Startup Pitching 201

This is the 2nd post in the “Startup Pitching” series. In this post, we’ll go over intermediate-level (201) techniques.

1. Dead seagulls

Let’s say you are talking about pollution after an oil spill. What works better: slide after slide with tables of numbers and nested bullet points of text or…

Dead seagull covered in oil
Credit: http://art-for-a-change.com/blog/2012/12/bp-lacma-the-gulf-oil-spill.html

Exactly.

Humans respond to images at a primal, emotional level. Your slides should have few words (aim for 6 or less) and powerful images. You need to not only communicate the logic of your presentation – you need to connect to the audience emotionally. Images are critical for doing so. High definition photographs tend to connect better than cartoons. Clipart almost never works.

2. Front-load credibility

Funders are cynical. They have to be because about half of all angel/VC investments lose every penny invested. Similar rates of failure (to-achieve-results vs financial return) are common in the nonprofit funder world. Any claim you make is therefore treated with suspicion. But… if you place some major credibility-enhancing facts into your second or third slide, the audience spends most of the presentation positively inclined to you and more likely to believe your claims. Examples of good content to front-load:

  • For “I have an idea” concepts: Interviewed over 100 potential customers, 75 of whom have signed a letter of intent saying they will buy our product if we can build it.
  • For pre-seed companies: “We’ve secured pilots with these major players in the industry…”
  • For post-revenue companies: “And I’m happy to say we’re not just an idea, we have our first paying customers, they are…”
  • For any company: if you have people on your team who the audience would recognize as world-class “Our team includes one of the world’s top engineers in this field” or “This isn’t our first rodeo, this management team has built and sold 3 companies in this vertical.”

3. Plant seeds, don’t tell it all

The most valuable of all talents is that of never using two words when one will do.”

― Thomas Jefferson

If we go back to the dating analogy from the last post: you’ve just met that special someone at the bar/event and you get your chance to speak… do you tell them your whole life story? If you try… things won’t go well! Your job is to tell them just enough to earn the privilege to spend more time with them.

So, simplify your pitch. If your product solves 10 pain points then in the pitch focus on the top 2-3 most important ones and simply hint at the others. This sets you up for questions during the Q&A period that you want to get.

4. No BS financials

Almost every slide deck any funder has seen has a slide that looks just like this…

chart

The numbers go up and to the right and resemble a hockey-stick curve.

Guess what? If everyone has a slide just like this, then you are not differentiated.

Another typical slide looks like this…

Typical slide financials

Mature companies have lots and lots of data to back up their projections. But a startup has almost no data. All you have is… pure BS. Show a slide like this and you’ll have to defend it. It is hard to defend BS :).

So don’t. Don’t even show a slide like either of the ones above. Instead pick the top 3 numbers that describe the economic engine of your company. Show the audience that you know what drives your costs, what drives your revenue, and how to attain profitability. If you show them this information and they ask questions, now you are on solid ground.

Something more like this:

Like other companies in our sector…

Our biggest cost is customer service, which scales up a little slower than 1:1 with our number of customers.

Our revenue is driven by the number of active subscribers we have.

Because retained customers are much more profitable than new customers the key to profitability is high customer retention.

The content here inspires confidence. It inspires questions you can easily defend because they will be based on the information you’ve worked hard to learn about your market.

Some people object that the purpose of the financial slide is to convince the funders there is a big enough financial opportunity. No! That is the purpose of the Market Size slide!

5. The one (maybe two) number rule

Most people can’t hold multiple numbers in their heads. You can put as many numbers on a slide as you like, but people won’t process them. In fact, if you show too many numbers they’ll almost certainly process the numbers incorrectly!

Less is more.

If you have multiple numbers, think very hard how to boil that down to the 1 number (at most 2) that gets at the essence of the matter.

Here is the normal way (BAD!!!!). These are the projections for a royalty-based investment fund.

too many numbers

This brings up lots of uncomfortable questions. How is each of the scenarios defined? Are these multiples attractive? Some of those IRRs (Internal Rates of Return) are very unattractive…

Now compare that to this…

Each company in the portfolio that succeeds generates a 1x return for our investors.

This dramatically simplifies things. The story it is telling is “Wow! if they can get even one company to succeed I get my money back. That mitigates a lot of the risk. And then I get multiples for each company after that.”

That is the power of simplifying your numbers.

