Before getting into the pitching process let’s take a step back and understand how to reach VC via emails or calls for the ones finding an optimal route.
With VCs handling over 100+ emails and numerous meetings everyday here are some heuristics VCs follow to arrive in the correct inbox. The clearer your proposition, the better chances of them being responsive. Here are some ways to be at the wheel of an effective email.
- Keep the subject line brief – Stay away from catchy subject lines to get attention. Instead use the name of your product and a few words detailing the product. Try keeping the subject line concise to less than 10 words.
- Keep it real – Investors avoid reading through long paragraphs to know more about you and your accomplishments. Instead, they want to read more of what your product is all about. It is essential to stay on the course and be clear about what you want to achieve through this email by providing the right information to investors. Providing a teaser ensuring a brief overview of the product and what it is solving helps capture the essence of this mail.
- Problem solving – Highlighting about your brand and what problems it solves, backed with data points on current traction (DAU, MAU, MRR, target audience addressable market) exhibits higher mail conversions.
Fast forward to today, you must pitch to VC investors convincing them to fund your startup. How can you make the pitch perfect? I’ve seen it working well if you can follow step by step approach as the following:
- Know your Audience – You need to research the people you are meeting and build your strategy accordingly. Its important to understand about investor background (if expertise in your area, adjust your pitch for it), portfolio companies (Have they made good returns by investing in synergetic business, if so position your company to maximize from it) , investment preference (focus on the mission statements published), investing criteria (understand fund size, ticket size, expected ownership), investor position (to understand the influence on decision irrespective you may still want to meet them). What we are trying to achieve here is craft simplest explanation of company’s core values tailored for the VC meeting.
- Grab Attention – I want to start on a positive note by saying most investors are eager to hear you and about your brand. They are hopeful you and your idea is the next big thing. Knowing that is generally the sentiment of the room, capturing their attention and making them curious about your business idea is crucial. As is said, “Impressions are made within the first 90 seconds of interacting”, so what are some things you can do to make a stellar impression? Well, above all how you approach the person is crucial. Approaching the investor(s) with a smile and excitement brings the right energy to the room. Next is how you open the pitch.
- Strategic opening – Resist the urge to immediately launch into your pitch. Instead initiate the conversation by posing a question “What is the most important aspect you would like me to cover?” This response becomes instrumental in shaping the remainder of your presentation. Say their concern is market size, you can allocate additional time to cover this aspect. Initiating conversation with this question helps make the pitch process more interactive, establishing guidelines to pitch right. Use a casual and catchy opener with references of your personal story or a surprising static. Keep it brief before getting into the meat of your pitch.
- Tell a compelling story – A gripping narrative that shows why you are passionate about your idea, how you validated it, what are you trying to achieve and what impact you want to make. You need to ensure investors engage on a personal level with real life pain point you witnessed/observed, your product addressing the concerns for the target group and how your product defensibility is difficult to replicate. Structure your pitch such that it reflects true value proposition. Airbnb’s first pitch started with diagrammatic representation about the company, slicing the segment of large market they are addressing. After highlighting the product’s viability it’s worth spending time to show all the features you’ve developed and customer benefits. Stories without contrast are monotonous and investors like to hear about the roadblocks while building and how you overcame them. But if you don’t have a real story, don’t force fit one. You can explain the problems your product solves, conveying the message efficiently.
- Outline Path to Profitability – To explain your product is one thing, showing how the value converts to financial performance is another. The main aspects to this is (a) USP – What makes you better than your competitors? (b) Early customers – Has your product been tested by customers? Do you have a paid user base? Explain clearly how you monetize to chart a clear revenue stream (c) Profitable – Talk about unit economics, metrics as LTV/CAC depending on the business stage to validate path to profit. The real winner for your company is the competitive advantage and how it converts monetary gains to your advantage. Investors aren’t evaluating your product solely; they’re evaluating your team.
- Core Team – Investors focus on core team especially in case of early-stage VCs. The keyman are backbone both in building stage and at maturity to keep the company going. VCs typically examine team expertise, sector experience, past accomplishments, skillsets, and qualifications. The core team exhibiting consistency, resilience and excellence is enough to grow the company and instill confidence in the investors.
Now that you have reached your pitch’s conclusion, you would want to make a clean exit. As you conclude, add a summary capturing the company’s essence in a few lines.
Be prepared for immediate questions upon completion. Maintaining confidence, adopt natural body language and calm approach. Interact with investors as you would with fellow founders circling back the conversation about the company’s core value. Together with it, founders can clarify their concerns by asking questions from the investors once investor queries have been addressed. Lastly, you’ll want to have a strong call to action. Try understanding the next steps and the expected turnaround.
You as a founder should deserve value out of an investor meeting as you are sparing valuable time, likewise, holds for investors. Not all feedback will be relevant, but some will be. And not all meetings will yield favorable outcomes, but you will be positively surprised about how many do when best practices put together. Good luck!