The Art of Pitching

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The Art of Pitching

The prospect of meeting an investor makes any StartUp founder nervous. During a short conversation, you can provide your project with a future or completely lose prospects – it all depends on the ability to present your idea or project. StartUp is a company created for rapid growth. Business model scaling is a must. A pitch is the very first step in the negotiation process leading to the sale of an idea and an investment.
So what is pitch? A pitch is a short, structured presentation of a project to potential investors. The word itself comes from “throw” or “serve”, which, for example, athletes use when playing basketball. This is a popular tool in the modern business community (or even a trend) that entrepreneurs or StartUps use to start communicating with potential investors. And venture investors go to pitch sessions in order to study as many new projects as possible in a short time and understand where it is better to invest their money. The purpose of the pitch is to interest the investor so that he has a desire to learn more about the startup and finance it in the future. But learning to pitch is useful not only for entrepreneurs, but also for managers.

Many startups think competitors are the ones who make a similar product. But they are also other entrepreneurs. Those who know how to stand out and be remembered are more likely to attract attention and get the desired offer from an investor. Therefore, the art of pitching needs to be learned. Educational and acceleration programs can be corporate (for those who are interested in developing as managers in corporations), entrepreneurial or mixed. Learning to pitch is important for everyone in order to be able to sell oneself, to interest in one’s idea and be remembered. It doesn’t matter whether you are standing in front of a potential investor from another country or a top manager of the company where you work – with the help of competent pitching, anyone can be interested.
Typically, pitching takes only a few minutes – maximum five or seven. During this time, you need to collect all your experience of working on the project and convey it as clearly as possible to the audience. The culture of a small amount of time for a pitch has developed for a reason – potential investors, including large businessmen or top managers, are usually very busy and listen to a lot of presentations a month. They do not have time to concentrate on other people’s ideas for a long time, and they need to keep in mind different tasks at the same time.
What is important for successful pitching? You can’t tell everything in 5-7 minutes, so you need to be able to focus on important details: the problem, the solution and the prospect of monetization. Also, it is not only the presentation that matters, but also the personality, charisma of the narrator. Business angels who invest in projects at an early stage are actually looking at the project team first. The founder and his team are the only point of contact for an investor at a time when there are still too many unknown or untested hypotheses.
A pitch in the format “went on stage – talked” has no value. During the presentation, it is important to interest a potential investor in order to communicate in more detail afterwards. Therefore, the organizers of pitch sessions should definitely leave time for startups to communicate with investors. Correct organization of pitch sessions: presentation – short break – opportunity for informal communication with potential strategic partners.

During the coronavirus pandemic, which has transferred most of the communication online, the so-called speed dating pitch has gained popularity, when startups and investors get to know Zoom in a short time. And there are some nuances in online pitches that should be considered:
  • Internet speed or minor technical problems can affect the perception of the speaker’s speech, so it is worth making more pronounced pauses and more structured your speech.
  • presentation slides should be laconic, with a clear picture. A picture is needed to support the speaker’s words. A cluttered presentation can be perceived during a live meeting, but confusing during an online conference;
  • the speaker must control his gaze. If a person is looking directly at the camera, and not at the slides, it seems that they are looking at you and want to talk to them.
  • gesturing is important. The speaker should not be a “talking head”, it is worth trying to imitate a live meeting as much as possible, so it is better to stand up during a pitch.
  • for the presentation design it is necessary to choose a calm color scheme. The eyes get tired of looking at too bright pictures, and the listener perceives such presentations worse.
  • the average age of initiators of investment projects is 25 years. People of this age have advantages when communicating with investors: they are uninhibited and moderately arrogant. Simple and slightly impudent material feed is positioning. You understand that although a person is young, he is confident in himself and can make his way among competitors.
On the other hand, a startup needs to show the investor some maturity when meeting. It is important to make a good impression, but you should not show “successful success”: the investor knows that 95% of StartUps will die, so he will not react to a person who shows only positive sides. You need to be able to sell yourself, but it is also important to be honest and self-critical. It is worth remembering that a person invests not only in the team, but also in the future. Less artificiality, more integrity, sobriety and analysis.
Entrepreneurship is not a new phenomenon, but the ability to build communication with investors and the importance of presentations have been talked about recently. Therefore, you should not focus too much on books about pitches or literature for startups – in the information age, everything changes too quickly. However, there are 5 basic rules for a successful pitch:
  • Clearly articulate the value of your project or product – you need to be able to tell about it in one sentence.
  • Do not try to impress with a bright presentation – the speaker and what he says is of the greatest importance, not the colorful picture.
  • Do not use highly specialized terms during the presentation – simple speech is perceived better.
  • Stay yourself. You don’t have to pretend that you know everything or that you have no problems. Honesty and openness create a partnership between a startup and an investor.
  • Don’t be afraid of mistakes and failing pitch sessions. Many books can be read, but the best experience comes with face-to-face communication.

What are the pitches. In the startup community, it is customary to divide the pitch into several formats, which have received separate names:
  1. Elevator pitch conventionally lasts one minute, in practice even less: up to 30 seconds. This is a short presentation that could be given during an elevator ride.
  2. Idea pitch is a different format, used in contests and events. This is a three-minute story in which you introduce yourself, talk about the problems and their solutions, business model, market size.
  3. Funding pitch lasts up to 10 minutes, in it you can supplement the presentation with a strategy, details of the current situation, plans and the amount of required investments.
  4. Letters to investors are often referred to as pitches. For a pitch to be effective, it is important to choose the right format, correctly structure your speech, understand the purpose of a specific conversation, and contact a relevant investor.

