I came up with 5 questions to ask before pitching to a potential investor. Working with VCs in the past has helped me understand them better. So, even before co-founding my own startup, I already had a good idea of what they look for when investing.
Before you pitch to a potential investor, I invite you to ask yourself the following questions:
If you are in the Food and Beverage industry, pitching to a VC with a purely Fintech portfolio may not be useful. Knowing who you are pitching to is an advantage.
According to Leta Capital, Investors usually look to finance businesses in which they have domain expertise. So, do your research. If you’re pitching to a specific person, try to find out more about the companies they’ve invested in before. Do a Google search and look through the first 10 results. Check their LinkedIn profile for past posts where they talk about investments made. You can also check other social media channels like YouTube, Facebook, or Twitter.
When I review the pitch decks of most startup founders who asked for help, they list their co-founders and the positions they’ve given themselves. I end up asking them about their background, or I check out their LinkedIn profile.
First off, don’t make the potential investor do this work for you. If you have a slide listing your co-founders, add their background related to the position. Secondly, make sure you choose co-founders because they bring something to the table. Choosing co-founders because they are your friends is not a sustainable way to do business. Finally, do not assign titles to co-founders to have someone fill the position. A person with a technical background shouldn’t be your marketing head because he has a popular blog. Think of the skill sets you will need to make your startup work — it could include people with skills in the technical department, marketing, logistics, or finance. Find experts in these fields with a proven track record for success and decide whether they are the people you want to work with on your startup journey.
One of the more challenging aspects of being a startup is finding people who will use your service or product for the first time. If you already have traction, prioritize presenting your numbers. This shows proof of concept. Talk about how you achieved those numbers and how you plan to expand your reach.
If you’re an early-stage startup with no traction yet, the best thing to do is to present the marketing strategy you will use to get your first few users. Talk about the realistic results you expect out of your acquisition plan.
Investors are interested in the background information of your business. They want to know how you came up with the idea and why you want it to succeed. Talk about the problem you’ve discovered and what you’re doing differently to address it. Always answer the question: What is your vision?
Remember, the people you pitch to may not have the same specialization as you, so don’t assume they immediately understand what you are talking about. Put everything in the proper context for them through effective storytelling.
She tells it from the VC perspective and walks readers through each part of the storytelling style with great examples.
Investors hear hundreds of pitches a month; what would yours stand out? Always practice your pitch. Ask friends and family to listen to it. Then, ask them to tell you what they’ve understood from your pitch. Are you communicating your point clearly? Find out what they liked about it and what they remember most from your presentation. Record yourself doing your pitch so you can do your own analysis, edit and refine your deck.
Last but not the least, do it with passion. The Journal of Business Venturing published an fMRI study linking founder passion with neural engagement and interest from investors during startup pitches. According to the findings, “founders displaying high passion increase investor neural engagement by 39% and investor interest in the venture by 26% over those displaying low passion.”