So, you’ve got a killer product and business idea, and the entrepreneurial spirit is running strong within you. Now all you need to do is acquire the capital to make it happen.
Unfortunately history is filled with otherwise great ideas that have fallen at this final hurdle, as the entrepreneur was unable to come up with a compelling- or unforgettable-enough pitch to convince an angel investor to snap up their idea. At any given opportunity to pitch demos to investors, they will be inundated with ideas from other people similarly convinced of the value of their product as you, so even in the best of circumstances you’ll have just a couple of minutes to make your demo really stand out from the pack. This means you need to put the real legwork into making the demo as perfect and rehearsed as possible before even stepping into the room.
The first thing you need to do is sit down and understand exactly what the pitch will be. That sounds straightforward enough, but after you’ve spent enough time working on a concept of a new product or service, it can be difficult to distance yourself from it to look at it objectively.
There really should be four questions that you ask yourself when building the pitch:
The answers to those questions will help you build the pitch that you’ll take to investors. The key thing to keep in mind, though, is that you need to keep it simple. If you’re pitching something technical, but can’t simmer the jargon down to something that is easy to understand for a layperson, then your pitch needs work. It’s a good idea to practice it on family, friends, your children and parents. If each person you pitch the product do doesn’t understand why yours solves a problem better than anyone else’s, then go back and rework it until it does.
In any given pitch, you won’t have much time available to you, and so your demo needs to get to the point within the first minute. That means that as you rehearse you need to be able to make sure you’re showing off the product itself within 60 seconds of starting.
There’s always the temptation to try to argue the value of the product, by producing market survey results, target demographics, and other such statistics. This temptation makes sense on the one hand as you’re inviting the investor to buy into your business, and of course they want to make a return on their investment, but in reality if you’ve got a product that is truly special, it really will sell itself.
Similarly, keep the overall pitch to a succinct five minutes in length. Consider something like the iPod – you could pitch that in just a couple of minutes as a really cool device that lets you listen to your music on the go. Facebook, likewise – sign up and keep in touch with family and friends regardless of where they are in the world. The investor doesn’t need to know how a product will work (at the pitch stage, anyway – they will want to after the pitch has been successful to ensure it will work as promised). In the demo stage, the potential investor is simply going to want to know what the product will do for customers.
The most key thing to remember in pitching to an investor is that you really should have a working prototype to show. If you’re still in the raw ideas development phase, then you’re not ready to be showing the product to an investor, because while you might have a strong vision in your mind for what you want to achieve, without being able to show that vision, you’re going to struggle to articulate the idea to an investor.
You’re also going to need to be able to articulate clearly the problem that the product will solve. One of the most common mistakes that people make when pitching to investors is to pitch an otherwise great product that doesn’t actually explain why people would want to buy this product. This is when you’ll need to get put your storytelling skills to work. Use personal experiences to highlight where your product will help in your own life, and that will help the potential investors understand the real market potential for it. After all – if there’s an unsolved problem for you, then other people are going to experience that problem too.
And, while the core of your pitch should not be about numbers and statistics, it’s essential to be completely prepared for the key questions that the investors will likely ask if they like your demo. You should know the potential market size of your product, and should be able to support that with valid research and independent sources. You should have a firm idea of the business model at play, including when the business could be expected to make money. And don’t try to hide this behind clever math – the typical investor knows when someone is trying to play them; just provide the simple truth behind the key revenue stream for your product.
You should also be well aware of your competitors and why your product is superior in some way, and you should be able to address this without being too critical of them. After all, your product will most likely exist in a market with worthy competitors, and that’s a good thing for you because if your demo is for something so pioneering that nothing else like it exists, the pitch, problem and audience becomes far more difficult to articulate.
A pitch to an investor can be a stressful experience for people prone to stage fright, but it’s important to refine your presentation skills and develop confidence in order to project yourself and your ideas.
One of the best ways to practice is to stand in front of a mirror, and rehearse your presentation to the point where you’re happy with how you look doing it. You should be able to deliver the planned presentation without referring to your notes, and while you might want to take supplementary information to the presentation to refer to (and for the sake of confidence), it’s also a good idea to have memorised the basic information that a potential investor might want from you. For example, it’s not a good look if you don’t have the basic demographics data or marketing plan so ingrained that you can recite it on cue.
If, while practicing in front of a mirror, you notice behavioural quirks, like over active hand gestures, awkward pacing and sentence formation, or uneven delivery volume, it’s important to smooth those out. The investors are going to want to see pitches from people who are confident and collected in their delivery, and while you might be perfectly comfortable, if you’re waving your arms around like crazy, it’s going to create the impression that you’re not as assured as you should be.
