PITCH Perfect: How to pitch your startup

Become Pitch Perfect:
How to pitch your startup
Dave Kochbeck | July 8th, 2014

About me
Dave Kochbeck!
• Serial entrepreneur
• Former Head of Technology
for Live Nation, Friendster,
Howard Dean’s presidential,
commerce for Blue Mountain
• Currently CTO funded by
Samsung Accelerator
• Many bad investments
• Coach for Women 2.0 PITCH
Competition

About PITCH
• Over 80 very early stage (idea to seed) have been
ﬁnalists from a pool of over a thousand
• Most companies selected from “napkin” pitches
• Around half became funded after pitching onstage
• Much of this webinar is about those experiences

Disclaimer
IANAL / FA!
This is not legal or investment advice, nor
should you treat it as a substitute for legal
counsel or the services of a certiﬁed ﬁnancial
advisor.!
Also…!
My “About Me” slide is the nicest slide in the
entire deck. Don’t make your pitch this ugly.

For more information…
To layout the best slides and be your best in front
of the room, I recommend:!
• slide:ology: The Art and Science of Creating Great
Presentations by Nancy Duarte
• Resonate: Present Visual Stories that Transform
Audiences by Nancy Duarte
• You’ve Got to Be Believed to Be Heard by Bert
Decker

This isn’t the webinar you
were expecting
• We’re not going to do slides.
• I’m not going to go in-depth about specifically what
to say.
• I’m only going to scratch the surface on how to
target a pitch to an audience.
My goal: to leave you with sufficient direction to
make yourself confident in talking about your
potential investment.

There is no single way to
pitch early stage startups
The perfect pitch is the one that raises money:!
• In the amount that you’re seeking;
• At terms that you ﬁnd agreeable and
motivating;
• From investors with whom you can forge a
working relationship.

Even a blind pig finds a
truffle now and then…
• Pitching is a numbers game - you have to get in front of
investors to get a yes.
• Even the worst, most misguided, ill-targeted pitch will
get a bite if you try hard enough.
• Crafting good pitches isn’t about being exactly right.
It’s about using your time wisely and applying your
effort efficiently.
• Being good at pitching means you have more time in
your life when you’re NOT pitching.

Who is the appropriate
audience for this talk?
• Founders seeking seed-stage funding;
• Predominantly tech startups intending to be venture-
or angel-fundable;
• New(-ish) founders;
• Companies seeking early institutional money;
• People who need to be coached out of pitching a new
venture to the wrong investor. <— this is most people

Topics we’ll cover
• What a pitch is, when you should / should not be
pitching, and what goes into your pitch
• How to evaluate your pitch for suitability to your
target audience
• Things founders overlook that damage the results /
credibility of the pitch

Topics we won’t cover
• In-depth financial analysis of deals
• Sourcing and qualification of leads
• Terms and negotiation
• Closing process and next round
• Where to look to understand the current state of the early stage
capital markets
• Having your stuff together (e.g., legal, accounting, recruiting)
• Making slides
• Knowing when to go ahead and go (hint: you’ll never be done, so
get someplace you’re 50% confident of, and go)
But you still need to know all of these!

What is a pitch? (your life)
A pitch is a way to present to potential and existing investors:!
• where you’ve been,
• where you are,
• where you’re going,
• that you know how to run a business,
• that you’re producing relevant performance (traction),
• that you can run the meeting gauntlet successfully.

What is a pitch? (their life)
A pitch is an offer to sell equities (or other business-activating ﬁnancial
instruments such as convertible debt or bank debt) evaluated against:!
• preference for type of instrument,
• risk-reward,
• preference for market,
• existing portfolio contention,
• expected demand on the public or M&A markets during your likely exit
window,
• ordinary human emotional reactions and irrational behaviors that you
would expect in anyone.

Why are you pitching?
• An infusion of money will
fuel momentum or lock up
marketshare
• There is signiﬁcant market
proof of your business
• You have a clear picture of
what your upcoming needs
are and what they’ll cost
• Investors are already
offering money, and it
makes sense to take it
• You really need a salary
• You’re out of runway and
you haven’t accomplished
what you wanted
• You think your thing is
brilliant, you’re in love with /
obsessed with it, and
you’ve convinced yourself
the world should know
• You have an idea but want
to limit your personal risk
Yes! No

If you’re a NO, don’t pitch.
• Pitching uses up your goodwill with the investors
you meet whose time you burn through
• Friends and colleagues consume their social capital
making introductions for you that you use poorly
• You will quickly gain a reputation for pitching junk,
and in the long run it will be harder and harder to
get meetings
Instead? Women 2.0 provides pre-funding support.

