How you have actually been ticking off investors

by Wendy Soon on June 23, 2014

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Did you ever realize that all pitch books tell you the same stuff? But following every single thing taught in there never guarantees you funding from an investor. Why so? Because they are not always right! So what is wrong with all these books and lectures on pitching to investors? Hear from Bill Reichert, managing director of Garage Technology Ventures, on what he agrees and more importantly disagrees with the typical pitch stories.

Bill Reichert, who hates long winded boring pitches, gives some (slightly controversial) pitch coach wisdom to keeping your investors at the edge of their seats:

 

  • Start with the problem. If the problem is big and obvious enough, you don’t need to spend 15 minutes explaining it. The investors know it, don’t go into too much excruciating detail to explain this to experts. Just state it in sufficiency to get the investors aware about which space you are playing in.
  • Tell a story. Keep it to 30-seconds if absolutely necessary. But don’t spend 5 minutes on something that is not critical to your product. Don’t even bother with this if you don’t see the necessity. Use just a simple sentence to describe what you do, and move on.
  • Follow this template. Download a template and fill it out. But templates don’t always fit your company. They can be valuable, but do not follow them religiously. Use them to frame your pitch, use them as guidelines, not bibles. Even if a famous investor or entrepreneur creates a template and asks you to follow it to “guarantee” success, don’t do it! Every startup is unique. There is no one template that can fit all. Know you are special, and pitch like you know that.
  • Show your passion. Try to ignite passion to the investor, stop showing excitement for the sake of it
  • Explain what you do. This is a question that almost every investor will ask you to answer. They are not exactly asking about the technical part of you are doing, but instead want to understand what is your company accomplishing in terms of creating value for customers. Do you make someone’s life better? If so, how?
  • Show a big market. Contrary to common opinion, investors are not looking for a billion dollar market that you will tap into. More often than not, this number is inflated and / or describes a market larger than what you are really targeting. It only shows you don’t know how to segment your market. Instead, investors are really looking for a startup that is starting in a $0 market, but will invent and create a market that will grow into a billion dollar market.
  • Tell them your exit strategy. IPO, be acquired, No VC believes this, at your current stage, you don’t know that.

3 steps to wow VCs, in 3 sentences.

  1. What do you do better than anyone else? First sentence after the basic introduction has to be extremely clear of what you do. How would wall street journal / techcrunch describe your startup? What is the sentence that the world will repeat? Not an extraordinary claim that is exaggerating, but what you really are.
  2. What is the compelling benefit you offer and to whom? “The big idea behind…” “We make it better / faster / cheaper…” How compelling is it? Give a metric – 5 times cheaper, 20 times faster, etc. Give a number.  You may not be there yet, but this is something you promise to do.
  3. How are you different? “Unlike other companies…” The moment you talk about what you do, VCs are thinking immediately about other similar companies that they have come across before. Their brains are spinning and trying to remember that company that sounds exactly like what you do. You should grab this time to immediately shut down that spinning brain, and immediately tell the VC how you are different from your competition. Stop the VC from thinking about other things and trying to dig around their memory, but answer their query immediately to keep their attention. Preempt all that, so you can keep focused on what you are doing.

More pitching tips from Bill Reichert:

  • You have 20 seconds to be compelling, if not you might as well go home. It’s not 30 minutes or even 5 minutes. But just 20 seconds. That’s all you have, and make sure you figure out what you have to say in that 20 seconds to grab their brains and hearts. It’s not necessary to tell your story in just 6 words (but if you can, you win!), but rather using just that limited amount of time to grab attention. Once you successfully do so, you have the minutes to follow to complete your life story (or rather, your startup story).
  • Think big, change the world, be disruptive, but make sure you also use adjectives that are credible.
  • Don’t try to claim you have the first mover advantage. In today’s market, there is a close to zero chance that you are the very first startup in the world to attack that problem. There is a higher probability that there are at least 10 other companies in the Silicon Valley, and 100 other companies around the world, that are doing the same as what you are doing. Don’t pretend that these companies don’t exist, nor imagine that the VCs know nothing about the market. instead, acknowledge that you know your competition, and focus more on how you are different from them.
  • Be clear, be compelling, be credible.
  • The secret to pitching, is to get the investors to fall in love! Then the critical question is, how do VCs fall in love? There are 3 types of VC love:
    1. VCs fall in love with teams. These are the VCs who don’t care if companies pivot
    2. VCs fall in love with technology. They get excited when they see something they have never seen appear on the face of the planet before. (of course, this technology needs to be something important and adds value)
    3. VCs fall in love with a vision. They agree with the vision, and want to be a part of that vision. They want to be seen associated with that vision.
  • Wow the VCs if you can at least make them fall in love in at least one of the 3 areas listed above. Of course, try for all 3 if you are that good!
  • Again, these 3 points are just a guideline. They are not a fixed template you should stick to at all costs. They will guide you to start your pitch, but by no means will your story end here.
  • Use your customer to explain your product. It is usually easier to show how you understand your customer and how your product solves his problem, rather than just describe the technology itself.
  • Tell a story using analogies.
  • If you have a big name to drop, then drop it early! Don’t bother with ‘ending with a bang’.. start with it!
  • Keep it simple
  • Be customer focused
  • Anticipate obvious issues (which is why templates don’t usually work). If you pitched many times and you receive the same questions again and again and again, preempt this the next time and answer the question before any VC even asks.

 

Here are his lecture slides:

Bill is an awesome speaker. Click here for a full video record of his lecture, and sign up for our next event at Igniters Meetup!

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