Raising Money from VC’s: The Art of the Pitch

The most surefire way to raise money is to have a great team, build a great product and get meaningful traction. Yet, I always get asked: “What’s the secret to win over investors in pitch meetings?” These are the pitch techniques the best entrepreneurs employ to raise billions in capital. None of this can substitute for the business fundamentals, but it never hurts to be the best pitch person in the room.

Don’t Slow Play It. Think of the first three minutes of your pitch as a movie trailer; showcase the best highlights right away. If you have a team member who was an early employee at Facebook, say that right up front. If you’ve been getting 25% week-over-week growth, lead with that stat. If you’ve got half of your round committed from Google Ventures, say so. You probably have 2-3 minutes to get the investors leaning in, or you’ve likely lost their attention and interest for good. Get all the great points out first and fast.

Forget Your Slides. Put your deck away. Why have investors focused on your computer instead of you? You’re looking to build a relationship; you want investors engaged in an organic, authentic conversation. Have your slides there, reference the key points as needed, but keep the focus on each other — not a slideshow.

Expect to Be Interrupted. There are no awards for the best-prepared speech. In fact, you should expect to be cut off within the first two minutes of meeting. Too many entrepreneurs get thrown off because they can’t go through their pitch the way they practice it. Be prepared for the conversation to take any direction. Investors will probe to see how well you understand your market and business.

Read what other startup mentors have to say about attracting investor attention.

Don’t Get Defensive. It’s very hard to not come off as defensive. Investors will give you all sorts of reasons why the business you’re so passionate about, and have worked so hard on, won’t work. In these moments of critical feedback, listen intently. Many times investors are testing to see how you will respond. Focus on “Ands” not “Buts”.

A “but” statement negates everything that came before it, giving the impression that you’re blowing off the feedback. An “and” statement is a joiner. “You make good points, and here’s how I would tackle that issue…” This approach will stroke the ego of your investors and help you come off as thoughtful and mature.

Convey Inevitability. You need to subtly convey that your deal is going to get done regardless of their investment. Don’t come from a place of need, which we all naturally repel. Create scarcity; let them know that this funding round is closing soon and we’re really here to see if we’re the right fit for each other. Every investor wants to invest in a confident team. Having that certainty of closing helps you walk the line between confident and cocky.

Talk Up Your Team. Investors are foremost looking to invest in people. You have to first sell yourself. Investors want to see that you’re a cohesive team that work fantastic together and are a bonded unit. Prop each other up in the pitch meeting. It’s awkward to talk about yourself and all of the great things you’ve done. It’s very powerful when others are praising your great strengths and traits.

Showcase Your Key Performance Indicators. Demonstrate the potential of your product through 5-6 KPIs. They should include stats like your growth rate (more important than your aggregate users), your cost per acquisition, user engagement and any early signs of conversion and monetization. Investors want to see that (a) this business is growing at a compounding rate; (b) that people love the product and service; and (c) that there’s a meaningful monetization opportunity. Communicate these metrics in the first five minutes of your meeting.

Speak the Investors’ Language. You have to think like them. Investors aren’t in the risk business — if they were, they’d be entrepreneurs. And they more often than not follow the crowd of what other investors are doing. You need to “de-risk” your venture with social validation. What are the external indicators showing that your deal will be a success? Focus on the Five Ps that all investors care about: people, product, progress, passion and persistence. Show how you’re in the plus column in each of these areas.

Tell a Grand Story. When I first started pitching investors, I tried to come off as a realistic, objective entrepreneur who understood the risks of my deal. That was a huge mistake. The best thing you can do in a pitch meeting is paint a big vision of something that should seem audacious and even outlandish. Venture investors are well aware of the risks of building billion-dollar companies, much more so than the entrepreneur. Your job is to get them excited about a massive opportunity. Paint the grandest vision for what your business will become.

This piece originally appeared in the WSJ: http://blogs.wsj.com/accelerators/2014/10/22/jason-nazar-the-art-of-the-pitch/

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