Guest Blog: #PitchPerfect: Think of a Horse Race

By: Bianca Dellepiane, Startup Evangelist, Global Connector, Digital Marketer

Do you have an exciting business idea? A pitch deck? Maybe a prototype? Conventional wisdom says that it’s time to seek Angel Investors.

But, what do Angel Investors care about in your pitch?

THE JOCKEY, THE HORSE OR THE WHOLE RACETRACK?

“Bet on the jockey not the horse” this is a very popular metaphor among Angel Investors, and it means that they would rather invest in an “A” team with a “B” technology than the other way around.

On that note, I was particularly impressed by the presentation, hosted by Digital Marketing Agency ParadigmNext, of Chicago-based executive and board member Glenn Gottfried.  In fact, Glenn takes it a step further when he describes what Angel Investors look for in a pitch.

According to Glenn, and I tend to agree, Angel Investors take a more holistic approach when they make an investment decision.

Staying within the Horse Race analogy, yes, having a great team (The Jockey) is very important.  Maybe as an early-stage startup can be difficult to attract a top-notch group of experienced co-founders/executives.  Therefore, having people with good knowledge (and hopefully some past experience and connections) in the industry you are targeting, being trustworthy and ethical (how good is your reputation so far?) as well as being willing to be coached (do you tend to dismiss expert advice?), are all great points in your favor.

But, what about the idea (The Horse)?  According to Glenn, it is rare for investors to come
across ideas that do not sound fabulous, at least on paper.  In fact, generally, by the time a BP reaches their desk has already been pre-screened. However, during your pitch, besides the fancy tech and your solution to a real problem, be ready to correctly identify  the market size, defining it too broadly or just wrongly can hurt your pitch right away.

Then, and this is what I found most interesting, Glenn added to the Horse and Jockey “image” two additional “Horse race” elements which also have an effect on the fundraising process.  These are: Market/Go-To-Market Strategy, which he called “The Racetrack” and the economic conditions which he compared to the “Track Conditions”.

Paying attention to these two factors shows your vision and ability to think strategically.  Be sure you understand the reasoning behind your business model, profitability, customer acquisition… and think about how the economic situation, market saturation, demand elasticity–what pricing pressure you will be able to provide– could impact your startup and the returns you will give your investors.

BUT THERE IS MORE TO A GREAT PITCH 

DON’T forget that everything you include in your pitch is interconnected and must appeal and make sense to potential investors.

Delivery: Can you WOW investors with your pitch? Can you be passionate? Can you sell your idea and your vision in a few minutes (5-7 on average)?  If you do not have that “Stage presence” even if you are the company’s CEO, ask someone else in your team to present.  Of course, if you live here in L.A. stage presence should not be a problem:)

In this video, Chris Lipp, author of “The Startup Pitch” explains what’s the best way to show passion in your pitch.

Financials: In the initial slides you illustrated your Go-to-market strategy, when you get towards the end, you show your financials.  Here you want to keep the capital you are asking for consistent with your Go-to-market strategy.  If the two are out of synch, investors will be concerned about how realistic is your overall plan.

Exit: some investors care more than others about your Exit strategy but they ALL want to make sure you WILL want to exit.  Ideally, Angel Investors expect to get a ROI of 10x their initial investment over a period of 5 years. Therefore, they DO NOT WANT to fund an entrepreneur who wants to run the business forever.

EVEN THE PERFECT PITCH CAN’T LURE THE WRONG INVESTOR 

Finding the right investor is almost like finding the perfect romantic match: nowadays you can go online and screen in or out many guys or girls just by reading their profiles.  Once you go on a date you already know that you have certain things in common, increasing the probability of a good match.

The same happens with investors: you should do some preliminary research in order to target those who are most likely to invest in your type of startup.

Screening Tips: Check in advance if they fund startups at your stage, have relevant industry expertise and have had success in your market.  Also, make sure that the amount of capital you are seeking fits their range, you can promise the right return multiples, and their other investments bear a similar level of risk to yours.

After reading this post, do you have some great pitching strategies of your own to add?

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Thank you!