Who hears your pitch?
Under US securities laws, the only people who can invest in ultra-high risk
investments such as yours are:
• Funds (and funds-of-funds) such as VC funds,
• Corporations operating some kind of investment practice,
• Financial services companies,
• Accredited investors.
Under the new JOBS Act, you can solicit equities sales from the general
public, but it triggers a bunch of really onerous compliance requirements.
The rule is: if they can’t afford to lose the money, you shouldn’t
be asking them.

Your venture needs to match
the economics of your investors
• VC: Must return above 5x, says 10x, wants 20x+
• Angel: Says 10x, wants someone to follow-on, fears
cram down, can’t follow-on with additional funds
• Bank: Says they’re easy, must match underwriting
perfectly to play, harder than ever before
• Micro-VC: Can return 2.5x, wants 10x+

• How VC economics work: https://blog.wealthfront.com/venture-capital-economics/
• Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist by Brad Feld
• Term Sheets & Valuations: A Line by Line Look at the Intricacies of Term Sheets &
Valuations by Alex Wilmerding
• How big VC transacts for large amounts: http://techcrunch.com/2013/11/02/
welcome-to-the-unicorn-club/
• Day-to-day funding news: http://mattermark.com/blog/
• News on where your investor’s investors come from: http://pitchbook.com/
Subscribe_to_PitchBook_News.html
• On the anatomy of seed: http://www.slideshare.net/brendanbaker/anatomy-of-
seed-7753824

So let’s get to what goes
in the guts of a pitch…

How I get started
1. Explore how your business ends to know where to start looking
for money;
2. Determine what’s most likely to kill you soonest and what’s
keeping you alive today to know where the next money is going;
3. Identify key business milestones to wrap your fundraising
around, and know the metrics that signal that you’ve reached
those milestones;
4. Tell a vivid story about your company that begins with clarity of
vision and leads to the obvious conclusion that the listener
should invest.

1. Explore how your
business ends

To find your first money,
consider your last
Your investors today don’t want to be your
investors forever. Eventually they want to sell
their position for an outsized profit. To do this,
they look at your:!
• Expected exit type (acquisition, IPO, acqui-hire)
• Expected multiple on money invested
• Expected demand for buying your shares later

Exercise: Describe your
potential acquirers
1. Make a list of ten possible acquirers for your business,
excluding usual suspects like Google, Microsoft, or anybody
else who could just buy you by accident. Be creative and
insightful! To know this is to know your market.
2. Look at similar deals that your list has already done and what
they paid for the deals.
3. If you sold to them in a similar way, where would you have to
be as a company to make such a sale plausible? What are they
buying, when and why? Is there some other way they could
generate that other than buying you?
4. Look at the common aspects across all ten. Is there a valuable
core to your business that you’re creating that someone will
later want to buy?

Remember this? Your venture needs to
match the economics of your investors
• VC: Must return above 5x, says 10x, wants 20x+
• Angel: Says 10x, wants 30x, fears cram down, requires
that you have a next-act
• Bank: Says they’re easy, must match underwriting
perfectly to play
• Micro-VC: Can return 2.5x, wants 10x+
To know who your pitch is targeted to, you need a
good idea how it comes out for your investors.

This is how you ﬁgure out how big a deal
you are to your investors.
!
Your milestones and metrics need to reﬂect
being a deal of the size you’re shooting for.

2. Determine what’s most
likely to kill you soonest and
what’s keeping you alive

Exercise: Identify your
major existential risk
Access to capital
• Ability to raise this round
• Ability to raise next round
• Reaching investable
milestones
Team risk
• People who work together to
produce results
• Results are of great enough
magnitude to invest
• Teammates maintain their
roles under extreme pressure
Market demand
• Ability to know and reach your
target market
• Customer acquisition
• Engagement to a future
Execution risk
• Know which metrics make a
difference
• Producing results to the limit
of resources
• Ability to do what you say

Identify your major
existential risk
Access to capital
• Ability to raise this round
milestones
Team risk
produce results
magnitude to invest
Market demand
target market
Execution risk
difference
of resources
We will turn your!
investment into results!
others will invest in
This team is our!
primary asset, and it’s!
a stable win-maker
Our customers are!
going to eat our product!
up and beg for more
We know how to run!
a business with integrity!
and efﬁciency

Two most common risks
Access to capital
• Ability to raise round
milestones
Team risk
produce results
magnitude to invest
Market demand
target market
Execution risk
difference
of resources

Whatever your biggest risk is,
that’s what your pitch is
proving you can get a grip on.

