The 3 Most Common Areas Where Startups Screw Up Their Pitch
I work with startups every day to help them develop their pitch and story so they can raise capital and get customers.
Sometimes I’ll get into conversations with founders who push back and say “I know our story needs work, but right now we need to focus on our product development.”
I get it. Your product can’t be put on hold.
Recently I had a chat with my friend Kim Kleeman of the Elmspring Accelerator, who has seen her fair share of pitches. She put it bluntly when she said, “You only get one shot to impress an investor. If you don’t have a good story, that’s it. There are no second meetings if they aren’t hooked right away.”
Story is EVERYTHING in the business world, and especially so in the startup world. Your product doesn’t matter if we don’t have a reason to buy in.
You can convince yourself that you just need to be heads down on product development. That figuring out your story isn’t the top priority. That you’ll get to it later. But this isn’t an either/or scenario, it’s an and/both.
A few days after my chat with Kim, I caught up with Cayla Weisberg, partner at InvestHER Ventures — -an early stage investment firm that partners with and invests in female entrepreneurs.
Cayla said, “Story is everything. Even if the numbers make sense, and the market size is good, none of that matters if we can’t understand the vision and product/market fit.”
To be clear, Cayla is an investor — she’s met with 391 actively fundraising female tech founders in the last year.
InvestHER has backed 8 of these companies.
That’s 2%.
2 PERCENT.
Guess what all 8 have in common?
Yes they have a good product. Yes their numbers make sense. Yes they have the right product/market fit. And yes, most importantly, they all have a compelling story.
As Kim originally said, “There are no second meetings if they aren’t hooked right away.”
If you focus only on the technology, you’re left out of that 2%. It doesn’t matter if your projected revenues have you at $10mm by year 3 and scaling to $100mm by year 6. If the people with the money can’t understand you, they will see right through your revenue numbers and find all the components that look a little off to justify why NOT to invest in you.
If you instead develop the story around the technology, and can clearly share how that leads to success, you’ve got a much better shot at being part of the 2%.
Here are the 3 most common areas where I see startups seeking capital get their story wrong.
1. They Can’t Articulate The Problem
Your entire thesis is built around the PROBLEM that you’re out to solve.But time and again, startups aren’t clear about the problem that exists in the first place.
They have a really good idea of what they are building, but they don’t take the time to first define why it’s even needed, OR they try to take on too many problems at once.
If you’re in the latter group and have a company that solves many problems, use The Superhero Strategy and identify your CORE Problem. Build from there.
Your Problem Statement is the context and frame of reference for which investors will understand your business.
2. Ambiguous Growth Strategy
Sure, your Excel spreadsheet says you’ll hit record-breaking revenues over the next 5 years, but how exactly are you going to make that happen?
DON’T gloss over this part and think you can wing it. Have a clearly defined growth strategy, and be able to tell the story of growth. I recommend even giving your growth strategy a name. Some startups I’ve worked with recently, we’ve used titles like, “The Network Effect Strategy”, “The City Takeover Strategy”, and “The Staircase Growth Strategy”. This creates an even better frame of reference, which helps further the emotional buy-in from investors because it positions you as an expert of your business, makes your projections memorable, and gives them a plan to get onboard with.
Investors always want to mitigate their risk as best as possible. Well thought-out plans help mitigate risk.
3. No Script
I am a strong advocate that you should script out your entire pitch deck. Don’t just create the slides, actually write in the Speaker Notes section exactly what you want to say. Every startup I work with I script their pitch deck and give it them to practice. This is important for a few reasons:
- You get all of the competing thoughts out of your head. You’re forced to put your vision into words — into a story that makes sense. During a time when you’ve been through 8 product iterations pre-launch, are arguing with your developers, and still searching for a CTO, you know too much about your company for your own good. Scripting your pitch deck gets you out of your own head.
- You’re able to pressure test your own company. If you think you can just ‘wing it’ and figure out what you want to say on the fly, you’re in for a rude awakening. Scripting in advance not only prepares you, but forces you to assess key components of your company — like your core problem, like your growth strategy, etc. You pressure test yourself before anyone else can.
- You know when to STOP talking. One of the Seven Deadly Sins Of Entrepreneurs is rambling on and on. Scripting your pitch deck not only gives you a starting point, but perhaps more importantly it gives you a stopping point. I even script out FAQs for my startups, so that when it comes time to answer questions they know what to say, and when to stop saying it.
Keep in mind that it’s not enough to just script it out. You have to PRACTICE it as well. Know your script so well that you don’t need to rely on it, and won’t get thrown off if someone asks a question during your pitch, or asks you to go back a slide.
You have one shot to make it into the 2%. Will you make it count?