Whom and when to pitch: how the relationship with the investor is born.
  • Try to look for an investor who can not only invest financially, but also give his expertise, tools, recommendations. Study the deals of relevant investors, list them, study the biography in more detail, and look for common ground. This will help personalize the pitch later.
  • Common acquaintances who can make a warm intro for you (introduce and recommend) are also important. The role of warm intro can be played not by a specific person, but by your presence at the event.
  • For an investor, in turn, it is important that a startup meets its profile and investment criteria.
  • Study what deals the investor concludes, which projects he pays attention to, at what stages of investment they are.
Pre-seed is the stage during which the team and the main hypotheses are tested. It is advisable to hold out this period on your own resources or investments from FFF (fools, family, friends). There are expensive high-tech products that cannot be tested without production, in such cases the ideal scenario is getting into an accelerator. Seed is the stage of testing a business model and preparing for scaling, approximately the same principles apply here. But the stages of series A, B, C, D are already those stages when investments are directed to growth. At these stages, the investor understands what and how it works, can easily assess the prospects, so he is ready to invest more seriously. Moreover, at these stages, investments are more than necessary, because it is important to quickly occupy the markets: it is with the beginning of growth that StartUp usually has powerful competitors.

Elevator pitch. The elevator pitch format is best suited for presenting your project at events. In a time-limited environment, it is important to have time to say the main thing: what problem you are solving, what solution you offer, and where is the money. Sometimes it is suggested that you formulate your presentation in seven words to prepare for such a dialogue. You can even at twenty-seven, the main thing is to remove all the “water”.
How to. Try to interest the investor and show him perspective. The purpose of a short pitch is to establish contact. If the outcome is positive, the interlocutor himself will offer to continue the conversation and schedule the next meeting. If the investor is not interested in the project, but was impressed by the idea and prospects, he can tell another investor about your StartUp or immediately advise you who to contact. Feel free to ask for such help.
How not necessary. Do not try to sell the idea during the elevator pitch and, moreover, do not try to “grab” the investor at any cost. If after your mini-speech there were no additional questions, the person did not offer to tell more, you do not need to continue the presentation and pour in numbers.

Idea pitch. When there is time for a more detailed presentation of an idea, it is important to follow the sequence of presentation of information. The algorithm is as follows: who you are, what problem you solve, how, how to make money on it, how much you can earn. At the end, you can talk about the team, and if there is time left, briefly summarize. A common mistake at this stage is to place the story about the team in the first block. No need, the presentation should be short. Another mistake is to dwell on details that are important only to you. It is not necessary to describe in detail how you solve the problem, just describe the approach. If the investor has questions, he will ask them. And, finally, in the story about the team, there is no need to think about local contests that are unknown to anyone and in which you allegedly once won.
How to. Focus on how much you can earn and how you define it. Describe the solution itself as briefly as possible, without going into technical details and complex terms.
How not necessary. Don’t get hung up on internal details. Also, don’t tell the investor things that are obvious to him. For example, do not describe the market situation to him if one of his portfolio companies works in a related field or the conversation takes place within the framework of a narrowly focused event.

Funding pitch. Funding pitch should be carried out if you are sure that the investor is specifically interested in your project and is thinking about investing. Here, in addition to information suitable for idea pitch, you need to talk about the current market position and growth rates. At 10% per month you will hardly surprise anyone, with 15–20% you can count on investments, 30% per month is already an impressive figure that must be mentioned. It is also worth talking about competitors and how your solution is better than what they offer. Outline the strategy, including points, that will entice clients from existing companies. Tell us how you will change the market, with the help of what tools, in what time frame and what investments are needed for this – and without exaggeration.
How to. Prepare as many details as possible, but state only the main ones. Most likely, after the presentation, the investor will ask questions, and then it will be possible to provide additional data. Also, personalization works very well in such pitches. If you have worked with the investor’s partners or your project can complement the functions of one of his companies, this should be emphasized.
How not necessary. Don’t relax in the belief that this is the longest pitch format accepted in the startup environment. Make up the speech itself only from the key facts, but do not forget that there should be a lot of information outside the brackets that you are ready to disclose after additional questions. Try to calculate all the nuances that the investor can clarify, and prepare relevant answers for each of them.

Pitch in a letter. A letter to a potential investor is written according to the following scheme.
  • Start with a short introduction, in which it is worth mentioning the points of contact.
  • Tell us briefly about yourself, clarify that your StartUp is looking for investments at such and such a stage.
  • Offer to hold a meeting or video call for 30 minutes. Online meeting is preferable for most European investors. Suggest several options for dates and times.
  • At the end, tell us about the project in detail and add a presentation to the attachment. You compose the letter yourself, but it is very important that a mutual friend forwarded it to the investor. This will be warm intro. If you send a message yourself, chances are it won’t be read at all.
How to. The presentation should answer the following questions: what is the client’s “pain”; Your decision and the value it brings; how do you implement it; how to monetize it; how the price is formed; Your financial performance and forecasts; project roadmap; what are the ways to enter the market; what team do you have to implement this strategy.
How not necessary. Don’t try to send all the information you have at once. Written format is not a reason to overload the message. If more information is needed, you will be asked for it.

Please send your presentation pitches for StartUps and investment projects to: office@arcgroupltd.eu

 

 

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