6. Use relative values

People have a tendency to site absolute values for industry-specific metrics. However, the only people who might know if these numbers are good or bad are people with deep domain knowledge. Everyone else in your audience (which is probably everyone in your audience) has no idea what these numbers mean. So you’ve wasted their time and/or confused them.

People don’t know what to compare your numbers to. So make it easy for them. Don’t give absolute values, instead convert them into relative values. Here are some examples.

  1. Turn “We added 1,000 customers over the past year” into:
    “Our customer base has doubled in the past year”
  2. Turn “20 customers in the 1st month” into:
    “We acquired as many customers in our first month as our competitors had after two years.”
  3. Turn “We spend $1.24 on materials” into:
    “Our gross margins are 75%.”
  4. Turn “523 people responded to our initial emails” into..:
    “Our initial emails conversion rate is 5x the industry standard.

7. Prep for Q&A

Amateurs “wing it.” Professionals prepare. Here is how to prepare for your Q&A session.

  1. Consult with teammates and mentors to create a list of the 3-7 high-priority questions your audience will ask.  
  2. Create a slide (or set of slides) for each. All the same rules of good slides from before still apply (ahem… DEAD SEAGULLS!!!)
  3. Try to have each team member standing on stage answer at least one question during Q&A. Do this by divvying up question areas. This lets the audience start to realize just how much smarts are on your team.


Next post in the series: Advanced (301)| View all posts in the “Startup Pitching” series

Startup Pitching 101

As a mentor once told me…

It doesn’t matter if you have the best opportunity in the world, if you can’t communicate it you’re dead.

This is obvious. Yet… I’ve seen thousands of presentations and the vast majority of them were confusing as heck. Those presenters almost always failed to get whatever they wanted from the audience.

At the regional angel syndication meetings (think of it as the All-Stars of angel-backed companies), the #1 Mistake Entrepreneurs Make Is…

I walked in thinking that because I already had the backing of an angel group that my presentation was great. Then I saw the presentations of the other companies there and realized just how poorly I was communicating my opportunity and how many investors did not come to talk to me because of that.

Don’t be that person.

I’ve also seen dozens of truly amazing presentations; presentations so strong that people who would have never considered an investment in a company like that ended up writing checks. 20+ years ago my first company was a terrible business idea, yet the strength of our presentations constantly got us follow-up meetings with investors we had no right to be speaking to.

This post covers the Beginner (101) level best practices for crafting strong startup presentations. See the other posts in the series for intermediate and advanced techniques.

1. One rehearsed presenter

There is a strong temptation to have multiple people from your team deliver your rehearsed presentation. Multi-person pitches add complexity that almost always leads to people going over time, stepping on each other, or confusing the audience.

Some people want to do this so the audience hears from the other founders so they know they exist and get a taste for their competence. That is a worthy goal, but it is much better accomplished by having each team member speak up during Q&A. If each person focuses on their domain of expertise, they will show (not tell).

2. Know your audience

Like most common sense, this is easy to forget. When designing your presentation remind yourself… who the audience is. What do they expect? What are their cultural norms? If this is a jeans & hoodie crowd, don’t show up in a tux (unless you have a tux company, of course :)). If this is a 1-on-1 meeting then slides probably don’t make much sense.

3. Set your objective

Think of it like dating. You don’t walk up to someone at the bar and propose marriage! You try to get them interested enough to get a date. When you design your presentation remind yourself of your objective. Most of the time it is simply to get another, longer “date” with the people you are pitching to. I’ve never seen a pitch that leads right to getting $$ (unless it was the last step in a long process).

4. No jargon or acronyms 

Would you walk into a room of English speakers and do your pitch in Russian? Of course not! No one would understand. Jargon (AKA the technical language of your profession) and acronyms are worse than this because they sound like English but, for the uninitiated, it might as well be Russian. There are many funders you’d love to have back your company who do not know your jargon. Even to funders that do know your jargon, they have learned to interpret entrepreneurs speaking in jargon as a negative signal. So, speak in plain English without acronyms.

6. Split up your slides

Too much content on one slide just overburdens the audience. If you have a slide you are spending a minute on with 6 bullet points turn it into 6 slides where each: Focuses on one of those bullet points, features a large (at least 100 pixels wide) or full-screen image that emotionally connects to the bullet point, and takes 10 seconds (6 slides X 10 seconds = same amount of time you were spending on the 1 over-stuffed slide).

