Life's a Pitch

The Most Important Key to Delivering a Killer Pitch

“By failing to prepare, you are preparing to fail.”

                                                                                                               Benjamin Franklin

Three undisputed truths:

1.            Delivering a winning pitch will often determine the survival and success of a business.

2.            People create their best work when they have time, space, and silence.

3.            Proper rehearsal is critical to delivering a professional, persuasive performance.

Despite these truths, most sales and investor pitch preparation takes place at the eleventh hour, amid constant distraction and noise with minimal, if any, rehearsal. Small wonder that most pitches are weak and ineffective and consequently fail.

“The first draft of anything is shit.”

                                                                                                        Ernest Hemmingway

There are two phases to all pitch preparation. The first is the creative process where you create your presentation and prepare your delivery. The second phase is rehearsal. Both take a considerable investment of time—days, weeks, and months, rather than seconds, minutes, and hours. This is not easy for time strapped entrepreneurs working in cash starved startups; but it is essential.

The greatest performers, athletes and world-class experts from every field are not ‘naturals’. They reached the top of their game through using effective techniques and investing thousands of hours in preparation.

Neuroscientist Daniel Levitin, in ‘This is Your Brain on Music’, talks about 10,000 hours of practice being the magic number to achieve mastery:

… ten thousand hours of practice is required to achieve the level of mastery associated with being a world-class expert—in anything. In study after study, of composers, basketball players, fiction writers, ice skaters, concert pianists, chess players, master criminals, and what have you, this number comes up again and again. Ten thousand hours is the equivalent to roughly three hours per day, or twenty hours per week, of practice over 10 years. . . . But no one has yet found a case in which true world-class expertise was accomplished in less time. It seems that it takes the brain this long to assimilate all that it needs to know to achieve true mastery.

Steve Jobs, wrongly perceived by many to have been a naturally gifted performer, was reported in Businessweek to spend “grueling hours of practice” when preparing his Macworld keynote speeches, a process Jobs began weeks ahead, even though he had been delivering spectacular keynote speeches for years. Jobs made presenting look easy because he worked so hard at it.

Starting your preparation well in advance of a pitch allows you time to research, reflect, and revise. Time gives you the opportunity to step back and look at the big picture and develop and refine your pitch so that you avoid the pitfall that Hemmingway highlights in the quote in this post.

Your choice is simple. If you want to create a forgettable, boring pitch that fails, simply spend a few hours at the last minute rehashing a pitch you delivered previously. If, however, you want to create a pitch that motivates your audience to take action, start your preparation weeks in advance of your meeting, and be prepared to invest days, if not weeks, in its creation.

Martin is the author of 'Here's the Pitch' available now from Amazon and Barnes & Noble and all leading booksellers

 

How to Become an Investor Magnet

This is the true story of ‘Ryan’ (not his real name). A serial entrepreneur with no qualifications and a very limited understanding of financials or launching a startup. Ryan, however, is an entrepreneur with a deep understanding of people, who consistently and easily raises hundreds of thousands of dollars from very savvy, experienced investors.

I first came across Ryan six years ago when he approached me to help him create some pitch materials. He explained that he had persuaded 2 investors (both bankers) to invest $500K in his IDEA (no prototype, company or team) but that one of the investors had asked to see details of his business model and financial projections.

Initially, I was sceptical as to whether the potential investors had, in fact, actually committed or had simply expressed an interest in learning more about Ryan’s idea.

Sensing my scepticism, Ryan called one of the bankers on his cell phone, explained I was helping him put together the information that had been requested and asked him to confirm to me that he was investing. Sure enough, banker X confirmed that both he and banker Y were investing but would appreciate understanding a bit more detail. About a month later, Ryan received the investment.

I subsequently helped Ryan raise nearly 2 million dollars over the next two years, though it’s fair to say that my role seemed limited and that all I was doing was effectively confirming, in writing, deals that Ryan had already successfully pitched and negotiated.

Over time, through observation and discussion, I came to understand that although Ryan is a very disorganized, creative entrepreneur, he does use a highly effective ‘system’ for securing investors. This is how Ryan does it.

1. Research – Ryan goes out of his way to identify potential angel investors. Typically these are people who have some capital and are involved in business or finance. Ryan’s research method is real world as opposed to virtual. He is a ‘social butterfly’ continually making new connections and expressing a deep interest in these people and their friends.

 Slowly but surely, Ryan builds up a picture of those people who are likely to be potential investors.

2. Target Early – Once Ryan identifies his prey (potential investors), he puts himself into situations where he will meet them.  This can be anything from the opening of an art gallery to a mutual acquaintances party. Ryan is very determined and resourceful and always seems to find a way to cross the path of his targets.

