The following is a guest post by Rizwan Virk, the author of Startup Myths & Models: What You Won’t Learn in Business School. If you’d like to submit a guest post to Money Q&A, be sure to check out the site’s Guest Posting Guidelines.
Now that almost everyone is working from home, startup founders looking to raise money from investors will need to do so remotely. In fact, in-person pitches may now be a thing of the past.
As both an individual investor and venture capitalist, I’ve taken a lot of remote pitches since the shelter-in-place order started. My impression is that most entrepreneurs aren’t always putting their best foot forward.
Here are five seemingly contradictory tips to keep in mind while pitching remotely.
Tip #1: The Slides Aren’t the Pitch
The first tip will be relevant for both in-person and remote pitches but is doubly important when you are pitching remotely: the slide deck isn’t the pitch. The pitch is the story that you are telling.
So, what do I mean by the story? This is a sequential narrative that captures the main reasons why an investor might want to invest in you. It doesn’t matter how good your slides look; it matters how compelling your story is.
Just like story beats in a movie script, which is meant to evoke responses from the audience, a story in the context of pitching to investors should consist of certain beats that are meant to elicit their reaction.
Paradoxically, the better the story, the worse the slides can be. When I was an entrepreneur raising money, one of the most effective pitches was for the Tap Fish video game.
I only had simple black and white slides with text and no images. If that seems like it violates everything you’ve read and heard about putting together pitches – you are right! Our story was great, so the slides didn’t have to be.
Here is an outline of the basic story, along with the ER (expected reaction):
- Mobile gaming is new and taking off
- (ER: Nodding/agreement)
- We have a million daily active users
- (ER: Surprise and/or impressed)
- Our users love our games
- ER: Nodding
- We’re making quite a bit of profit
- ER: Surprise, because most startups aren’t profitable so soon.
- Look how much money we’re going to make if we follow our plan
- ER: Greed and excitement
A few years later, I was raising a subsequent round for my next video game startup, Midverse Studios. By then, we had a more experienced team thanks to the success of Tap Fish. We had flashier games that were based on the TV shows Penny Dreadful and Grimm. We also had marquis investors, who put money into our seed round, and we had a more impressive set of slides.
Despite the flashy slides, we found it difficult to raise money. The fact of the matter was that the slides were better, but the underlying story wasn’t nearly as good. This was because the market for mobile games had become more competitive, making it difficult to acquire users cheaply.
We also didn’t have nearly as many users, and we certainly weren’t even close to profitability. We needed a new story that would captivate users and investors.
The real takeaway from my experience is that before you assemble your slides, make sure to articulate your skeleton of a story that will evoke the desired response from investors.
Tip #2: Use Your Slides in the Remote Pitch
Now, this might sound contradictory to Tip #1, but going through some slides is even more important these days when pitching remotely than before the current health crisis.
In recent times, it seems the trend is that entrepreneurs will email me their slides before the call. But then during the call, they completely ignore the slides. It’s as if they expected me to have memorized the slides for the call.
Instead of being able to focus on their message with the guidance of slides, I found myself rifling through the collection of slides to find the right one.
Out of my last five entrepreneurial pitches, all five had sent me the deck beforehand. Yet only one actually brought up the slides on the Zoom call and went through them with me. The rest just wanted me to look at them sitting on their desks at home, not wanting to “bore me” with the slides. This was a mistake.
Now I’m not saying you need to go through every single slide on a remote pitch. You can certainly economize and jump around. But the visuals are actually important when you are trying to make a point to an investor who is attempting to understand your story and has been listening to a multitude of pitches. For one thing, it’s harder for an investor to figure out what the heck your product actually does on a remote pitch.
I’m more likely to remember you if there is a catchy visual that illustrates an important point, as opposed to just telling me that point.
So, if you have a deck, bring up the slides while talking to investors on Zoom. Otherwise, they’ll just remember you as another face on a screen.
Tip #3: Don’t Spend Too Much Time on the Product
Traditionally, entrepreneurs love to talk about their product, but investors need to know about more than just the product – the market, the team, competitors, business model, etc.
Recently, I saw an entrepreneur’s deck that was 30 slides long, with 10 slides about the product (features, roadmaps, videos, and screenshots). This was too much. Try to keep your deck to 10-15 slides (with extras you can draw upon if necessary).