7. Make fonts readable

Make sure your font is at least 30 points to make text readable and to ensure you don’t put too much text on the slide :).

Caveat: For slide decks that are supposed to be sent by email without your speech accompanying them, then you’ll need to have more text on your slides. That said, you still want powerful images and to apply the other lessons listed here.

8. No Math

Every smart person likes the results of math. Very few people want to watch math. It puts them to sleep, it violated the One Number Rule, etc. Do not put math in your presentation. I don’t just mean avoid putting in complex formulas. I mean: don’t show them how you calculated your target market size! Just put the final number. Let them ask you for the derivation during Q&A.


Next post in the series: Intermediate (201)| View all posts in the “Startup Pitching” series

RVI’s first virtual angel group meeting a success, here is how we did it

The River Valley Investors angel group just ran our first virtual meeting today. In case anything we learned can be valuable, below is a copy of a blog post we just published on our blog showing what we did to make it work. I know several other groups already ran virtual, so I’d love to hear any other best practices people have patched together.

Today’s RVI meeting was held online via Zoom and, while we certainly missed the unstructured networking and other aspects of an in-person meeting, it worked and we can make them better. Some of the techniques we used and/or will use next time…

  1. Prep
    1. Before the event, we ask everyone to log in with a device with a camera so we can see each other. They all have been invited to a google calendar event with the link embedded in it.
    2. Created Breakout Rooms (Networking, Startup, and Scheduling) from the get-go. I’ve used Zoom for over a year and hadn’t even realized it was built into the pro plan I was already paying for! If you haven’t used breakout rooms before check them out.
  2. Troubleshooting & networking
    1. As our members logged in, once we are sure we can see & hear them and vice versa, our Manager will invite them to head into the Networking breakout room to socialize. This way people who are ready to go don’t have to listen to others getting tech support :).
    2. As the entrepreneurs login, we have them hop into the Startup breakout room where our assistant manager makes sure the entrepreneurs are ready to share their screen and has their questions answered.
  3. Setup to best re-create in-person meeting
    1. Our manager messages everyone via zoom’s integrated chat, inviting them to rejoin the main room ASAP.
    2. With everyone present, we ask people to switch to Gallery mode, this shows a grid of as many people as can fit on one’s screen. It helps recreate (as close as we can) the feeling of all of us being around the same table.
  4. Meeting start & entrepreneur presentation
    1. Invite members to send our Manager messages via Zoom’s chat feature during the presentation so we have a queue of questions ready to go.
    2. Go through our introductory agenda (quick intros, explain the process, etc).
    3. Manager mutes everyone (except the presenter) to minimize background noise.
    4. Presenter shares their screen (where they already have their presentation in full-screen mode, ready-to-go). This puts their slides in full-screen mode for everyone.
    5. We ask them to have a timer set for ten minutes. We set one up as well and if the company runs over time the Manager discreetly private-messages the entrepreneur. (If anyone has a tip for displaying a countdown timer to the entrepreneur/room, we’d love to hear it!)
  5. Q&A
    1. With the presentation complete we ask the entrepreneur to stop screen-share so we can all see the grid of faces. The Manager uses the list of chat messages and looks for people to physically raise their hands on-camera, to know who to direct to ask the first questions. Manager tries to message people to let them know they are in the queue. Manager unmutes and says things like “Mary has our first question, and Jim is next in line.”
    2. Members then unmute themselves, ask their question, the entrepreneur responds as normal, and we call on the next questioner.
  6. Closed-Door Session
    1. When Q&A is complete the Manager asks the entrepreneurs to move to the Startup breakout room while the group deliberates next-steps.
    2. The closed-door session continues as normal. At RVI we follow a particular format with the discussion going in three parts…
      1. “Why might this be a great investment opportunity?”
      2. “If you were on the due diligence team, what questions would you recommend they think through carefully?”
      3. “Who wants to be on the due diligence team?”
      4. Most of the group take a 5-minute break.
      5. If there is a due diligence team, they and the Assistant Manager head to the Startup Breakout room to schedule the next meeting. No point in losing momentum!
      6. If there is no due diligence team, our Manager heads to the Startup Breakout room and gives the bad news and a very brief summary of why we did not have the critical mass to proceed. We believe a fast, respectful no with an explanation is the only respectful and fair thing to do for an entrepreneur. We also offer to have a conversation after the meeting if they want more info. If they are a local company we sometimes invite them to rejoin the meeting at the end to get some targeted advice from the group.
  7. The rest of the meeting
    1. Rinse-repeat for other presenters.
    2. Do end-of-meeting wrap-up.
    3. At the end of the meeting, invite people to use the breakout rooms if they would like to continue any conversations or otherwise take advantage of the fact a bunch of us are in one (virtual) place at the same time.

