You have your slick, edgy business cards with funky job titles. Your business plan is top notch. Your team are looking cool and confident. Your awesome (or so you think) startup pitch deck is ready. You’re standing in front of an audience of investors you aim to captivate.
So far so good? Well, unfortunately it is at this very point where things can often go pear-shaped for even the most promising entrepreneurs and their startups. The challenge, of course, is to make your startup pitch as functional as it is exciting, and as simple as it is clever.
What makes a good startup pitch?
So, what makes some pitches standout against others? What are the dos and don’ts? And what, if any exist, are the secret ingredients to help you mesmerize your audience and get what you’re looking for – a lovely pile of cash.
Foundr recently published an interesting piece on this topic, asking eleven of the best investors and VCs around for their views on what they liked and disliked. While much has been written on this topic, the answers they gave Foundr are quite surprising.
While you may think your core idea is the key, more often than not, that is not the most significant aspect. The majority of the VC’s interviewed said they value the ‘why’, behind an idea. After that, the startup team members in terms of drive, energy and character is the standout vital ingredient.
What do VC’s like and dislike?
So, how do VC’s evaluate a startup idea? What kind of ideas and pitches do they like to see? And perhaps most significantly, what are the biggest mistakes startuppers make with pitches?
Well, both the why and the people behind the startup – but particularly the latter – are things we at Starttech focus on. In fact, we can’t think of a more impactful factor than a team which is clearly talented, driven and passionate.
Let’s have a quick run through the ‘likes’, as it were, based on Foundr’s survey.
- The people: primarily they look at the team behind the idea. VC’s want to see energy and purpose to match a great idea. As David Cohen, Founder and co-CEO, Techstars, revealed, he will even “sometimes just fund a great team before they figure out their specific idea.” Similarly, Parker Thompson, a Partner at Angellist, says:
“I focus on finding exceptional people. In terms of team, you can’t fix this.”
- Be essential, not incremental: ideas which aim to solve real world problems are gold dust.
- Think small: find your niche. VC’s by and large prefer very specific ideas with a view to expanding, versus a ‘big picture’ view which “misses the details”, according to Esther Dyson, Founder, Way to Wellville.
- Talk the talk: yes you need to have a decent startup pitch deck, but how you converse and articulate your idea and solution is of paramount importance. As Mark Solon, Managing Partner at Techstars says:
“I’m far more interested in how obsessed you are with solving a problem and why you think you can solve it…and if there’s one thing I’d like to see more of, it’s conversations instead of startup pitch decks. Powerpoint is a crutch. Just sit and have a conversation with me.”
- Arrogance: try to avoid false confidence. Yes, an ego can be positive, but nobody likes someone that’s all bravado and no substance
- Not knowing your audience: make sure you are pitching to the right investors. i.e. pitching people at the wrong stage, or to people don’t invest in the company’s space. As a founder you need to know the market. Your first strep should be to seek out and talk to other founders before talking to any investors.
- Lack of testing/validation: this is a big one. As Joe Kiely, Head of Startup Founder Evaluations at BlueChilli says,
“the biggest mistake I seeing being made by founders when pitching is creating an MVP, prior to conducting true and thorough validation of the business premise.”
- Mindset: don’t let your mindset get in the way of your success. How can this happen? Joe Caruso, Founder at Caruso Leadership, says:
“When people are more in love with their idea than their market or potential market, they can have too many blind spots.”
Aside from agreeing with many of the “likes” above, our approach and philosophy at Starttech is simple. Be confident yet humble; present a solid team; be ready to keep learning, relentlessly; and, value revenues, growth and (sustainable) profits more than investors’ valuations. Because you should always remember that the requested investment is the medium, not the objective.
In the end…
As Foundr’s article states
“Investors have made it their livelihoods to spot brilliance and poke holes in seemingly airtight plans. Sometimes, your idea isn’t even as important as you might think.”
The most important conclusion to draw from all of this is why this topic is so important. Put simply, it’s important as outside funding is an absolute necessity (in most cases) for startups to achieve growth and scale. And in some cases just to get off the ground. Personal savings can only get you so far.
Still, even if you don’t need funding, your startup pitch represents the confirmation of your idea to yourself. More than that, you still have a vital audience to prove your idea and your business’s worth to. Who? Your customers.