At the same time, you want to avoid developing a monotone style to your presentation. To keep the investor interested across the five minutes of the presentation, you’ll want to shift between excitement, humour, questioning and challenging. The best presenters (like the mighty Steve Jobs) developed a gripping style in which people hang over their every word, and that’s because they talk like humans who truly believe in what they’re doing, not as robots churning out the words that have been scientifically determined to be the “correct” ones for the “perfect” pitch. As odd as it sounds before going into any presentation scenario, you should practice how to be passionate about your product.
It’s also worth doing background research on the people you’re pitching to before the presentation. Understanding your audience will give you some familiarity with them, making the process of speaking to them less intimidating, and will also provide you with the opportunity to alter the pitch to their interests, and people always appreciate when they feel like they’re personally being spoken to. Most investors have a presence on the Internet, so hit up Google when preparing for each opportunity to pitch.
Finally, right before the pitch, it’s a good idea of finding a way to relax the mind. If you’re too highly strung going into the meeting, you’re more likely to make mistakes or become flustered. Doing some meditation or getting a massage can be a very effective way to prepare the mind for the stress of a pitch.
Rather than pitching directly to an investor, there are opportunities out there to pitch on stage at conferences to a large audience of people. This has the obvious benefit of getting you in front of a large number of potential investors (as well as press and potential customers, giving your business’ PR strategy an early shot in the arm), but it has a consequence of requiring a different set of presentation skills to the more intimate setting of a comfortable boardroom.
Some of the same basic rules apply; you’re going to need to be able to make the value proposition of your product explicit within three or so minutes, and you’ll need to keep the language simple and pitched to a broad demographic, rather than experts in the field who would understand a more technical presentation. But being on stage does change the dynamics of how you can present to an extent.
One of your greatest potential allies in getting a business off the ground is a family member or friend with a shared interest. However, going into business with them still requires that you convince them on the value of your business idea, and that means making an effective pitch… of a very different kind to that you’d take to a potential business investor.
Obviously you know a family member or friend far better than you know someone who you’ve met for the first time to ask for their money. This is both an opportunity and a risk. The opportunity is that you can tailor the conversation far more easily to appeal to what you know they want and need, and why your product idea should speak to them. The risk is, of course, that you could take the relationship for granted and forget that you’re asking for them to invest real time and money with you.
In other words, don’t try and have a conversation with a family member to pitch a business proposal at Christmas dinner. Go to the effort to formally invite them to a meeting (perhaps over coffee), and formalise the process of explaining the idea to them to some level. You’ll find they’ll take the conversation more seriously, are more attentive, and therefore are more receptive to the idea if it’s a good one when it comes time to ask for their commitment to it.
It’s important to also emphasise how similar you and your family member/friend are in mindset, as a way of inviting them to be on board with the idea that you are so invested in (and which will therefore be likely to appeal to them as well). And, if you’ve got other friends and family on board, mention this during the initial pitch, so that you can highlight that other people they likely know and respect are on board with it.
Many of the other rules of a good pitch to an investor apply, too – make it short and succinct and address the problems that the product will resolve, rather than the technical nitty-gritty. Finally, be prepared to be flexible. The family member or friend might not be interested in jumping on board full time right away, but if they can be involved on a part-time basis, then make sure that you’re able to structure things so they can be a part of it. If the idea then gathers steam, the family member or friend might then be willing to become a full time participant in the venture.
Of course, for anyone looking to become truly great at pitching, it is essential to watch Steve Jobs on stage. When Jobs pulled the first iPad out of the document file, or the iPod out of his pocket, he wasn’t pitching a startup to a room of investors, but he was pitching something new and innovative to an audience of consumers, and his ability to have them hanging on his every word, while wowing them with simple theatrics, was a set of skills transferable to anyone with an idea needing to find an investor.
But not everyone can be Steve Jobs, so it’s useful to look at some other examples of great pitches or presentations to pick up tips and tricks on effective delivery technique and how to structure a presentation that from end-to-end holds meaningful value to the audience.
A good resource to go to when researching presentations is TED.com. TED conferences are held around the world and have a reputation for drawing the brightest minds across a wide range of academic, scientific, and artistic fields together to present good ideas. A great example is a talk in 2009 by the founder of Lifesaver, Michael Pritchard. In this presentation he was able to express the simple idea behind his company – to provide clean drinking water to disadvantaged people, and was able to do so by emphasising key statistics, such as the reality that through the course of his talk, 13,000 people around the world would have started suffering from diarrhoea, and four children would have died. Needless to say his company has been a success since that point.
Another truly great pitch from the archives is the one the founder of Digg made back in 2004 on Tech TV. The pitch encompasses everything that a good pitch should, being both short and to the point, and demonstrates the kind of energy and enthusiasm of someone that genuinely believes in their product.
With these tips and examples of successful pitches up your sleeve, you should be prepared to take on family, friends and business greats alike – so take deep breath, wow them, and get ready to start your new business.