 Ryan doesn’t wait until he is desperate funding. He describes himself as being in ‘perpetual funding mode’. By lining investors up in advance, he effectively ensures that he is able to access investment as and when he needs it.

3. Seduce – Applying the same principles that most of us use to persuade someone to come on a date, Ryan presents his best side to his target. In addition to being upbeat, witty and charming, Ryan expresses deep interest in the potential investor. He makes the encounter about them and makes every effort to ensure they enjoy the experience of meeting him. Far better than pitching an investor at a urinal!

 Though Ryan has the same worries and stresses that every entrepreneur does, he never reveals these to his target. He also never talks about his latest venture unless specifically asked. Social protocol means that he is always asked about what he does. 

4. Convey Success – Ryan is a master at making dry toast sound mouth- watering. When asked what he does by his targets, he always makes it sound as though he is already successful. While being careful never to mislead, Ryan focuses on the positive and any successes that he has already achieved as well as others who are interested in his venture. Even when talking of potential challenges, Ryan focuses on the solutions.

5. Engage – Having already worked out what makes his potential investor tick, Ryan focuses on those points that are most likely to appeal to them. He always asks for their opinion and lets them know he values it. Importantly, however, Ryan never mentions that he is looking for investment unless pressed by his target.
 
6. Enchant – In his latest book ‘Enchantment’ Guy Kawasaki discusses the importance of enchantment to business success. Ryan understands this principle well and makes his ‘investor encounters’ magical, mesmerising experiences using the power of story and likeability, while focussing on how his venture will make a difference to the lives of others. If you want to enchant others, I strongly recommend you read Guy’s book.

7. Hook and Leave – Though somewhat counter intuitive, Ryan usually leaves the encounter at the point he is certain his target’s interest is at its high point. This seems to be a variation on ‘playing hard to get’ which tends to have the desired effect with the target making contact a few days later with a request that Ryan let them invest.

Conclusion

Ryan’s way may not be for every entrepreneur. But Ryan has proved time and time again that it works. Even during today’s tough economic climate. Many of the techniques and strategies Ryan’s uses are the very same advocated by Angels and VC’s in their blog posts and elsewhere.

At the end of the day, Ryan is focussing on building relationships. People and relationships are the most critical factors in investment. This is why investors consistently say that the team is the most important factor in a deal. It is also why when talking about an investment, investors will often start out by saying that the founder is a great person with lots of integrity

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The Different Objectives of an Executive Summary and Investor Deck

A common area of confusion on the part of entrepreneurs seeking to raise capital is the different objectives of an Executive Summary and an Investor Deck (usually a PowerPoint).

Typically an Executive Summary will be sent to an investor before any meeting. The  objective is to engage the investor and often to secure the first meeting. The fact that you will not be present to speak to, elaborate up and clarify the Executive Summary means you must make sure that it is a document that provides an investor with sufficient information to answer the key questions and issues they will focus on.

 It is for this reason that Executive Summary documents are primarily text based and will contain paragraphs of information rather than short sentences. You can read more about the proper content and format of an Executive Summary in my post ‘The Complete Guide to Creating an Investor Focussed Executive Summary’.

In contrast, an Investor Deck is usually presented by an entrepreneur at a first meeting with an investor. The objective at this point is to get the investor to take things to the next stage. As you are present, the Deck should be supporting your investor presentation, not replacing you. You will be outlining the elements of your investor proposition while referring to your Deck to illustrate, demonstrate or reinforce your key points.

The Deck will usually contain a number of graphics, diagrams and charts and should use a bullet point format for information. See my recent post ‘The Investor Pitch Deck and Why Less is More’ for advice on format.

I should add that there are some investors who will request a Deck before meeting you, rather than an Executive Summary. If this occurs, you will need to tweek your Deck to ensure that the information presented is clear enough for the investor to understand without assistance from you.

Three Ways to Kill Your Investor Pitch

It sometimes happens that there is a point during an investor pitch when something is said by the entrepreneur which instantly kills their chances of securing funding. It is the point at which there is no return and nothing can be said to repair the damage. You know it’s happened because the investor(s) stops listening, changes their tone of voice and hurries you on.

I took the opportunity the other night at a dinner with several angel investors to ask them what were the three things that would destroy the chances of an otherwise decent investor presentation. I asked the Angels to focus on substance rather than style i.e. the investment proposition fundamentals rather than pitch technique.  The top three were as follows:

Lack of clarity on the numbers

This evil covers a range of sins including:

1.   Not being clear as to precisely how much investment is required.

2.   Not being clear as to what milestones will be achieved by different stages of funding.

3.   Not being on top of revenue projections. Even though the Angels agreed that projections rarely bear any resemblance to reality, it is essential that the CEO / Founder is on top of the numbers and should not hide behind the CFO.

