord to let you pay them...).
Many companies focus on pitching investors, which as a venture capitalist I experience daily, and that's certainly an important piece of the puzzle. Let's dissect (I had to lookup how to spell "dissect"...) the VC/investor pitch to gain a better understanding of the "right" way to build one.
Here are the basic elements of a VC/investor pitch (from my perspective):
- Financial model
- Product/market fit
- Pricing validation
- Customer/client definition
- Market definition/overview
- Macro economics
- Go-to Market strategy
- Market focus
- Corporate behavior
- Investment offering
- Equity or debt
- Fundraising roadmap/dilution
- Use of funds
- Focus areas
- Take aways
- Contact information
- Key points for investors
I'll skim through each of these to explain why I want to see the information and why it's in a particular order.
- Concept is critical because I want to immediately identify if the business is something I'm even remotely interested in supporting.
- Team is critical because I'm only going to invest in businesses with solid teams. Team weaknesses are important because it shows me both whether the team is self-aware, and whether they are humble enough to highlight weaknesses. Strengths are obviously nice to know and key reasons to invest.
- Financial models tell me whether the business fits the VC/investor model. Can this business ever return 10x to an investor? I want to see this early in the deck because, again, I don't want to evaluate companies I can't invest in.
- Traction tells me where the company stands in the search for product/market fit and whether they've validated the financial assumptions in the previous slide.
- Customer/client definition helps me understand the company's approach, focused or scattered, and whether the team has analyzed the sales side of the equation.
- Market definition/overview clarifies, for me, the market opportunity. This is particularly important for areas I'm less familiar with, or where the team feels the prevailing understanding is inaccurate (i.e., they've identified a hidden market opportunity).
- Go-to market strategy reiterates the team's approach to business and whether they understand prioritization and how to assess opportunities. Hint - do NOT say you're going to market with multiple approaches at the same time - I'll assume you haven't tested any of them and have no idea what you're doing.
- Competition is actually an ego question. Does the team acknowledge competition and are they humble enough to recognize the threats the company will face? This is almost a gotcha slide and unfortunately it trips up some otherwise strong teams.
- Vision is a chance for the team to dream a bit and lay out the big picture. Will this company be a narrowly focused champion like Apple or a broadly spread Goliath like Microsoft? Are they looking to focus on the US market or do they dream of international expansion? Is the goal to employ thousands and be highly public or stay in the shadows and rake in money? Are the founders going to share wealth with employees and be charitable or keep the profits for themselves and investors?
- Use of funds is a pragmatic question that will either validate the previous statements or undermine the team's validity. Budget allocations are the window into the soul of a company. Align the use of funds with the previous slides or risk looking like a fool.
- Take aways are simply those points you want me to remember. One of those must be your contact information and you should also include your website, social media info, etc. Remember that I'm likely to share this deck with my colleagues, especially if we're looking at making an investment, and you won't necessarily be there to explain the details or hand out business cards.
In terms of the order, I front load the presentation with stuff that's make or break for me. Concept doesn't fit my investment focus - I'll skip the whole presentation. Bad team - I'm not investing. Poor financial projections - very unlikely I'll spend more time on the idea. Once I get past those points I'm starting to dig into the assumptions and proof of viability. I'm also starting to gain an understanding of the pscyhological makeup of the team. Are you too arrogant? Are you oblivious to problems and weaknesses? Are you charitable and giving? Are you data-centric and research-based or intuitive and feelings-based? Do you maintain logical consistency from point to point and slide to slide?
Remember that the pitch won't win you an investment (most likey) but it can lose you an investment. Make it good enough to move on to a discussion and thorough analysis. Make it captivating enough to stand out from a crowd of other good investment opportunities. Make it polished enough to enhance the underlying impression of your company and team as a group of people I want to associate with in the future. Most of all, put effort into the pitch deck and make sure it's constantly evolving to reflect the current realities of your business, the market, and the audience you're addressing.
I'll leave with a referral over to a terrific post by TechStars director Alex Iskold with some other ideas on the "perfect pitch deck".