Startup Pitching Checklist

This is the checklist/boil down of the techniques listed in the prior 3 posts in the “Startup Pitching” series. After you complete a draft of your pitch, go over this list to make sure you’ve applied as many of the techniques as possible. If you want any of the checklist items expanded just click on the section header (Beginner, Intermediate, Advanced) to go to the blog post that explains the details.

  1. Beginner (101)
    1. One rehearsed presenter – Pick one person to deliver your presentation, don’t tag-team your pitches.
    2. Know your audience – Customize everything about your pitch to meet the cultural norms of your target audience.
    3. Set your objective – Your objective is to get another date, not marriage/investment. Stop freaking out :).
    4. No jargon or acronyms – Use plain English accessible to a lay audience.
    5. Split up your slides – Turn a slide with X bullets into X slides with one bullet each.
    6. Make fonts readable – Minimum of 30 points. Period.
    7. No Math – Don’t show any derivations, just show the results.
  2. Intermediate (201)
    1. Dead seagulls – Put a large, immediately relevant image on almost every slide.
    2. Front load credibility – Put the 1-3 most credibility-establishing facts about your company right after your title slide.
    3. Plant seeds, don’t tell it all – You don’t have time to tell it all, so boil down each section of your business to the 1-3 most important parts.
    4. No BS Financials – Focus your financials on fundamental economic drivers of your business, not BS projections.
    5. The one number rule – Don’t have more than one number (maybe two) on a slide.
    6. Use relative values – Don’t give absolute values, instead convert them into relative values.
    7. Prep for Q&A – Before your pitch identify the most likely questions and have polished answers ready to go.
  3. Advanced (301)
    1. Timing is everything – Make sure that on the slides immediately before powerful images your speech prepares the audience.
    2. Tell a story – Don’t rattle off facts, weave them into a story.
    3. Inoculate the audience – Address any deal-killing objections right in your presentation. Don’t wait for Q&A.
    4. No complex issues – If there are any complex issues in your business that you know are not relevant, don’t bring them up on the 1st date.
    5. Results not resumes – Identify the 2-4 most critical skill sets a company like yours needs and then show examples of your team doing exactly those things… brilliantly.
    6. Risk reduction, not line items – Don’t tell us what things you are spending money on, tell us what risks you will mitigate.

Hungry for more? Here are 25 more tips from some of the top people in the angel investing world.


View all posts in the “Startup Pitching” series

Startup Pitching 301

This is the 3rd post in the “Startup Pitching” series. In this post, we’ll go over advanced-level (301) techniques.

1. Timing is everything

Once you get good at using Dead Seagulls on your slides you want to take a page out of the comedian playbook… dramatic timing. If the image on a slide is particularly powerful, you don’t want to bring the slide up and then explain it. That will confuse the audience or rob you of the emotional punch you could have achieved. Instead, prepare the audience during the prior slide and then advance when the emotional timing is right.

2. Tell a story

At least a hundred thousand years before science and logic were developed we humans communicated via stories. Our brains are hard-wired to digest information packaged that way. Stories center on people, not bullet points. They have a protagonist and often an antagonist. So take your facts and craft a narrative around them.

You might start with a set of facts like this…

Our website allows customers to find and play games with friends, family, and strangers. Like a play-by-play on the radio, our game reads aloud all of the action and text chat.

And turn it into something more like…

Jane invites her grandson to join her in a game of cards on our site. Minutes later they, and several others, are playing and chatting. No one can tell who is blind and who is sighted… they only know who is winning – Jane! 

And don’t just do it on one slide. Your protagonist should keep appearing in your story. Weave the narrative through as much of your presentation as possible. Here are some more advanced tips for adding narrative to your pitch.

3. Inoculate the audience

Most vaccines work by giving a person a weakened version of a virus/bacteria before they would normally encounter it. You can take the same concept and apply it to your pitch. If there is a certain kind of objection that comes up again and again during Q&A, that is a signal you need to address it right in your presentation.

For example, my first company made video games for the blind. It turns out that most investors thought that all blind people were also intellectually disabled. Once we realized this, we updated our pitch so that our narrative featured Jane (mentioned above) who clearly was not intellectually disabled. We made sure to introduce our blind teammate  wrote code and skied.

4. No complex issues

Continuing our dating example… imagine this situation. You are going on your 1st date with someone and, for completely legitimate reasons, your X is currently living with you. If you bring this up on the first date, is there a second date?

Heck no.

Why? Because there isn’t enough time and trust to go over something complex like that. The purpose of the first date is to get a basic understanding and decide if a second date is warranted.

So if there are any complex issues in your business that you know are not relevant*, don’t bring them up on the 1st date. They should be brought up when you have the time and trust to explain things fully. Often times company financials fall into this category as they are just too complex to go over in spreadsheet form at a pitch meeting.

* You’ll notice in the example I gave the X was living with you for legitimate reasons. If they were living with you because you two are friends with benefits… that seems like a legitimate deal-breaker for the person you are going on a first date with!

5. Results not resumes

This is a specific application of the Show, don’t tell rule. The team section is one of the most important (arguable the most important) part of your presentation. Almost everyone does it the same way, by telling the audience about the resumes of their team members. This is dumping data on the audience and asking them to connect the dots. Also, resumes tend to emphasize the wrong facts.

As you want their funding/support, don’t make the audience work that hard! Spell out for people why your team is right for your venture.

In general, you should ditch the names, titles, degrees, and previous employer info. Instead, identify the 2-4 most critical skill sets a company like yours needs and then show examples of your team doing exactly those things… brilliantly.

The ideal team slide sounds something like this:

[for a company making artificial-intelligence software for hospitals]

From what I’ve told you so far, I bet you can see a few critical skill sets our team needs.

  • The particular kind of artificial intelligence needed for this work is very rare. There are only about 1000 people in the world qualified to do it. We have five of them.
  • Selling software to hospitals is notoriously difficult. Fortunately for us, previous to founding our company our CEO sold $100 million worth of software to hospitals.

The presenter narrowed it down to the 2 most important skill sets for a company like theirs and then showed how their team has a track record that should put funders’ minds at ease.

6. Risk reduction, not line items

Entrepreneurs tend to explain to funders how they will spend money. Often in a graph that looks something like this…

How we will burn your money

This seems logical but it sends the wrong message. As a mentor once told me…

“Don’t tell me how much of my money you will burn. Tell me what amazing accomplishments my money will allow.”

A startup is a bundle of risks. Its valuation goes up as it mitigates those risks. So don’t tell us what things you are spending money on, tell us what risks you will mitigate.

Bad example: “This round of financing will be used primarily on working capital to keep us alive until we’re ready for the next stage.”

No one (except maybe your mother) cares about keeping your company alive :(.

Good example: “This round of financing allows us to get a commercial grade prototype into the hands of key influencers in our target market.”

This shows the funders that you A) know what your next major milestone is and B) this money will let you hit it. Staying alive to do so is understood :).


View the startup pitching checklist | View all posts in the “Startup Pitching” series

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.