Here’s something all startup founders should know when speaking to an investor: you’ve got 30 seconds of their time. Half a minute to impress them with your idea, or you can forget it.
If you can’t grab an investor’s attention within 30 seconds, then more likely then not your pitch won’t get any further – first impressions count.
It’s not too dissimilar from Tinder. People spend just a couple of seconds checking out your photo before choosing which way to swipe. That photo is your one shot at the title. Wearing sunglasses reduces your chances of a right-swipe by 15%. A hat knocks you down another 12%. Blurry profile pics are another huge fail. But facing the front raises your chances by 20%.
If you’re smart (on Tinder or in business), you’ll do all you can to make the right impression from the start. You aren’t going to get a chance to win someone over with your “great personality” if your headgear or shades repel them.
The same goes for pitching your startup. For the last three years, I’ve been talking about the importance of a process I call “30-3-30”.
It’s pretty simple. You get 30 seconds to hook us with your pitch (either deck or in person). If we like that, we’ll take three minutes to further understand the opportunity. Based on that, you might score a 30 minute face-to-face meeting.
Why do we investors do this? It comes down to a factor of time.
Most startup investors are approached with several pitches a day: one Australian VC firm recently indicated they have said no almost 2000 times over the past few years, and I am sure the number looked at is even higher.
Even if they spend only three minutes on each of them, that’s well over 12 days spent just saying “no” – given this figure would be time from potentially multiple partners the opportunity cost definitely begins to add up.
To do due diligence on all of them, which can take 1-2 months per business, is more hours than we’ve got this century.
By restricting the initial pitch to 30 seconds, investors can filter out the promising ones in a day.
So let’s look at it step-by-step.
The 30-second pitch
All an investor wants to know at the start is what the concept is and why it is a fit for their portfolio. Sounds easy? Many of startups can’t even get this right.
When they do, it’s compelling. Looking at two deals we actually did go ahead with: Sendle got me interested to read their whole deck just by capturing me with their initial idea – killing the wait at the post-office. Airtasker also got it right by showing me a problem, and a business opportunity, that I understood.
Before jumping into the 30 second-pitch, pick your time. No investor wants to be interrupted in the middle of another meeting or conversation, no matter how awesome your idea is. Be polite, be professional, and you’ll have a much better chance.
The three-minute pitch deck
I think we could all learn from the Y Combinator pitch decks which are literally five slides: a title page/logo, who you are, what you do, what you’ve done so far, and your addressable market size.
As an investor, we’re looking at traction to date and your potential market. We’re interested to see who you’ve got on your board and whether you’ve got good advisers, and any partnerships or any other parties that may have done their own due diligence, valuations, and what they’re asking.
Charts and tables have to be recent and relevant. Old stats are an instant warning bell. If you got some traction in the first couple of months but nothing for the past year, don’t try and bluff it with outdated figures.
The 30-minute meeting
If you’ve managed to get a face-to-face meeting, there’s probably a decent chance of getting investment. You’re definitely not home and dry by this stage but you’re much closer, so don’t screw it up.
This is about proving your startup is as good in person at it was during the pitch deck. It’s also your opportunity to scope out the investor – to see if you’ll be able to work with them as you grow your company.
The smartest founders I’ve dealt with understand the rules of the game. They know that the investment world has a limited amount of time to spend listening to ideas.
Don’t waste the opportunities you get. Like Tinder, ditch your hat and shades. Don’t be vague and blurry. Be front on, direct and clear.
If you can nail the 30-3-30 approach to pitching, you’ll definitely have far greater chance of securing capital for your startup.