Exercise: What’s giving your
company life?
Team
• Leading subject matter
experts
• Financial wizards
• People out there visibly
causing something big
Assets
• Intellectual property
• A valuable customer base
• A mortal lock on
consistent, growing rev
Relationships
• An exclusive partnership
• Hard-to-get customers
• Exclusive, powerful sales
or marketing channels
Performance
• A really killer product that’s
already delivering
• Traction in the form of
numbers people are into
• Ofﬂoading your risk

Whatever is giving your company
life, that’s probably why they’re
investing in spite of your risks.

3. Identify key
milestones and metrics

Relationship of your biggest risk, your
best assets and this funding round…
Biggest
Risk
Best
Asset
+
Build on
assets
Investor
Money
+
Before This!
Investment
Using This!
Investment
New
Best
Asset
Investable
Milestone
After This!
Investment
Biggest
Risk
+ +

Milestones
Most funding rounds are raised at key business
milestones:!
• A launch
• An expansion into a new market
• A new distribution partnership
• Meeting a new growth or revenue target

Metrics
Milestones are a conﬂuence of improving metrics that
tie to your business model:!
• Total addressable market
• Segmented addressable market
• Total or active userbase
• Cost of goods sold
• Cost of service and retention
• Cost to acquire the customer
• Time it takes to effect important actions in your
business

10 Possible Acquirers
1.ADP
2.Trinet
3.Ogilvy
4.(no usual suspects)…
!
3 Things Giving Us Life
1.Novel IP
2.Huge market demand
3.Active channel partners
!
3 Things Killing Us Now
1.Difficulty hiring
2.High acquisition costs
3.Low conversion
Summarize for yourself
Capital Consumption Plan
Seed: $1m in Conv Notes
$250k committed
Series A: $10m VC
Series B: $20m VC
Series C: $40m VC
Exit form: IPO
Returns 22x to Series A
!
Comparable Deals
abc.ly: $30m by NEA 8/13
def.com: $5m by KPCB 7/13
MyCo
Logo
Major Stats
CAC = $15, $2 by 14Q4
ARPU = $.25/mo, $1 by Q2
LTV = $10, $45 by 2016
Churn = 5%, 10% by 2016
COGS / COS negligible
!
Metrics We Live By
% returning MUA mo/mo
% conversion to sale
Viral coefficient (kn ln(n))
Ratio best v worst buyer

Develop an in-depth understanding
of where your business applies force
From The Startup Owner’s Manual
by Steve Blank, p.400

…and reduce it to a bottom-up analysis
of how money comes in and goes out.
Cost to Acquire a Customer
Cost of Goods / Services Sold
Cost to Retain a Customer
Other Costs
Ongoing and Subscription Revenue
One-off Sales and Setups
Ads, Partnerships, and
Other Revenue Sources
More Valuable
Company
If they put in
money here…
show how it
comes back out.

Construct an explanation of
your business model
Designed for: Designed by:
Date:
Version:
Lean Canvas is adapted from The Business Model Canvas (BusinessModelGeneration.com) and is licensed under the Creative Commons Attribution-Share Alike 3.0 Un-ported License.
Problem
What need does your customer have?
What causes them pain?
What would they pay you to solve?
What do they already overpay to solve?
Existing Alternatives
How are these problems solved today?
Do competitors exist in this market?
Is inaction an alternative?
Solution
What are your solutions to these problems?
How do you remove the pain?
How are you necessary?
How are you desirable?
Key Metrics
What numbers tell how business is going?
What numbers should be going up?
What numbers should be going down?
What drives the up and the down?
Cost Structure
What is your cost to acquire a customer?
What is your cost to retain a customer?
What is your cost to service a customer or
cost of goods?
What fixed costs and capital service costs
do you have?
What R&D costs do you have?
Revenue Streams
What is your primary revenue source?
Does your main revenue source cast off
secondary revenue sources?
Do you have indirect revenue sources?
Do you provide benefit that does not
appear directly on your P&L?
Unique Value Proposition
What is your clear, compelling offering?
What turns a stranger into a prospect?
What are your key benefits?
What is your “reason to believe?”
High-level Concept
What is the short description of your offering?
What is your “X for Y” analogy?
(ex.: Youtube is “Flickr for videos”)
Unfair Advantage
What do you have or do that cannot be
easily duplicated, circumvented, or bought?
Do you have goodwill advantages?
Do you have brand equity advantages?
Channels
What are the paths to your customers?
Do you do direct sales?
Do you do channel sales?
Customer Segments
What are the attributes of your customers?
Do your customers have customers?
What part of who your customers are drives
differences in decision making among them?
Early Adopters
Who will buy your offering first?
What is the profile of your “perfect” buyer?
For whom have you exactly matched their
needs and their ability to purchase?

