Pitching your Start-up to VCs & Angel Investors
There is an art to creating the pitch and presenting it to VCs and Angels.
Most CEO of a start-ups have a slide deck to “pitch” or explain their company. This is used when raising money from VCs or Angel investors. It is also often used when hiring people, because people won’t join the company unless they truly believe in your business model.
The rule of thumb is that you need to communicate your company completely in 10 minutes. Here is a common flow for pitching to Angels or VCs.
Recently I reviewed my company and my deck with Dan Rosen to get his feedback. Dan is the chairman of the Alliance of Angels and was a VC at Frazier. People in Seattle know Dan because he is a hub in the Seattle start-up scene and has amazing advice for new companies. Dan’s feedback gave me and my co-founder the confidence that we are on the right track. We also receive a lot of good input.
The Alliance of Angels has a web site walking through the steps to refine a pitch slide deck. This is critical for any entrepreneur, even when they aren’t raising money. This process will force the CEO to flush out their business model in-depth.
The Alliance of Angels web site has a sample slide deck available for download. A secret is that the notes in the sample deck have great tips that are important for the financial planning when generating the deck or topics that are important to to include in the verbal walk through of the deck.
I’ve attended Alliance of Angels and Keiretsu events where I watched other CEOs pitch their companies. Here is what I learned from their pitches and having to write the pitch myself.
1. Audience has No Context: The audience will have no context for your business. The entrepreneur will often only have 2 1/2 minutes to describe the problem/solution/product. The audience must have a clean understanding on how to partition the market between your solution (fix to the problem) and the other products in the market. Asking yourself, “Will they see a clean partitioning of the market” will help point out areas of the deck to improve. The audience will project their background knowledge onto the framing you present. You will succeed if it clearly partitions the market across existing solutions, the core problem, and your fix.
2. One Point each Slide: The audience is only able to digest one idea per slide. The time constraints will only allow them to process that much. It is often best have the entire problem and solution (including product) be communicated on 3 to 5 slides. Each slide only makes one point. This lets the text and an graphics clearly communicate the one main idea. If the slide has a few sub-bullets, expect the audience to only catch a few of them.
3. One or Two verbal sentences per slide: If there is more talking on one slide, then smaller audiences will often interrupt. Show one slide with one or two verbal sentences, and then move on before they loose their attention span. This has the added benefit of keeping the communication balanced between text/graphics/verbal. The CEO needs to frame the problem across slides to communicate clearly. Each slide should scope in on the market’s optimal fix for the problem which turns into the business model for the company.