Some pitches have too little about the product, and some have way too much. The best pitches have “just enough” so that an investor, can understand what their product offers and why it might be special.
One or two slides about your product are enough if you do it right. Then it’s time to move on to why it’s better than other solutions, followed by the business model and how you are going to make money.
Tip #4: Explain What Your Product Does
Some entrepreneurs go too far in the other direction and make it really hard for the investor to figure out what their product does clearly.
This has led to pitches that are “market heavy,” such as many slides of data about the market. To be honest, if I took your pitch, I am probably already interested in the market. So the market slides are somewhat important, but you don’t need more than 2 slides on the market, so don’t dwell on them.
For example, if your startup is in esports, you’ll have the obligatory slides talking about how many hundreds of millions of viewers of esports there are. However, as an investor, I probably already know this, or I wouldn’t have taken the pitch.
What I really need to know is your segment of the market, what your product is, and why it’s better or different than others.
If I had to pick the one thing that takes the most time in remote pitches, it is figuring out what the heck an entrepreneur’s product actually does! Many entrepreneurs get to 2/3 of the way through the slides and start talking about the business model and financial projections while I’m still wondering exactly what their product does and what makes it unique. Having a screenshot or two displayed while you explain your product helps tremendously.
So remember Goldilocks – having too little or too much on the product can both be big problems – you have to get it “just right”.
Seems obvious, right? You would think so.
Tip #5: Identify a Killer Slide Investors Will Remember and Repeat
I always tell entrepreneurs whether they are conscious of it or not, an investor leaves with positioning in their mind about you and your company. This is how the investor will position your company to their partners (if they are a VC) or to other investors, or even to their spouse (if they are angel investors).
If you aren’t clear on what they positioning will be, it’s likely you aren’t clear on your story, which brings us right back to Tip #1.
The best positioning is usually the single strongest point that you have in your presentation. Typically, it is about your team, market opportunity, technology/product, or market results/ traction.
You can go through 15 slides, but in the end, there is one slide that will get an investor. I call it the killer slide.
If you are in a new market and don’t have anything to show yet, but have a team that has had real success before (by selling a company), or you are a team that worked together at Google, then the killer slide is the team slide.
These days it’s become fashionable for entrepreneurs to put the team slide at the very end of the presentation, which is great for Demo days. But if the team aspect is your biggest strength, then you need to be sure that you establish your credibility up front, so put that first. Because up until that slide, the investor is thinking: “Who are these yahoos and why should I care about what they say?”
If your biggest strength is your technology or IP differentiation, you better have a simple visual which makes it easy to understand, while also hammering home your IP is so important. It’s important is that the investor remembers the “gist” of why your IP is so special after your conversation. Spend more time on this “killer slide” and hammer in the point.
Sometimes, the “big strength” is a product demo, which isn’t in the slides at all. I recently invested in a VR company whose founder told me that the way he sells investors is to get them to put on VR glasses and meet him “in the world.” In this case, it is necessary to get people over the hurdle because the VR market is not as “hot” as it used to be when it was seen as the “next big thing.”
All investors have to justify their actions to someone else (partners, LPs, spouses, etc.). This is why it’s extremely important to not just convince an investor, but to arm them with a positioning they can take to others to justify their investment.
There is, of course, no one way to do a good pitch remotely during these trying times. But for many startups, it’s even more critical that you raise money quickly, at a time when investors are growing more and more cautious.
Almost all good pitches have a good, solid story behind the slides. Moreover, guiding the investor to the right slides is even more important when you are pitching investors remotely rather than relying on the investor to “get it.” You aren’t there to just chat – you are there to pitch.
Remember to keep a “just right” approach to all the sections of your pitch: market, product, competitors, business model, and team. Ensure that you don’t have too much or too little on any one section.
Most importantly, think about what the investor will say about your company after the pitch. If it’s not what you want them to say, then your pitch needs work!
About the Author
Rizwan Virk is the founder of Play Labs @ MIT and author of Startup Myths & Models: What You Won’t Learn in Business School, Zen Entrepreneurship, and The Simulation Hypothesis. He is also a venture partner at several VC firms. For more information, please visit https://www.zenentrepreneur.com and follow him on Twitter.