what-are-venture-capitalists-looking-for-in-your-pitch

What are Venture Capitalists Looking for in Your Pitch?

By Eximius Ventures | Posted On : 18/08/2020

You’ve come a long way from growing your startup. From a mere idea in your head, to a proposal on a paper, your startup takes a giant leap for the big world, when you are ready to pitch your idea to a team of investors. All the days that lead up to the presentation, are a jumble of emotions: you are excited and yet apprehensive of their reaction to all that you’ve built from ground up — Am I dreaming too big? Is my idea realistic at all? Is it too early to be approaching an investor? However, we should know that investors aren’t there to make your legs tremble, instead they hope to help you find firm footing so that you can eventually take off and soar higher.

And so you must set aside your nervousness for another day, and instead charge yourself up with grit, passion, hustle, and humility and ready yourself to deliver an irresistible presentation — one that is sure to captivate the attention of every investor in the audience.

To start with, prepare an elevator speech and a pitch deck — both of which should be concise, creative, short and interesting — a true reflection of your spirit to shine. Guy Kawasaki recommends building one that has “ten slides, last no more than twenty minutes, and contain[s] no font smaller than thirty points.” Furthermore, remember that practice is key to perfection, so rehearse your presentation several times before the final day to avoid rambling and over-complicating your message. Last but not the least, read through the following eight-point checklist to ensure your startup is investor-ready and you are success-ready:-

  1. Research on Your Investors

Contrary to what it might seem like, your potential investors wish to be your advisors, mentors, and friends more than a board of unwinnable individuals. Their word is not the be all and end all, they wish to form a reliable and easy relationship with you — one that is based on mutual trust.

To let them know that you are agreeable to forming a lasting relationship, take as much interest in them and their stories as you expect from them in your work. Know the industries they have invested in, and causes they care about to bring yourself on the same page and hence see eye-to-eye on most aspects of your startup.

Pro tip: Some of the best pitches open with an introduction of an intriguing story one that relates to the investor’s prior experiences and areas of interest while also addressing the problem the startup aims to solve.

2. Prove Economic Viability

Investors like to see if your idea is evolutionary enough and moves with the times. Set yourself and your startup in the contemporary world of fast-changing technologies and digital solutions. A holistic, and all-rounded idea is one that takes into consideration all aspects of growth: social, environmental and financial impact. The problem solved by your startup must be outlined clearly in your pitch with appropriate facts and figures.

Pro tip: As quoted by Pearl Agarwal, founder of Eximius “be the painkiller to your audience and not the vitamin C,” in other words — choose to be something your customer cannot do without instead of being an optional supplement.

3. Show How You Can Scale-Up

A sustainable business is one that can scale-up and is futuristic in nature. Your investor pitch must strive to prove your product/service’s high-retention rate, means of recurring revenue, and a contribution margin. Does your startup predict the needs of the next decade or so? Ask yourself that and assume that your investors will be interested in knowing the answer to the same.

Pro tip: Show your investors a long-term vision — one that includes them, and they’ll be more likely to show you a thumbs-up. Most venture capitalist teams wish to stick around with you and help you achieve your goals, so don’t be afraid of dreaming big while telling them how you hope to get there.

4. Introduce Your Team

Boast about how hard working your team of young entrepreneurs is. How they pulled all-nighters because your startup is their waking dream. In addition to listing their educational degrees, demonstrate their grit and your ability to lead a dynamic team that is success-driven and here to stay. Introduce your investors to the quirks and strengths of each member, and leave them wanting to join in your cohort. A good way to prove your team’s potential is to discuss their past experiences (as further explained in the following point.)

Pro tip: Prove to your investors that you are as determined at work as you are humble about your results, and as trustworthy as trusting. Remember, the highest mountains have the deepest seamounts underwater.

5. Highlight your Past Successes

The first few months of starting up a business are most eventful and are full of learnings and growth. Share these experiences with your investors and talk to them about the tribulations you faced and how your team was equipped enough to overcome them. Mention your unit economics, update them with the history of your work execution so far, and show your capacity towards growth. If prior testing has been conducted, results must be mentioned to draw a real and honest picture of your product/service.

Pro tip: In the allocated time for a pitch, your investors are looking forward to learning the nitty gritties of your past professional experiences with the startup. The more extensive your timelines, the more tempted they will be to participate. Reflect your passion for your project in your pitch!

6. Know Your Market Size

“Everyone” is not a credible answer to when you are asked “Who is your target audience?” Instead, a defined pool of people comprising their age brackets, gender, interests, jobs etc., is more meaningful information.

It is important to not build castles in the air and instead be realistic about who we are building our product for. A good way to do that is to divide your potential audience into TAM (Total Available Market,) SAM (Serviceable Available Market,) and SOM (Share of Market) — depicting this as a pie chart visually would fetch you bonus points for deep research and good presentation skills. Once the audience is defined, be prepared to answer technical questions in regards to the audience’s growth potential, potential customer preferences, logistics of reaching out to your target group etc.

Pro tip: For extra credits — create a user persona (or a typical customer) to make your presentation come alive and help your investors envision your audience. List life-like characteristics that portray what an ideal consumer would be like.

7. Recognize Your Competitors

While you discuss your USP, mention who your current competitors are. Talk at length about why your solution will be more wanted than those of your current contestants. Oren Klaff, bestselling Author of Pitch Anything, warns against trying to make it look like “your business is unique by telling investors you have no competitors.” This usually has an adverse effect, where your investors might think that there isn’t a market for your business at all (hence the lack of contenders.) Remember, a known devil is better than an unknown one.

Pro tip: Discuss the four P’s of your startup: product, price, place and promotion, and also that of your competitors. Ensure that 3 out of these 4 P’s of your product/service are better than the existing ones in the market.

8. Express Your Need for Funding

Keep a list of all the projects you hope to accomplish with the help of the investment, and stress upon what exactly you require the money for. Aim to build new products, grow your team and showcase tangible results with the invested money. In this case, broad visions do not work as well as focused achievable goals do.

Pro Tip: Chart potential monthly and yearly milestones that your startup will be able to arrive at with additional funding. Prove to your investors that out of everyone else that they interview, you can make the most of their investment!

 

At Eximius, we embrace disruptive and groundbreaking ideas that carry the promise of a better world! We attract the infectious energy and passion embedded in your personality and look forward to forming enduring relationships and knowing you beyond just your venture. Let’s hustle and conquer together!

 

Written by Aradhita Saraf.

Eximius Ventures is a pre-seed stage investment firm investing in young and dynamic Indian Entrepreneurs with a precedence for female founders. You can reach out to us at pitches@eximiusvc.com.