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September 29, 2009 / Danny Robinson

3 Investor Pitch Conditions – Why You Get Conflicting Advice!

I hear it all the time – almost daily, in fact.  Entrepreneurs deal with wildly varying, passionate, almost religious, beliefs around how to pitch their company to Investors.  They have advisers, board members, friends, family, potential investors, consultants, and sometime even the gardener telling them how to get their point across to prospective investors.  My advice to you is this: listen to all of them, but put their advice into each of the following buckets.  You see, everybody is so sure that they have the right answer, because most of the time, they do.  They just forget to understand the conditions in which you’ll be delivering the pitch.  And that, changes every aspect about how you deliver it.  I tried to work out how many pitches I’ve given over the past 10 years.  My guess is about 100 pitches, which have resulted in 10 rounds of investments.  Adjust your pitch to match the conditions, and you should receive better responses:

5 Pitch Conditions

  1. The Pitch Event/Angel Forum Pitch – For many first time Entrepreneurs, this is first contact.  The goal here is to  pitch interested investors one-on-one.  Many entrepreneurs make the simple mistake of trying to tell a room full of people about every nuance of their business in 10-20 minutes.  They feel that, “if they only knew about this feature, and that deal, or the other markets that my product could expand into” that they would get funding.   I recommend you follow Guy’s pitch advice for group presentations.  Also, read my post about loud-mouthed (probably ambulance chancing consultants) at Angel forums.  If these guys try to criticize your pitch in public, just deflect those comments by responding with, “I’m happy to answer any questions you may have about the business or my team.”
  2. The Coffee Shop Pitch – The chance to pitch a VC or Angel one-on-one is the most important part of the fund raising gauntlet.  This is when an Angel or VC will decide to do further diligence, or leave you on the side of the street.  This often follows a Pitch Event, but if you’re lucky enough to get a personal introduction (which is always better) then this may be the first time the individual has heard the pitch.  In either case, your pitch needs to be dynamic, interactive, responsive, which will result in a fresh and real delivery.  It’s much more of a discussion than a pitch, except you’re doing most of the talking.  You should be open to sharing every detail about the company; No NDAs are accepted or required here.  Do not follow a rigid format.  You can use slides, but mix it up with as many actual live demos as you can and based on what the investor may care more about. (to know what they care about, ask them)  You have the unique ability to watch for the “ah ha” moment.  Keep your eye out for this moment, it’s what you’re working toward.  You’ll know it when you see it.  When you do see it, think of what you just said to cause this reaction and go into more detail about that aspect of the business.  This is when the questions will start to pick up, because it’s at this moment that the investor switches from “why should I invest in this deal,” to looking for reasons “why not to invest.”  Make sure he/she doesn’t find any, and you’ll be on to the next stage.  Oh, and be careful never to answer challenging questions in a defensive tone.  This will make you seem closed to advice and difficult to work with.
  3. The VC Partnership Pitch – Following the Coffee Shop pitch, you will be subjected to a certain level of diligence.  If the investor was a VC (vs an Angel) and things went well, then you will then be asked to pitch the Partnership.  This usually happens on a Monday and if it goes well, you will hear about it by the end of the day.  If it doesn’t you’ll hear a no by Wednesday.  Of course this isn’t a perfect formula, but I can it’s hard for me to recall a time that this wasn’t true.  This pitch is usually the easiest because you’re being “sponsored” by a partner in the partnership.  To get the investment approved, it requires by-in from his/her entire firm.  The Partner will work with you to construct the exact slides that will sell the firm.  Work with them, but for the most part do exactly what he/she says.

Other Pitch Conditions

This post is not about pitching to customers, but it needs to be noted that the pitches below also differ from the rest.  I mention this because I have seen many entrepreneurs pitch their companies to investors as if they were pitching to a customer.  They spend way too much time on the product and not enough on how the business makes money.  Knowing about these other two buckets will hopefully help you decide where to move store the advice you receive.

  1. The Customer Pitch – For example, Industry events, customer’s offices.
  2. The Public Peer Pitch – Demo Camps, Launch Parties, etc
  3. The Board Pitch – Every board meeting is a mini pitch.

Universal pitch advice

  1. Exude a calm confidence in what you know.
  2. Talking fast usually means you’re nervous. SLOW DOWN.
  3. Using lots of inflections in your voice means you’re passionate, but be careful not to sound defensive.
  4. Using your body means you’re really passionate, but remain pragmatic.
  5. Never get defensive when someone criticizes  your idea or approach.  Chances are they have a really good reason for doing so, and you may want to think about their advice a bit more. But, it’s nice if you can say, “We looked into that, and this is what we discovered…”

Pitching yourself

Don’t forget that there’s always a sub-pitch that you will always have to keep fresh.  That’s learning how to effectively pitch yourself.  When Bootup Mentor, Patrick Lor came to town to work with our portfolio and some other local companies to refine their pitch, the first thing he made us all do is pitch ourselves in less than 30 seconds.  In almost every case, we went over time and didn’t focus on our achievements.  Even the most egotistical of us, could have done a better job transmitting our resume with pride and confidence.  People want to invest in winners, tell them that you are one.

Good luck!

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7 Comments

  1. Megyn / Nov 10 2009 8:14 am

    Great info. Pitching yourself is they key to being successful most people decide wether they like you within the first 90 sec of meeting you.

  2. @austingunter / Mar 18 2010 3:31 pm

    Great post. Thanks for sharing the different contexts of investor pitches. I'd like to add the following: The only reason an investor is listening to your pitch is because they want to hear the answer to this question: "How is this person going to make me more money?"

    Deliver the answer as quickly as possible.
    http://www.techranchaustin.com/node/115

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