Not Having a Clear Go to Market Strategy

For reasons that I’m convinced are rooted in human nature, entrepreneurs will often  spend enormous amounts of time, energy and creativity on the development of their product or service but not give sufficient attention to the development of a well thought out route to market.

Without sales, the best designed product in the world, is of no interest to an investor. An entrepreneur’s pitch deck will often identify potential customers but not deal with key issues such as:

1.   What channels of distribution will be used and how will they be established.

2.   Who within the company has the experience and expertise to execute the sales strategy.

3.   How will potential customers awareness of the product / service be created.

Linked to the issue of a lack of go to market strategy, is a confusing of the market size with the addressable market. The addressable market is limited to the company’s industry focus in contrast to high-level market size numbers relating to that sector of the economy.

Maintaining There is No Competition

Competition is a good thing as it implies there is money to be made and provides an opportunity to learn from the competition’s mistakes and triumphs. It is very rare to find a situation where there is no competition, whether they be startups or established companies.

At a minimum, an entrepreneur pitching Angel Investors or Venture Capitalists for funding, needs to be able to:

1.   Identify the competition

2.   Compare the products / services.

3.   Explain what their product/ service has that the competition doesn’t.

It seemed only fair that I buy dinner in return for this free market research…

Why 'How' is Critical to Your Investor Pitch

An entrepreneur’s investor presentation documents and pitch will typically focus on the product or service, numbers, competition, sales strategy and team. What is often missing, however, is ‘how’ key stages and milestones will achieved. In other words ‘how’ the entrepreneur and his team will execute.

An entrepreneur can have an exciting idea with significant revenue potential, but if they fail to reassure the investor that they have the ability to execute, they will not get funded. I spent a couple of years working alongside a very experienced Chief Operating Officer who frequently managed projects worth over $100 million. Whenever a member of the team would state what they intended to do or what needed to be done, she would say ‘by who, by when’ and ‘how’. She even planned her vacations with a Gantt Chart!

When I first encountered Angel Investors and Venture Capitalists seven years years ago, I noticed that they asked the very same questions time and time again of entrepreneurs pitching them. The most common terms used in every meeting seemed to be ‘how’. How will you bring on board your first strategic partner? How will acquire customers? How will you find the CTO you urgently need?  

Reassuring an investor that you have the ability to execute can be achieved in two ways. Firstly, by proving that you have previously launched other startups that are successful. A good track record counts for a lot. Secondly, by having thought through how you will execute all key stages / tasks and being able clearly explain this to investors.

It is not necessary for you to spell out the detail of ‘how’ in your Executive Summary or Deck, as that is not the purpose of these documents. You must, however, deal with ‘how’ at a high level in your documents and be prepared to give detailed answers to the ‘how’ questions that investors will inevitably fire at you.

Why Great Substance + Great Form = A Winning Investor Pitch

It is often said that ‘it’s not what you say but how you say it that matters’. When it comes to investor presentation documents, substance will always triumph over style. If, however, your documents are unprofessional or unclear you run a very real risk of not getting funded.

An investor may pass on the opportunity of funding you if your executive summary, deck or business plan aren’t up to scratch because:

·     You have missed out key information;

·     It is not clear to them how your business will generate revenue;

·     They believe that your inability to prepare professional looking documentation will mean you will do the same for a prospective customer or client; or

·     You simply couldn’t bothered to create investor focused documents.

So while an investor will always primarily focus on numbers, team, execution, sales strategy etc, remember that the key to a successful pitch is great substance and great form.

Why Your Investor Presentation Should Focus on the Past and Future

There used to be a time, not so long ago, when an entrepreneur could secure funding on the basis of an investor presentation that focused on what would be achieved, rather than what had been achieved. Times have changed and investors are far more cautious and skeptical. This means investor pitches must be refocused to include achievements as well as statements of intent and projections.

When creating investor presentation documents e.g. Executive Summary or Deck, think about what you have already achieved and include it. Plainly in the case of a startup seeking seed funding, there may be little that has occurred.

Nevertheless a presentation that outlines some achievements will have greater impact. Obviously sales and customers are persuasive.  It may, however, that the achievements are the recruitment of a strong management team or the creation of a strong brand identity which should be included.

When you start to talk in terms of what you have achieved, it lends credibility to your assertions as to what you will do. You begin to cast yourself as someone who ‘does’ rather than someone who ‘says’, ‘hopes’ or ‘intends’. The ‘doers’ and ‘achievers’ are plainly far more investable in today’s brave new world, so make sure you cast yourself as one.

MAKE IT EASY FOR AN ANGEL INVESTOR TO FUND YOU

I was talking with an experienced Angel Investor recently who tends to mostly invest in tech startups. He had invested in a Silicon Valley startup (B), 2 years ago and was beaming at the fact that it was clear to him that the startup was finally on the verge of generating some ‘serious revenues’.