The Seven Flavors of Capital (for Startups)

icecream gelato flavors pexels-photo-1352299

Startups need capital to launch and grow. What many entrepreneurs don’t know is that startup capital comes in many different flavors. Each flavor has its own pros and cons and is appropriate for different situations. To be successful in fundraising an entrepreneur needs to understand what flavor(s) are a fit for them at each stage of their venture’s maturation.

For instance, I can’t tell you how many times I run into an entrepreneur who “knows” they need to raise equity capital from venture capital when royalty financing would work for them, cost less, and be non-dilutive*.

Or I meet a concept-level startup ready to invest 6 months in trying (and almost certainly failing) to raise equity capital when there are lots of grants and competitions that could help them get started.

Here is a 2-page table summarizing each of the major flavors of capital, their pros, cons, and who they are good for. I hope you find it helpful!

*Dilutive financing is any that distributes more equity (AKA shares), this has the effect of making each of the current owners of the company own less… effectively diluting their ownership.

RVI, Launch413, Innovation Accelerator – Growing and Thriving

For all my friends who kindly track the progress of my ventures, I have a short update :).

  • Launch413 (the post-accelerator) – We’ve invested in 13 companies in just under 3 years, expanded our team of kick-ass Venture Advisors, and are starting to see some real results from our top companies. It is still early days, but the model seems to be scaling and our ability to deliver impact is growing.
  • Innovation Accelerator (helping mature nonprofits create for-profit spinouts that help fund the parent org) – Is about to graduate our 5th cohort! Our top alumni have raised hundreds of thousands of dollars in seed funding and are generating their first revenues.
  • River Valley Investors (angel investor network) – Now more than 17 years old, went through a major strategic shift (aka a pivot) at the end of last year. Since that change we’ve gone from losing members to adding four new members and invested in a two companies in the past two months.

A HUGE thank you to my co-founders: Rick Play w/ Launch413 & Kelly Minton w/ Innovation Accelerator.

And buckets of thanks to the dozens and dozens of friends and mentors who gave advice, lent a hand, or made a connection along the way. Y’all rock!

The Power of the Spa!

Arguably the #1 customer discovery how-to guide is the book Talking To Humans. Here is a jem:

One aspiring entrepreneur wanted to target mothers of young children. She had heard stories about talking to people in a coffee shop, but felt like it was too unfocused.  So she tried hanging around school pickup zones, but the moms were too busy and refused to speak to her. Next, she tried the playground, where she figured moms would be bored watching their kids play.  This worked reasonably well, but she was only able to get a few minutes of anyone’s time.  So instead, she started organizing evening events for moms at a local spa where she bought them pedicures and wine. The time of day worked because the moms could leave the kids at home with their partner.  The attendees had a great time and were happy to talk while they were getting their nails done. —

Hat tip to Jim Stanczak!

Grinspoon Foundation Championing Entrepreneurship Yet Again

49029251868_e479881003_o.jpg

At this year’s Grinspoon, Garvey & Young [Collegiate] Entrepreneurship Conference hundreds of students participated in an “Idea Madness” event to motivate them to Get Started. Imagine a room with row upon row of circular tables, each one has a student pitching their table-mates as a giant countdown clock ticked down. When the time was up the next person at the table pitched. The air in the room was charged with excitement and nervousness as everyone at every table had pitched. Prizes were handed out, but most importantly, everyone got some public speaking experience, learned that coming up with ideas isn’t the hard part, and maybe got a jolt to check out this entrepreneurship thing :).

The whole event was made possible because of the leadership of the Harold Grinspoon Foundation and the incredible help of the faculty at all 14 colleges in the Pioneer Valley. The region is incredibly fortunate to have so many people passionate about helping the entrepreneurs of tomorrow!

Some more photos are below. You can see all the photos the foundation kindly paid for here.

