5 Quick Tips on Pitching Angel Investors and Venture Capitalists
Lately, I’ve been doing a lot of pitching to investors, including angel investors and venture capitalists. It’s a fact of life when you run a venture-backed startup. It’s one of those things that no one ever tells you about raising money — once you start, you never stop.
It will take on average 4-6 months to raise money, so when you raise an early seed round (say in the $250k-$500k range) it won’t last long. That means the minute you cash that check, you’re out there again, raising more.
I’ve written about pitching investors before. And I’ve also posted some common questions investors will ask during the investment process. The points I made in both posts remain true, but here are some additional insights I’ve learned over the last few months of pitching, pitching and more pitching:
- Tell Your Story Quick. When pitching investors you have a captive audience. But they won’t stay captive for long unless you can hook them. And to-date I’ve seen two things that keep investors’ early attention on you versus their Blackberrys:
- An entertaining story on the problem you’re solving
- An entertaining story on the founders and how the company came together
Both of these points are about putting some context and relevancy on the upcoming pitch and discussion. If you make the problem feel real and explain it in an entertaining way it’s going to resonate much more strongly with investors. The same holds true with the history of the company. They want to hear about each founder’s strengths, background and how you were drawn together to create this new business. That has to be done in a relaxed, entertaining way.
Here are 3 slides I used recently in the beginning of a presentation from CIX where Standout Jobs was named one of Canada’s Hottest 20 Startups.
You don’t get all the context without hearing me go through the presentation, but the key is that I was illustrating very simply - at a high level - the problem we’re trying to address.
- Change the Pace Throughout. Whether a presentation is 5 minutes or 50 minutes (or anywhere in between), you need to change the pace throughout. Speed up when telling high level stories, which also allows you to go through more rapid slide changes to keep people’s attention. Slow down when you’re getting into the meat & potatoes, so people can digest the details. When I first started pitching I know that I did so with a very monotone pace. Everything was well timed, but there wasn’t enough variation.
- Sexy Slides Work. I know you’re not selling vaporware or snake oil, so I have no problem promoting slick presentations. You’re not trying to pull the wool over people’s eyes with “style over substance” but you need to make things look good. I’ve seen too many presentations where the slides were simply painful to look at; and you can watch people in the room tuning out almost instantly. No matter what you’re pitching - from cool consumer apps to ultra-complex B2B technology - find a way to make your slides sing.
Here’s an example of a slide I’ve used which I think works well. It’s nice looking, bold and has a few key points on it:
Side note: Don’t be afraid to play around with font sizes, colors and typefaces for things like slide titles. Everything shouldn’t be absolutely uniform.
- Don’t Over Emphasize the Product. Unless your product is dead simple, you won’t be able to go through all of its great features and benefits in a short investor presentation. Don’t even try. You want to highlight the key elements of the product, but ultimately investors are buying into the team (i.e. the founders), the passion, and the belief that you can execute on what you claim you can execute on. They love to see barriers to entry, intellectual property, etc. but they don’t want to become experts in your product after one pitch.
- End Strong. Most presentations leave the detailed financials to the end. Of course, investors want to know about your financial situation and projections, but ending just on that is pretty dry. Plus, they’ll be assuming that most of your projections are wrong anyway, especially if you’re at a very early stage. So find a way to end as strong as you can. In the last pitch I did, I listed out 4 key points I wanted the investors to remember. It was my, “If you leave here remembering only a couple things…here’s what you need to know…”
And recently, I got some interesting advice, which was to make sure the audience is drawn back to you at the end of the presentation and not focusing on the slides. You want them looking at you, making eye contact, and really getting a feel for your confidence and passion. I was told that the last slide should be as minimalistic as possible; even down to just showing your company’s logo. No matter what you do, end strong by highlighting the few critical things you want investors walking away with in their heads.
Pitching investors is hard.
I’ve met very few people who are really comfortable with it, and fewer still that enjoy it. I did not enjoy the process early on. But the more I pitch (and present in front of larger audiences), and the more I hone my Powerpoint skills and realize that I’m really just telling a story, the more comfortable and effective I become. And you do get better with practice. Good luck!
