7 crucial things to keep in mind when pitching to investors

My observations from judging a few recent offline startup pitch events #startups #fundraising

1. Down-playing the team and leaving this slide till the very end of the pitch. I argued (and will continue arguing) that the team is the #1 thing investors care about at pre-seed. Then goes the market and traction, of course, but if the team is bad (maybe not literally — they can very well not be well-suited for the idea experience-wise). Consider selling yourselves like the Americans do: adding social proof (companies/clients you worked for and their logos), clearly communicating your unfair advantage, experience, and founding story. Why not put it in the second place?

2. Not having a clearly defined beachhead market, and, basically, focus. Beachhead translates to something you’re starting with and will probably be fixated on for the first year (at the very least). It can relate to both specific customer niches/verticals/personas, as well as the functionality you’re thinking about. Saying that you’re gonna do 5 things at once (or target 5 personas at once) will only get you a skeptical look from the investor.

3. Not showing traction clearly. If there is cool traction, but the pitch is very bad, the startup is still interesting! And there’s no way around it — you gotta be specific and show at least something from this list: a). User growth (signups, DAU/WAU/MAU/installs); b). User engagement (time spent, retention, churn); c). Revenue (MRR/ARR, booked revenue); d). Pre-product traction: LOIs, wait-list. And remember, show the line, not the dot. Progress is always better than a simple snapshot.

4. Fucking up the competitors’ comparison (and the overall market landscape). Here are a few examples (try to avoid them): a). “We don’t have competitors” — is there a market then; b). “We’re better than all of our competitors (big companies BTW) because we have A+B+C+D, and the competitors don’t have that” — wishful thinking and a lie; c). “All of our competitors are basically shit” — probably not true and looks a bit like the show-off; d). “We don’t know half the players in our market” — you gotta do the research. Overall, respect for the players in the market you’re after is a good sign of an experienced founder.

5. Using random numbers to show the possible upside through the market size. Sticking big numbers (as TAM/SAM/SOM) from questionable consulting companies is not a solution if someone starts digging. Try to calculate your true market size using the bottom-up approach: how many possible customers you can have times what you earn from these customers.

6. Not communicating clearly enough the sense of “magic” related to your startup. To me, this is one of the things that make up for the FOMO factor, and it’s really really important when trying to fundraise. One can get this (magic!) in a myriad of ways: having a rock-star team with an impeccable expert, showing amazing traction, discovering something very specific that no one else in the market found, and having a proprietary tech that’s simply magical. What is your magic? You should at least be able to answer this for yourself.

7. Selling the “why now” as part of your pitch. Very few pitches nailed this and I often was left thinking if now is the right time for this startup, or if it is too early/late. Examples of what you can include in this slide are: a). Tech shifts; b). Governmental changes/laws/policies; c). Complex numbers or data, charts. The more obvious the change is, the better — don’t invent stuff.

I often do advising/consulting and run FundraisingHackers bootcamp in monthly cohorts as a side hobby — so definitely reach out if you’re fundraising and planning to fundraise 🙂