It’s not easy convincing venture capitalists to lend you millions of dollars. After all they’re listening to hundreds, if not thousands, of pitches per year. In this highly competitive environment, it’s especially difficult to stand out from the crowd. And it makes sense that only a fraction of entrepreneurs actually win funding.
So what’s the secret to making a pitch that succeeds instead of fizzles? What’s the best way to prove that your particular business is worthy of investment? Making a successful VC pitch isn’t an exact science. However, these four tips can help your pitch really stand out.
1. Create a stellar presentation
A boring slide deck is one of the first ways to lose your audience, so make sure yours really pops. The key to a creating successful one starts with aiming to answer the biggest question on everyone’s mind: “why?” Why your product? Why your company? Why now? VC firms want to know your business matters to the market and to the world.
During your presentation, make sure to address:
- Why the current market conditions create a perfect opportunity for your company to not only exist but to thrive.
- Why your product solves a market need. Consider adding a use case to your presentation. It can help potential investors understand how your company provides a unique solution.
- Why your company is ideally positioned to take advantage of this market opportunity, especially in comparison to the competition.
- Why you need VC funding now to gain traction or to take your business to the next level. Include details like your current revenue, pricing model, average sale, and marquee clients.
2. Be yourself
One of the biggest mistakes you can make is trying to be something you’re not. Rather than taking on the role of salesperson during your presentation, aim to be authentic instead. Being yourself not only helps you relax (which makes the nerve-wracking pitching process a little bit easier), it also ensures you avoid any hint that you have delusions of grandeur.
At the start, VC funding is a lot like dating. Investors want to know whether they want to work with you. They also want to know if you’re someone people will want to work for. If you start your pitch painfully nervous–or conversely, so confident that you’re claiming your company is the next Facebook–you’ll lose your audience instantly.
When it comes down to it, investors really want to know who you are and where you come from before they decide to give money to you. Aim to tell an interesting story about how you identified your market niche; ideally it’s due to your inside knowledge of the industry. Establish credibility in your background to give your audience reasons to believe in your enthusiasm for solving this particular problem, as well as your ability to follow-through. Show investors you’ll be an evangelist for your firm, so they not only invest in your company but they also invest in you.
3. Sell your team
Above all, investors are primarily interested in investing in people. Ideas are second. So, if you ultimately want make a deal, it’s imperative to share details about your incredible team. Oftentimes, entrepreneurs spend too much time describing their product and too little time describing why they have the right talent to take their company to the top.
To communicate what makes your team so special, start by describing the skill-sets or domain expertise your leaders contribute. Try to avoid simply listing where they’ve worked or gone to school. Instead, aim to demonstrate how they fit into you’re company’s bigger picture. In other words, what does your company’s road to success look like; what are the most important tasks at-hand? How will each person help your company accomplish that vision?
Additionally, don’t be afraid to be upfront about your team’s holes or weaknesses. Most startups are missing key players. It’s okay to let investors know that your team is aiming for greatness but hasn’t fully achieved it yet. Self-awareness is a character trait that’s valued by investors.
4. Talk about the investment
When you’re talking about money, make sure to paint a full picture about what stage your business is in today and why you need VC funding. Be clear about how much money you’ve already raised, as well as who has invested in the past and their ownership percentages. These topics will open the door to discussing how much more investment you’ll need to take your company to the next level. And don’t forget to describe what exactly the “next level” means for you.
It’s a good strategy to have a range in mind for how much money you’re looking to raise—usually it depends on your company’s valuation or dilution. Discuss why you need this investment, how you’ll use it, and what is the intended outcome. Get into details. Will you be hiring more developers to improve your product? Or perhaps you need a bigger marketing department to boost sales leads. Whatever you plan on doing, make sure to explain why each decision is a necessary step on the path for your business’s growth.