…and reduce it to a short, memorable
explanation of how your company works
Designed for: Designed by:
Date:
Version:
Lean Canvas is adapted from The Business Model Canvas (BusinessModelGeneration.com) and is licensed under the Creative Commons Attribution-Share Alike 3.0 Un-ported License.
Problem
What need does your customer have?
What causes them pain?
What would they pay you to solve?
What do they already overpay to solve?
Existing Alternatives
How are these problems solved today?
Do competitors exist in this market?
Is inaction an alternative?
Solution
What are your solutions to these problems?
How do you remove the pain?
How are you necessary?
How are you desirable?
Key Metrics
What numbers tell how business is going?
What numbers should be going up?
What numbers should be going down?
What drives the up and the down?
Cost Structure
What is your cost to acquire a customer?
What is your cost to retain a customer?
What is your cost to service a customer or
cost of goods?
What fixed costs and capital service costs
do you have?
What R&D costs do you have?
Revenue Streams
What is your primary revenue source?
Does your main revenue source cast off
secondary revenue sources?
Do you have indirect revenue sources?
Do you provide benefit that does not
appear directly on your P&L?
Unique Value Proposition
What is your clear, compelling offering?
What turns a stranger into a prospect?
What are your key benefits?
What is your “reason to believe?”
High-level Concept
What is the short description of your offering?
What is your “X for Y” analogy?
(ex.: Youtube is “Flickr for videos”)
Unfair Advantage
What do you have or do that cannot be
easily duplicated, circumvented, or bought?
Do you have goodwill advantages?
Do you have brand equity advantages?
Channels
What are the paths to your customers?
Do you do direct sales?
Do you do channel sales?
Customer Segments
What are the attributes of your customers?
Do your customers have customers?
What part of who your customers are drives
differences in decision making among them?
Early Adopters
Who will buy your offering first?
What is the profile of your “perfect” buyer?
For whom have you exactly matched their
needs and their ability to purchase?
For
people with
a problem
we
solve it
by reaching them
and
selling
them
which makes
things better
for us
growing
us so

How does that go together?
When soliciting investment, consider thinking
from this context:!
!
“By applying your investment to _____ (key action),
we will be able to make today’s ______ (milestone)
a huge success by growing ______ (metric) which
will propel us to ______ (investable milestone),
and activates _______ in our business model.”

Constructing milestones and metrics is a really
long topic worthy of entire texts. Check these out:!
• The Startup Owner’s Manual by Steve Blank
• The Lean Startup by Eric Ries
• Business Model Generation by Alexander
Osterwalder
• The Personal MBA by Josh Kaufman

The circle of life
1. What does your company do, for whom, and how?
2. Why should I (the investor) care about that?
3. What makes you (the founders) think you’re the
person(s) to succeed at that?
4. What are you asking for and why? Taken as a
whole, does what you’re asking for make sense?
5. Repeat 1-4 until you win or you die.

Who we are…
In order of importance:
1.Made them money in the past;
2.Made someone they know money in past;
3.Successfully applied money in past;
4.Did something your customers would know
What we do…
• A solution for an identifiable problem (what)
• Big market (who)
• Something that fits market (how)
• Has model that will return investment (why)
Why that matters
to you…
1.Fear: This is a big deal, and if you miss it, your LPs will think
you’re a failure
2.Greed: This is going to be so much money, you should beg us to
put in more than we’re asking
3.Continuity: This is consistent with your investment thesis, and
you don’t have one in your portfolio
What you should
do about it…
1.Invest
2.Tell us who, specifically we should talk to next, and intro us
3.Tell us what you’d do to improve the pitch, improve the
business or generally be more awesome
The meat of your story

