Pitches are not simply an opportunity for a founder to describe their idea.
They are also about the founder convincing an audience that the startup is a bet worth taking, and that they have the passion and ability to deliver on their vision.
Founders might be pitching for funding with a VC, pitching for capital in a competition against fellow founders, or simply building a network of contacts to take their business to the next level. Regardless, a good pitch doesn’t happen without careful planning.
With fierce competition for funding, it is easy to understand why a founder might want to adopt the kitchen sink approach and throw everything at an audience.
Leaving anything out can seem to be a missed opportunity. But from the perspective of the investor, ‘more’ is often too much.
There are nine key pitch components that founders need to get right.
Without these boxes ticked, even the best idea and the brightest founder can fail to reach the right note with investors.
1. Articulate the problem that the startup is solving
If there isn’t a perceived problem, there is no need for a solution.
And a founder shouldn’t assume an investor knows what the problem is.
The best way to convey the problem is often through storytelling and recounting personal experiences.
Telling the story of a typical customer might include the impact of the problem in dollars to a business, wasted time or resources.
2. Show how the startup solves the problem
With the problem now clear, this calls for a solution.
Founders should articulate their business model clearly, outlining the benefits to the audience and keeping it very simple.
Startups should be wary of technical jargon as this is the enemy of engagement. If an investor is unable to wade through technical jargon, they will simply walk away.
3. Size of the market matters
By defining the size of the market, founders can tell their potential investors exactly how much potential business is out there.
If a founder can’t answer these questions, they may not get past first base with investors.
TAM, SAM and SOM all give investors very different information.
As a crude explanation the SOM generally indicates the medium-term sales potential, the SAM reflects the target market size, and TAM is the full potential.
All have a place in a pitch.
4. Show them the money (making opportunities)
A pricing strategy is one of the most important decisions that a founder makes.
The audience will want to hear if revenue comes from a one-off sale, a subscription product or if the startup generates income from strategic partnerships such as advertising or affiliate fees.
5. Know the competition
Competition can come from an incumbent, from indirect competition or alternatives that may solve a problem a different way, as well as the most obvious direct competition.
Founders who have done this homework can talk about their sustainable competitive advantages and the barriers to entry with a dose of reality, respect and insight will be leaps and bounds ahead of those who fail to acknowledge the competition in their market.
6. Understand whether the startup is a sales or marketing-led business
A founder should have undergone enough testing in the early stages to know whether it is primarily a sales or marketing focussed business.
Understanding the effectiveness of different channels will be an ongoing process of testing and refinement to find the most promising sales or marketing distribution channels.
7. A winning team
An idea can be great, but it is only an idea until it’s executed, which depends entirely on the team’s ability and experience.
In every pitch, a founder needs to switch gears and pitch themselves and their personal experience and expertise to convince the investor that they are the perfect person to build the business.
8. Show traction, the evidence of momentum
Traction is momentum. It is essentially a measurable set of customers or users that allows a founder to demonstrate that their big idea is more than just an idea.
That it is a viable business and the founder is on the journey to product-market fit.
This shows that the founder has evidence that there is a sizeable market for the product, and there are green shoots of sustainable growth.
9. Be specific about the help needed
Founders can usually articulate where the business is at now, and where they want their business to be in the future, in very clear terms.
But where they often struggle is ‘asking’ and making a direct link to how investors can help them realise their plans for the business.
For founders not looking for funding, but more focused on seeking leads, possible advisors and introductions, their pitches still need to define their ‘ask’ in strict and specific terms.
For example, if a founder operates in e-commerce, their ‘ask’ might be for an advisor who understands delivery logistics, while also describing how this assistance relates to the startup’s future plans.
Startups should aim for clarity at all levels of their pitch.
After all, if the investor can’t completely understand the messaging of the startup, the problem the business solves and its value to clients it becomes difficult for the audience to really back the startup.
By ticking these nine boxes founders will be off to a flying start.