Being struck by an inspired business idea is a thrilling moment. At this time, it’s tempting to believe that every investor in town will be begging to hear an in-depth explanation of your wondrous start-up before throwing copious bundles of cash at your feet.
The reality, unfortunately, is a little different. Investors and potential business partners are often busy, healthily cynical people. You will need to perfect a strong elevator pitch before they will even consider backing your business.
Get business news first
Sign up to SmartCompany’s daily newsletter
An elevator pitch is so named because you should be able to deliver it in the time it takes for you to corner an investor in the lift. If nothing else, it will help you boil down the essence of your business and allow you to cut the waffle.
Keeping it short
“People are passionate about their businesses and they can talk for an hour straight about their ideas,” says Niki Scevak, founder of estate agent search engine Homethinking and mentor for the Startmate program. “I’ve done this and it hasn’t gone so well.”
“Even though you’re passionate, you need to be brutally precise. Even one sentence is too much, in my view. You should be able to sum up your business in a few words.”
“That brevity gives you a good kick-off point for the investor. If you’re talking for longer for 30 seconds, it can prevent the conversation flowing and the asking of further questions. Don’t feel you have to say everything at once.”
David Jones, another Startmate mentor and co-founder of ThreatMetrix, adds: “Australians are generally not good at elevator pitches. We are wafflers.”
“In the US, they have a debating culture in their schooling that allows them to put forward arguments in concise terms.”
“Also, we have the self-deprecating thing that we share with the Brits. Entrepreneurs need to be able to blow their own trumpet in an effective way.”
Two pitches or one?
Jones believes that entrepreneurs should master two pitches. One is a “explain to a person on the street pitch” that should consist of 20 words and include what the business is, the problem it’ll solve and its target market.
The other should last a minute, according to Jones. This gives more in-depth information about the business, such as the market it operates in. Start-ups should, for example, be able to name all of their potential competitors and identify a clear point of difference to them.
“You really want to be able to nail that differentiation,” he says. “The investor will then say ‘Okay, so how will you make money?’ You then need to nail that, too.”
Scevak advises: “The biggest breakthrough is to show empathy with the problem rather than the solution in your pitch. The biggest mistake is to go through all of the features of your business rather than identify the problem that it is looking to solve.”
“It’s also good to anchor your proposition in something understandable. For example, we call Homethinking the ‘Yellow Pages for estate agents.’ Yellow Pages is an anchor – it’s something everyone knows. Use that anchor and modify it for your own use.”
Present yourself well
Scevak says the presentation itself is important too.
“People use Powerpoint as a crutch, which I hate,” he says. “You should have one broad concept which you can use as a slide. Even one paragraph is too much – it’s a bad way to present.”
“People like to connect with the product you’re talking about too. If you demonstrate it well at the presentation, that’s almost as important as anything you say.”
Jones concurs, but says that flashy presentations can often be empty.
“The strongest Startmate presentations were structured and the bad ones were waffling and had no confidence,” he says.
“One had done a video that included a couple of skits that were very funny, but they didn’t actually explain the value proposition of the company. It all got lost in visual effects.”
Packing a punch
Attention-grabbing clarity is what investors are looking for, according to Jones: “Investors see a lot of people and they do a lot of deals. You have to respect their time and grab their attention.”
“Be very clear what you want from them. Ultimately, they don’t care about you, they don’t know you. So you have to excite them. You’ve got to sell the sizzle, not the sausage.”
“If you’re sending an email, they won’t read the attachment. You’ve got to get them with the teaser in the email. When we started, we had to strip everything away (that we sent) because it was always too much.”