Prize Money=Nice | Funded Pilots=Amazing

AccelVT_logo_color

This summer I had the pleasure of facilitating the 2019 Energy (CleanTech) cohort for the AccelVT accelerator in Burlington, VT. At last week’s graduation they showed one of the critical differentiators between their accelerator and most others: funded pilots with utilities.

Most CleanTech companies need to interface with local utilities in order to deliver their innovations to the world. Utilities are usually extremely cautious, deliberate, and methodical – great things for organizations dealing with high voltage safely! However, that same culture is usually far too slow for startup-paced innovation.

AccelVT built a network of utilities and similar entities that didn’t only write checks and show up to share advice… no, they did the hard work to figure out how to run real pilots to put the startup’s innovations to work making VT’s climate greener and safer. The graduates had tried working with utilities (elsewhere) before and left frustrated. But in this program they were “blown away at how ready AccelVT’s sponsors were to find ways to Make It Work.”

The Burlington Electric Department and Green Mountain Power provided four funded pilots at graduation. My conversations with the graduating startups showed that by the end of graduation night almost all of them had serious prospects at getting their own funded pilots with one or more of the many sponsors who attended the event.

I’ve never seen anything like it. AccelVT and their sponsors are making Vermont one of the best places in the country for CleanTech innovation. If you have a CleanTech startup, keep an eye on AccelVT and consider making a pilgrimage to beautiful Burlington to see if you can do business there. I’d be happy to introduce you.

Picture of the cohort.
Picture of the cohort’s entrepreneurs and I. Source: AccelVT & the Vermont Sustainable Jobs Fund

Here are details on the fantastic startups I had the delight of teaching these past three months.

DCC is a hardware company supporting residential electric vehicle charging installations that are otherwise unattainable because of a limited power supply. With our device, EV owners now have a reliable solution if their panels are at full capacity or if they reside in a multi-unit dwelling. dccelectric.com   Quebec 

EVmatch is a mobile platform that allows EV drivers to find and reserve charging stations anywhere they go by enabling increased access to private charging stations. EVmatch reduces the stress in locating an available charger and immediately grows EV charging options by making private charging stations available to the public. www.evmatch.com/  California

Go Together is a SaaS platform for people to get where they need to go through their trusted networks using apps to do end to end trip planning to meet, collaborate and schedule carpools, biking, walking, transit, and more. Go Together leverages technology and the power of trusted communities to innovate the way people get where they need and want to go whether it’s to and from school, to practice, a game or to vote. gotogether.today/home/  Washington, D.C.

iSun Energy develops robust, esthetic, smart and easy to install solar carport and canopy systems with proprietary hardware and software systems. iSun offers an attractive structure delivering shading and protection, while also feeding the local grid with renewable solar energy, and the ability to mate with smart energy management systems, such as EV charging. isunenergy.com/en/ Quebec

Onboard Data is in the business of helping people make buildings better. We provide analytics software to service providers and facility managers that maintain our most frequented spaces: such as our offices, hospitals, and schools. Instead of chasing energy, maintenance and comfort problems, our customers can turn to our software to uncover issues before they turn into emergencies. Maintenance personnel can now save time and money while delighting their building owners and tenants.  www.onboarddata.io/  Massachusetts

SomEV provides charging solutions for micro-mobility applications (e-scooters, e-bicyles, e-mopeds) by providing a network of Battery Swap Kiosks, that charge, store, and monitor battery packs. Using our proprietary kiosks, riders of micro-mobility have access to a swap-&-go battery system, thus providing a convenient and reliable way  www.som-ev.com/  Massachusetts

UAT developed a robust clamp for electrical wire management that reduces weight, improves safety, and simplifies maintenance through the use of Augmented Reality and Artificial Intelligence. This patent pending ICC is unique because it avoids metallic installation hardware while greatly simplifying installation complexity, reducing installer fatigue, and minimizing associated repetitive strain injury. www.uairtek.com/  New York

Facilitating AccelVT Energy 2019 Cohort

AccelVT_logo_color

I often talk about how startups are the ones out there saving the world. This summer I have the delight of facilitating the newest cohort of the AccelVT Accelerator. This accelerator focuses on “startup and/or seed stage ventures who offer new technologies, or novel applications of existing technologies, aimed at reducing fossil fuel use and greenhouse gas emissions in the heating and/or transportation sector.

It will be an honor to help these entrepreneurs as they boldly work to solve crazy-hard problems that could literally help save the world.

My thanks to my first mentor, Joseph Steig, for bringing me into this program!