Ingredients for an effective pitch
Pitching is more art than science. It's a proper presentation of your company. It is about developing the ability to make known what your company does and the most relevant milestones of your operation in the shortest possible time and in the most effective way. But more importantly, it's about the opportunity to make someone fall in love with the cause. That is the concrete solution to a problem your company is solving, as well as the team that will be behind that mission.
The first thing is that you must develop the capacity of abstraction. You must be able to explain what your company does in such a simple way that no previous preparation is required to understand what you do. It works very well to ask yourself if your grandparents or your parents who have no knowledge of the industry or the market, much less the technology you use (if any), are understanding in a simple way and in a sentence what you do. Remember that the more time you spend on your explanation, the more chance there is to have doubts and consequently reasons not to invest in your company.
The second thing is to make clear what size is the market opportunity you are looking to attack with the proposed solution and, in turn, what size is the slice of the pie you are looking to keep implementing your business model. Obtaining data on this is relatively simple and can give a pretty clear idea to investors of the possibilities of return on their capital.
The third point has to do with traction and what makes your business solution unique. It should be made clear where your company stands, either in terms of sales or in terms of product development and, to do this, the use of numbers in this component is essential, using comparisons of sales from month to month, or the status of product development in case you don't yet have sales also helps. The important thing is to convince the investor that your business is moving fast and in the right direction and that, in addition to the fact that the solution you propose is the right one, the market is quickly recognizing it.
The fourth point has to do with the team. The most attractive teams in early-stage companies are usually of 2 to 4 co-founders, with a multidisciplinary balance (technical and business profiles), committed full time to your company. The investor wants to know who will be the captains in charge of bringing the ship to port in times of storm and if they have the capacity to do so. This is an aspect where the aim is to convey to the investor the peace of mind that their money is in good hands.
The fifth has to do with the clarity of what you are asking from your investors. How much you need and how you need to capture that investment, if it is direct injection to the capital of the company or if you are looking to do it through convertible debt or other figures, you must be clear and explain the methodology you used to arrive at the valuation and, if you do not know, be honest about it.
Finally, considering that raising capital is more an art than a science, focus on being empathetic, put yourself in the investor's shoes and be prepared to demonstrate total mastery of your business model; but, above all, think about whether the person you are considering investing in your business will bring more to the table than just capital.
Capital must be smart.
Ian Paul Otero is Managing Partner of Redwood Ventures
Follow him on twitter: @iotero