What do investors look for in a pitch? Should it be different than your standard sales pitch? What are the tips, tricks and quick wins? Bruno Wattenbergh, Senior Advisor at EY & Academic Director at Solvay Brussels School of Economics and Management, lists out a few key elements to keep in mind. The pitch of your startup in order to raise capital should be well prepared. An overview of the do’s and don’ts for your investors pitch.
Not your average sales pitch
Is a sales pitch that different from a pitch to investors? You ask. Well, yes and no. Naturally, in both pitches you have to find a physical and mental connection with the audience. Content-wise, you address the same, main structure topics: the problem (quantified and tested customer pain), the solution (demonstrating a Return on Investment (ROI)), the business model, and the team (combination of value and affordable risk).
Thus, the starting blocks of both pitches are quite similar. Investors, however, are often not your product’s direct target audience. They’re interested in elements most of your customers don’t value. For example, the milestones and financial information of your business. What’s the margin, sales cycle, Cost of Customer Acquisition (CoCA), Combined Loan to Value ratio (CLTV), etc. of your solution? What’s the cap table, the Monthly Recurring Revenue (MRR), the runways and cash drains, the valorization methods, and possible potential exit?
In short: you’re pitching to investors, not customers. Give them financials and milestones.
1 idea. 1 product. 1 story.
In the short time you’re pitching, try to tell a good story. ’Hook’ your audience from the first second of the pitch. A good story will keep your audience interested until the end. Play on both sides of the brain: use visuals, but back them up with statistics. Images generate visualization and ignite emotion. Your audience will then be triggered to be engaged. Furthermore, emotion decreases critical thinking. Next, as previously mentioned, make sure you back your story with numbers. This shows the investors that you know what you are talking about. Numbers will indicate you have done your homework. In order to optimize your story with emotion and numbers, make sure you don’t overuse generic terms such as ‘many’, ‘a lot of’, ‘few’, etc.
In short: investors will remember you by your interesting story, backed by images and numbers.
What investors really want to hear. 3 dos:
- Consistency. Be consistent all along your pitch. Follow a clear story. A red thread.
- Tests. You are not pitching hope and faith anymore. You have been testing your product’s customer traction, the feasibility and the business model… and it works. This means your project is (close to) risk-free. It’s no longer just an idea. It’s a real business opportunity.
- Scalability. When your project is scalable, the investor can be convinced that, if he/she puts money into it, it will be multiplied in terms of value, without any plateau. Forget the capital intensive model.
What investors really don’t want to hear. 3 don’ts:
- Selflove. Don’t talk too much about yourself, or your product’s specific features instead of focusing on the values. Praise love for your customer instead of singing a hymn about your product or technology.
- Megalomania. Don’t state that, since your market is so big, we’re all going to be very rich when capturing only 1%.
- Naivity. Don’t assume you don’t have any competitors or substitutes. If you’re addressing a serious problem, your potential customers are already searching or using a solution.
In short: Be consistent, show scalability and that you’ve been testing. Be realistic and value-focused.
6 quick wins to keep in mind before, during and after your pitch:
- Connect. Prepare a routine and train yourself to be able to connect with your audience in the first 2 to 6 seconds. Connect on a physical and mental level. Make sure you have this connection every time you pitch.
- Know your audience. Who is sitting in front of you? In what companies have they invested in in the past? What are their sectors of predilection? Do you know their average investment ticket? Stage of their preferred investment? Use popular search engines, social media, even references! Their knowledge about your industry might exceed yours, so you’d better be prepared.
- Slides are not your auto cue. Your content should be complementary to your main communication channels.Your voice is telling a story. Don’t repeat – or worse – blindly read the content on your slides. Your story and your slide-deck are supporting each other. They’re not the same! So, make a clear choice or trade-off.
- Your body. Don’t underestimate your body language. Numerous of academic studies have argued that it has a serious impact on the quality of your pitch. Make sure you often make eye contact, do some moving around, and open your arms. All of this should support your story.
- Observe them. On the other hand, also check their body language! Try to notice when you are losing them or when they don’t understand. Be assertive, the pitch is all about the value you can offer them (whoever they are, investors or customers). Use active listening when they ask questions. Questions are a gift! You can add complementary information and compensate what you have not clearly expressed during your pitch.
- Ask questions yourself. Have a strong and supported opinion. If you don’t ask anything at the end of the pitch… it’s not a pitch! Whoever you are pitching to, even if it’s your father in law at a BBQ, ask something: even if it’s only for €5.000 or an introduction to one of his friends who could be a great customer.
In short: make a connection, know your audience and be assertive!
Ready for your investors pitch?
EYnovation often hosts workshops and bootcamps on the subject of getting investor ready. Discover our events here.
Bruno Wattenbergh, alumnus of Harvard and MIT – current chairman of the EY Belgium Innovation Board and Professor of Strategy & Entrepreneurship at Solvay Business School, is EYnovation’s go-to expert for pitching advice. He frequently hosts workshops and bootcamp to get you fully prepared for your pitch.