Thank you again for a meaty post Ben. What you say of pitching investors and how to present can easily be extended to any presentation. It’s about knowing your audience and delivering accordingly.
Though I have yet to pitch to investors, I would think that a big alarm bell would be the spending of money on operational costs (wages, leasing office space, etc) verses assets (hardware and other tangible goods that can be sold to liquidate).
Any tips on how to really key a business idea as an asset in their mind?
I think you make a perfect point. Its not always so much as to what your pitching but rather how you pitch it. People are dying to hear a good story and are more willing to back it if its entertaining.
End Strong! starting strong is a must to keep people reading. and ending strong is totally a must to get the business running.
This is the first blog post that I’ve read on pitching investors, and I have to say you made some great points. It’s not easy to get in front of an audience of potential investors and captivate them or get them excited about what you are doing. These days VC’s can see through a crap pitch within seconds, so it’s imperative to really keep building momentum in the beginning of your pitch.
What a great resource.
I remember my first company, it was so hard to raise money. We relied on all angels. $5,000 here, $10,000 there, finally, we raised $75,000 and were able to hire someone to do our PR.
Even though we made barely any money, we generated a lot of press in the media. That press alone got the attention of angel investors with deep pockets. We were then able to raise 1.5 million at a decent valuation.
I highly recommend learning how to write an effective press release, monitoring the media to discover when they’re writing about your industry, and building relationships with reporters so that you get the buzz you deserve.
Investors love media … it’s kind of a smoking mirrors effect, and it’s only one small piece of your sales/marketing pie. It will not make or break you, but it will definitely give you a great edge for raising money.
Great blog!
[...] 5 Quick Tips on Pitching Angel Investors and Venture Capitalists PerkettPR’s attendance at multiple TechCrunch, TechCockTail and PopSignal events definitely brought to light that there’s certainly no shortage of start-up companies looking for money. This post from Ben Yokosvitz’s Insigator Blog gives some good advice on successful pitching during your fund raising efforts. [...]
These are excellent tips. I have been using Raising Capital for Entrepreneurs (ebooks version), which has a lot of the same information but definitely not in an at-a-glance format. I’m printing out this blog entry!
Thanks for this starter’s guide to raising VC from angels. Joeys’s comment above regarding creating your own media buzz is an excellent addition to the list. There are a ot of resources available to guide you through the press release compositin and distribution process — and you’d be amazed what an old-fashioned phone call to a business editor can do for a young company with a good story.
Are there just five most important or you have another?
I just practice about 3 of them and still didn’t have investors..
Thanks for these tips. I’ve been working on a few different projects recently and it’s about time to try to Pitch them. I think every owner’s problem is over-emphasizing their product for obvious reasons, but it’s a good thing to keep in mind.
New Reader, Alex
Those are a great tip! Keep up the good work.
Be prepared before you pitch any vc - put yourself in their shoe and think about the risks. Is there really a market for your offering? Research - study - prepare & rehearse, then repeat.
Excellent blog, I’m so glad I’ve found this place. As for the post, there’s some great advice in there for beginners and some good points to refresh the brains of the pros. I’ll be visitng regularly.
Hello Ben, thanks for this great post. I’ve engaged in personal selling before and large audience presentations, and I think it helps to practice a certain level of detachment in your presentation - that delicate play between passion (about the project)and a demeanor of desperation. Your audience can sense the confident attitude and will get the message that although you’re truly passionate about your project and would very much like to get them on board, you have plenty of options and it will be their loss if they miss out on this boat. The details in this post about the different stages of the presentation flow are priceless. @Joey’s comment about the use of media in raising interest for the project is also very valuable. Thanks.:)
These were great things to think about. Sometimes we get so caught up in making a super spectacular powerpoint that we forget to tell the true heart melting story. Getting personal goes a long way, even to strangers with big pockets.
@Brian Hogg: Most of your money IS spent on wages and other operational things, not on assets. Any assets you buy depreciate in value over time and are of little use to the business’s value. So I wouldn’t worry about that. What you need to focus on is where you’ll spend money to EARN money.