What interested me was his comment that he had almost invested in another startup (A), with a similar but stronger model, 6 months prior to coming across startup B. I asked him why he hadn’t and he said ‘they were making me work too hard in order to invest in them’.

The Angel elaborated. He said that like most investors he received several pitches and contacts a day from entrepreneurs with the next big thing.   He still runs his own company and has a family, so his time was precious. He went onto to say that he really liked Startup A’s CEO and the people he bought to the pitch. He described them as being ‘committed’, ‘focused’ and ‘resourceful’. The sort of people he could work with.

So far so good. Great idea, great team. ‘The problem was’, the Angel continued, ‘it was more a meeting where I asked them lots of basic questions, rather than them present me with the answers to questions I would have asked’.

This is not uncommon. Sometimes, when you have lived and breathed your business and know the detail inside out, you forget what it is like for someone who is hearing about it for the first time.  This is one reason why it’s so valuable for you to have a dry run of your pitch with an appropriate trusted third party.

Lawyers know that they must anticipated as many of the questions and issues a  judge and jury is like to raise or be troubled by and deal with them at the outset. And salespeople are trained to ‘inoculate’ against a customer’s potential objections.

It doesn’t matter whether you go to your investor pitch knowing all the answers. If the investor doesn’t ask you the question or you get sidetracked, you have lost the opportunity to put across crucial information. It’s critical that you answer the fundamental questions investors are concerned with, in your investor presentation materials and pitch, before they ask them. When you do that, you not only convey competence and professionalism. You also demonstrate and understanding of what is important to an investor and your ability to sell.

Of course any good investor will still drill down on the detail and ask you a range of penetrating questions. That’s to be expected. But you must make sure that you have covered the first layer of detail that any business investor will be interested in.

I asked the Angel whether he knew what happened to Startup A. Never heard of them again he said. The  equation is clear – the easier you make it for an Angel Investor or Venture Capitalist to fully understand all aspects of your investment proposition, the more likely they are to fund you.

   

Why You Should Pitch With Passion

The importance for an entrepreneur to convey passion during an investor pitch is sometimes overlooked and can undermine an otherwise strong pitch. Angel Investors and Venture Capitalists like to see passion from someone pitching them, because passion is the characteristic that enables the entrepreneur to defy the odds and succeed. Passion will keep you going when you are down to you last dollar,  when your family, friends and dog have left you and you have been turned down for investment 53 times.

I see that passion in so many of my clients when they discuss their business and vision with me. I was reminded of it recently when an entrepreneur I was talking to, who has launched a great venture, told me he hadn’t has a single day off in 3 years! Now I am not recommending that as a way of life, but it was clear that it was his passion for his venture that had enabled him to achieve the success he had so far and would no doubt enable him to achieve further milestones.

Now when I say it’s important for an entrepreneur to convey passion, I do not mean that they should come over as emotional, irrational, naive or immature. By passion, I am referring to measured confidence, belief and enthusiasm. Enthusiasm can be very infectious and something you definitely want to infect your investors with.

A word of caution. It is not uncommon for passion to vanish and fear to take over when delivering an investor pitch. Do not allow this to happen. There are many effective techniques for overcoming ‘Pitch Fear’.  Make sure you test whether you are likely to be passionate or fearful when pitching by running through a mock pitch with a third party, ideally someone not to close to you. And video record your mock pitch but be prepared to be surprised.

Pitch with Passion!

Why One Slide Thats Says It All Can Save Your Investor Pitch

As we all know Venture Capitalists and Angel Investors and very busy people. Some of them have very short attention spans and pitch meetings can be very chaotic and unstructured. This can be a real problem when you are in the middle of an investor pitch, just about to get to the most compelling slide and either you are told ‘time is up’ or you realize they have stopped listening as they type away on their Blackberry / iphone.

Right back when I was an attorney, I learned early on that it is really helpful for the audience if you can give them an overview at the outset as to the main elements of argument. It gives the listener a context within which to frame the information you subsequently provide them with.

The same principle applies to pitching. In addition to being helpful for the investor to understand at the outset the key essentials of what you are about to pitch; it also ensures you don’t leave the room before having got to your best slides. Tell them where you are going, and then go there.

Adhering to good presentation principles, adopt a 4 word by 4 or 6 line format.  Use language that drives your points home in an impactful way and gets your investor(s) salivating for more information.  Include the most important topics which are likely to be along the lines of

· Value proposition / problem you solve

· Market size

· Competition

· Achievements (so often overlooked in presentations)

· Team

Getting this slide right can take considerable time but the benefits are worth it. When you create a single slide along the lines suggested above, not only do you ensure that your investors get the key points you want them to know at the earliest opportunity, you also ensure that they are more likely to be interested for the whole of your presentation and allow you to complete your pitch. Which of course is why you were there in the first place.