Perception is Everything
• A sense of immediacy and urgency
• Fear of missing out or of being left behind
• Fear of losing control of the deal
• An opportunity to be greedy about
• Beating out other ﬁrms
• Striking at the peak of ripeness of your business

I’m not going to get into slides here. For examples, check out:!
• http://bestpitchdecks.com/
• http://www.slideshare.net/hnshah/mintcom-prelaunch-pitch-deck
• https://www.crowdfunder.com/is34/about/
• http://www.slideshare.net/UTR/how-to-pitch-a-vc-dave-mcclure
• http://onstartups.com/tabid/3339/bid/98034/The-Pitch-Deck-We-
Used-To-Raise-500-000-For-Our-Startup.aspx
• http://reidhoffman.org/linkedin-pitch-to-greylock/

Seriously?! After all
that, no slides?

Yes, seriously
• Most wantrepreneurs never do the underlying work
required to get to the stage where they need slides
• If you do the work ﬁrst, you’ll have all the material to
put together great slides
• If you already have a pitch and are still asking,
“Does my pitch work?” then you skipped steps
• The slides are not your pitch. They’re the prompt
that keeps your audience with you.

These are some of my favorite make-a-deck
guides:!
• http://www.slideshare.net/slidesthatrock/how-to-
pitch-a-vc-redesigned
• http://www.slideshare.net/dmc500hats/how-to-
pitch-a-vc-or-angel
• http://www.slideshare.net/Sky7777/the-best-startup-
pitch-deck-how-to-present-to-angels-v-cs

Okay, a FEW pointers to
avoid weird things people
do in pitches…

! ! MyCompany 
! ! … makes taglines to help everyone remember me!
Team
Person Name, CEO
Brief about-me
@twitter
!
Person Name, CTO
Brief about-me
@twitter
!
Person Name, …
Brief about-me
@twitter
!
Other team members /
Relevant things that make
team valuable
MyCo
Logo
1st Custs, Advisors, or Stats
Advisor Name
Credential
!
Marquee Customer
Significance
!
STATISTIC
Significance
Other key information
highlighting why this is a
deal worth participating in
and recalling STAR moment
Partners or Social Proof
Partner name
Significance
-or-
“It’s so fantastic I’m
putting it in the State of
the Union!” – President
Obama
Founded 2011
Headquarters NYC
Employees 10
Funds Sought $500,000
Contact me@my.co
Cust
Logo
98% Part
Logo
We make company taglines that reliably boost customer conversion by 300%. Our
patent-pending FairyDust Platform makes the magic happen. Our mission is to never
let a company have a bad tagline again.

Solution
• Describe your solution in simple, clear, concise
terms. The worst feedback you can get is, “I
can’t really tell what you do.”
• Show the actual product in a way that makes it
real for the entire audience (i.e., not an idea)
• Clearly and concisely explain how you are going
to make money. When in doubt, pick one of
Kaufman’s 12 Standard Forms of Value
(http://book.personalmba.com/12-standard-
forms-of-value/)

Validation
• Provide provable, non-anomalous metrics
showing why you are successful
• If you can’t get excited about your validation
metrics that prove the validity of the meat
of your product’s approach (versus just
sales or rev model), no one else will be
excited either.
• Your founding story is part of your validation.
Make sure it’s short and attractive.

Competition, Defensibility or 
Key Market / Mega Trend
• Describe a clear, defensible advantage. Do not be tempted to
claim you can out-execute a successful, entrenched leader
unless you already know for certain that you have an unbeatable,
exclusive advantage over them (e.g., “I can out-eVite eVite.”).
• Mention potential partners (esp. those who might be acquirers)
• Explain why you will be the market leader – why is your
advantage unfair and insurmountable to the competition and
your product irresistible to your customer? How can you lock up
85% of your total market?
• If you find yourself claiming you have no competitors, your
competitor is the status quo. What special leverage do you
have over existing customer behavior that will make them choose
/ force them to change their behavior?

Team
• Describe the team as the main company
asset
– Relevant information only - shorter is better
– 1 successful product > 20 graduate degrees
– Include past companies, titles and achievements
showing a track record of delivering returns
– Big bonus for having worked together before
• Why does the team care about this problem?
• Why is this team particularly well-suited to
solve this problem?

Plan
• What still needs to be done?
• What are your specific milestone dates?
• What do you need to get it done? Make a
clear ask here—say the specific amount of
money you’re raising.
• Be sure that everyone in the room gets
asked to do something for you.

PITCH Perfect: How to pitch your startup

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