@John Gillett: PR is key. I’ve written about that before and how startups can generate PR. It’s some of the least expensive attention you can get, and do it properly, over time, and you can generate strong results from it.
@Greg Rollett: I agree. But just remember, super spectacular Powerpoint slides DO make a difference. If you go with boring, overstuffed slides with tons of text and too few visual cues, I don’t care HOW great the business is, the investors will turn off their brains.
It is difficult to find angel investors, but a careful exploration of possible locations for prospective angel investors can help. Angel investors are inclined to stay close to university programs due to the high number of fresh business ideas they produce.
Some really interesting (and not previously seen stuff) here. I’d like to share something that I heard recently that is more about the individual, but I think is interesting.
A friend of mine had recently read Harmonic Wealth by James Ray and showed me a section because she thought it reminded her of me. That is how it all began. (lol!)
James Ray said, “If your not growing, you’re dying.” Six simple words that I really needed to hear. I guess it was because I was complaining to my friend that I just wasn’t feeling stimulated enough. It wasn’t as if I was doing anything “bad” in my life, so I was not sure why I was not feeling right. After learning this idea, I realized that “staying at even par” is not enough. That bad feeling was because by not growing, I was staying in the same place, just plodding along towards my death in a way. Doing nothing has negative consequences. But if I was to start growing, I would be moving my life forward, expanding it into something much more exciting! That’s what living is all about.
After I finished reading Harmonic Wealth, I realized I needed to commit myself to a lifetime of learning – it did not end when I threw my graduation cap in the air. Check it out for yourself… (Link) By the way, the Spanish classes I singed up for are going great
Here’s the link to the website where I bought the book: harmonicwealth.com/read
-Harmoic Wealth Enthusiast
[...] list of pickup lines some entrepreneurs are using to open the conversation with investors, while Ben Yoskovitz refreshed his quick tips for pitching angel investors and Venture Capitalists. Both hone in on the need to abandon cute corporate clichés and focus on packaging and [...]
Good points raised. You are right that an impressive presentation can make a huge difference to the survivability of a start-up.
I think your third point, about not over-emphasizing the product, is the most important one you made. The product is obviously a key issue to the investor, but if you can’t convey the important element of the product or concept in a fairly short span of time, you are SUNK.
And I would add one more point - practice! Try your pitch on family and friends. If they are bored or don’t “get it,” revise your presentation and try again. Never go to your first investment meeting without being fully prepared. Treating your first meeting as a dry run may be fatal if that was the one person who might have written you a check.
@David: I agree 100% with you when it comes to practice. It’s something I’ve mentioned a few times in previous posts. And don’t just practice alone, in front of a mirror — get in front of people … the more you do it, the better you’ll get, to the point where you could do the presentation on-the-spot at any given moment.
1. A good story
2. Some images (easier to comprehend than text)
3. Keep it as short as possible
4. Repeat important points …
5. … That are about benefits to clients
6. Slow it down. You’re excited, we’re tense and fidgety.
7. Keep it as short as possible
8. A lot of it will be down to whether they like you or not.
… from someone who’s never pitched for venture capital in his life
Did you ask your audience later why a pitch _didn’t_ work? That could be useful.
I use to work in VC funding and I want to warn people it’s usually not beneficial to pay fees to pitch your idea to so called investors. There’s an outfit in Los Angeles that is notorious for this and they charge thousands but rarely ever invest. When they do, they don’t even use their own money. Legit angel and VC funding sources won’t charge you to hear your idea.
Those are really good tips; I’ve often thought about the possibilities of investment opportunities.
[...] but he’s right. For some further advice on pitching VCs, I’ve written a couple posts: 5 Quick Tips on Pitching Angel Investors and Venture Capitalists and 5 Lessons Learned from Pitching [...]
A good point to add would be “Invite them to Lunch” - It’s a small investment if you consider what you get in return if they actually “LIKE” you. Having someone with money who actually appreciates you as a person is key in my book.
I found listings of angel investors and venture capitalist groups at http://www.breadsreet.com and http://www.investorinspector.com . can somebody recommend other web sites with free listings for angel investors?
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