The Startup Corner: 3 Tips Before Your First Pitch
You finally made it! You have at least one potential investor who has read your primer and asked you for a formal pitch. You have communicated a problem that you and your team and product(s) will solve, the potential market and evidence that they will support or buy said product, and a demonstrated competency and capability that you and your team are the ones to carefully and responsibly spend someone else's money in order to execute on both.
Well, before you jump into your pitch deck, drafting and scrapping (and drafting and scrapping some more), here are three tips to consider before your first funding round, and it's not what you think.
Tip #1: Plan out the work, and pace it to include fresh thinking
We are affiliated with various startup support teams and pitch coaches, and we coach for pitches also. It is tedious work, requiring full diligence before you even ask a potential investor for their time. Those who craft a "Pitch Plan" before they get started are far more prepared, far more confident, and far more successful than those who cobble something together haphazardly or with little organization around the work that needs to be done. After all, you would never build a house without a plan in place-- why would you build a pitch deck without a plan?
On three occasions in the last year, we were asked to help finalize a pitch project for startups that were pitching within 1-2 weeks, and it created unnecessary risk and stress for everyone involved, especially the founders seeking the funding. It was also far more work than it needed to be because we were responding to poor planning instead of focusing on content and practice.
Plan out the work, delegate your resources, assign tasks, discuss status and deadlines, solve Pitch Deck problems in unison, and include time to rest, reflect and improve.
You will look at, read, and revise your first Pitch Deck more than anything else you will ever create. Ever. You must have time to step away from it, rest your brains, see your family and friends, and gain perspective several times before you will truly be ready for your pitch time.
To that end, there is almost nothing more critical to a successful pitch than fresh thinking. A big part of a successful pitch deck is being able to anticipate and then answer the questions that will come up. You cannot do this bleary-eyed and pitch-deck-fatigued-- in fact, the pitch projects that do not put rest-time into their schedule are the ones that miss simple spelling errors, invert numbers, and make version mistakes.
They are also the ones that missed anticipating the most common and basic questions from the potential investors.
If you feel burned out before you pitch, you're doing it wrong, and there's no glory in messing up your pitch because you didn't take the time out to properly plan for it.
(and this kind of discipline will carry to efficient management after you are funded)
Tip #2: Reduce chaos by being clear about your competencies (what you do and do not do) and your capabilities (what you have and do not have)
Most investor pitches are not like ABC's Shark Tank. That is reality TV. Their objective is rightfully aimed at high ratings, high-priced advertising slots, and perpetual fandom. It's true that all potential investors want to understand the problem you are solving and whether there are people willing to use/purchase/re-use it to perpetuate success-- that is what will give them a return on their investment with extras (more money than they put in), but Shark Tank is... well... TV.
These days founders know and are exposed to far more than founders knew or were exposed to even 15 years ago, mostly because of the wonderful startup community we are all a part of and the amount you can learn online. You can find, and your lawyer (who should be your best friend) and others will be able to guide you through, the basics. Firms like Impono will do this, too.
The one piece we don't always see emphasized, and hence often see missed, is the focus on your core competencies: what you do and what you do not do, and your capabilities: what you can do and what you cannot do.
Depending on your product or service, how well you can describe its function, and how novel it is, the investors you are pitching to may begin to ask questions and brainstorm during your pitch, trying to take your product in a different direction from what you are thinking. While there are times that this might be good for you, most times it's a red flag indicating they don't understand what you are talking about. That means they don't know your core competencies. That's not good.
When you are clear about your core competency, you are able to cover a lot of ground. You reinforce what your company does best-- your "secret sauce." You demonstrate how your company does it better than anyone else, and you emphasize your company's planned pathway.
While your pathway will shift and adjust with your growth-- and you should expect this when you are funded, including your investors guiding some of those adjustments as a way to reduce pathway risk-- you should not be changing course drastically at the early stages of funding. Your course is based on your core competencies.
Simply put: your core competencies means you can predictably deliver on what you know and do better than anyone else.
Equally critical is being clear about your capabilities: what can and cannot do, what you have the power to do or not do, what gaps may prohibit you from doing what you need to do. This is usually related to skills and talent, but can also be related to capital, such as basic infrastructure like software or machinery.
If you know how to bake the best cakes with honey as a main ingredient while also perpetuating a means to protect honeybees and create jobs in low-income geographies, that is your core competency.
If you do not have the industrial level machinery or people who can help train local bakers or comply with food laws and global distribution cycles, that is where you lack capabilities, and you should be upfront about that: it should be a primary ask in your pitch and related directly to the funds you are seeking.
Your funding isn't just to startup and pay for you, your staff and the means to grow; it is also to help you fill in
critical skill gaps and determine smart business models for growth. These are things a good investor will often help with, and if they do not hear about what you are able to do and not do in order to return on their investment, it will lead to a very (a-hem) uncomfortable discussion later.
Tip #3: Be sure your core competencies actually solve the problem your business is solving
Albert Einstein is credited with saying, "Everybody is a genius, but if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid."
While there is no substantive evidence that he said that, there are anecdotes and hypothesis about his own journey of learning and finding his path based on natural strengths. This is the basis of focusing on core competencies.
Once you have established and can clearly articulate your core competencies-- even better if through a story of how your business solves a problem needing a solution-- be sure that it actually solves the problem your business is looking to solve.
Nearly all founders who approach us at Impono, or at least by the time someone sends them to us, have a disconnect between their core competency and their solution. They may be scientists or physicians who have discovered how to impact a large group of patients, but they focus everything on how their product(s) work instead of what their product(s) solve.
In business, your core competency isn't about how you build something or what you are building. Your core competency is about how the "what" you are building will solve something.
Continuing on with the baking example above:
Imagine if the company's core competency was making honey instead of cakes? That massively changes the risks and opportunities as well as the competitive landscape, which also changes the potential of funding.
What if the company didn't know anything about making cakes with honey-- it was just an idea, not yet vetted, without any understanding of how it might solve the problem they are looking to solve? That also changes everything, and we guarantee you won't get to a pitch (or you will be ushered out within the first five minutes).
What if the co-founders were a baker, a PhD Entomologist expert in honey bees, and an ex-International Monetary Fund manager? This is what is more likely to get funded because the core competencies align to solving the stated problem, and the expertise of the founders suggests an inherent reduction in basic risks.
When it is clear how your core competency will be applied to solve the problem, and you have practiced, practiced, practiced, you will be in a far better position to experience a positive pitch session, and those you are pitching to will appreciate the obvious preparation.
We know that launching a new or transforming an existing organization isn't simple, but it can be easier with the right advisors and doers. If you have additional questions about this topic or how it can impact your business, contact us. Let's see what we can do for you.
© Impono LLC. All Rights Reserved.
Join the Impono Community and Follow Us on LinkedIn.