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Preparing an Investor Pitch
- 1. Preparing an Investor Pitch by David Williams and Rick Duggan
- 2. Overview ✴ Ideas Are Worthless ✴ Know Everything... ✴ ...Although Admit What you Don’t Know ✴ Talk To Everyone Who Will Listen ✴ Pitfalls To Avoid ✴ Play to WIN ✴ Putting It All Together ✴ Summary ✴ Q&A
- 3. Ideas Are Worthless ✴ I have had thousands of ideas... ✴ Fleeting thoughts --> Hmm, that’s interesting ✴ I should see if anybody is doing that -> Research-worthy ✴ But none of them have ever made me any money ✴ Value-Added Solutions ✴ Must be solution that resolves a “pain point” ✴ Must be solution that is efficient ✴ Example – Twitter
- 4. Proof That Ideas Are Worthless Idea Execution Success Bad Bad No Bad Good No Good Bad No Good Good Maybe
- 5. Know Everything... ✴ Research, Research, Research ✴ Google (lots of variations) ✴ People around you every day ✴ Be fluent in your market knowledge ✴ Know the competitive landscape
- 6. ...Although Admit What You Don’t Know ✴ Wait...I thought I should Know Everything ✴ In theory yes, in reality no ✴ Admit what you don’t know ✴ Credibility is key ✴ Always thank the person for teaching you something ✴ Offer to research and get back to them ✴ Being prepared minimizes the risk of downside surprises
- 7. Prepare a Business Plan First ✴ Write a business plan ✴ Do not wait for an investor request/pitch; focus on the process, not the product...marketing, development, operations, financing, etc. ✴ Continuous improvement ✴ Save your sources – you may be asked to cite them
- 8. Talk to Everyone Who Will Listen ... and Some Who Won’t ✴ Family ✴ Friends ✴ Mentors ✴ Colleagues ✴ Blog readers ✴ Stakeholders
- 9. Pitfalls to Avoid ✴ Ask VC/angel to sign an NDA – ain’t gonna happen! ✴ You are not in a position to dictate terms, so do not waste your time doing so; negotiation is the key ✴ Claim your market is the entire world, or so large that it is unwieldy ✴ “Market is $Y billion. If we get only 1% of that...” does not impress...you might end up with much more or much less ✴ Do not emphasize your exit strategy more than your business strategy – focus on creation/build/growth ✴ Do not be overly broad; investors like to see focus, ability / vision to execute the idea, not simply sell it
- 10. Play to WIN ✴ Listen carefully to questions; answer what was asked, not what you wanted to be asked ✴ Be respectful to everyone you meet on your journey; relationships are paramount ✴ Research your audience; most are clear on what they want and how they want to see it ✴ Be realistic about your valuation, especially at a very early stage (pre- revenue) – negotiation ✴ There is a fine line between defending your ideas and being defensive ✴ Put your best foot forward
- 11. Elements of a Pitch ✴ Introduction ✴ Problem You are Solving (pain point) ✴ Your solution ✴ Market ✴ How to reach market ✴ Revenue model ✴ Desired investment & what major milestones will you reach with it ✴ Team
- 12. Summary ✴ Prepare, prepare, prepare ✴ Responses to operational questions should be considered ✴ Know what you do not or cannot know ✴ Negotiation will determine many outcomes ✴ Consider that angel / VC funding might not be the right model for you ✴ 10% of pitch meeting is your presentation ✴ 90% of pitch meeting is discussion / answering questions
- 13. Thank You Q&A
- 14. Other Resources ✴ http://www.paulgraham.com/ideas.html ✴ http://blog.assetmap.com/2011/01/social-web/lets-end-the-ideas-are- worthless-myth ✴ http://blog.startupprofessionals.com/2011/08/how-much-is-your-million-dollar- idea.html ✴ http://blog.startupprofessionals.com/2011/08/10-funding-quotes-every- entrepreneur.html ✴ http://www.inc.com/guides/present-your-business-plan.html ✴ http://www.sequoiacap.com/ideas ✴ http://programmingzen.com/2009/02/23/do-you-really-need-venture-capital- funding
Editor's Notes
- R\n\nPitch practice\nElements that are important\nFocused on pitching to an investor, though we will mention other topics\n\nWhy listen?\n\nI raised $19 million for a company that sold digital downloads on the internet. You may have heard of it -- iTunes.\nBut that wasn't my company.\n\nDavid's bio\n\nHow many people think they have an idea worth a million dollars? You’re wrong.\n\n
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- R\n\nTwitter is the solution to the problem “I want to communicate but I have ADHD”.\n\nSecond article makes the point that the idea has to be good. True, but somewhat irrelevant to the point.\n\n
- R\n\nIncidentally, this is why more than 75% of startups fail.\n\n
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- D\n\nWriting the business plan is somewhat less about the plan and more about the preparation.\n\n\n
- D\n\nWhy aren’t they listening? Listen to their objections.\n
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- D\n\nVC web sites describe how they like to see business plans, presentations, and common mistakes (which translate to pet peeves/irritations)\n\nPut your best foot forward – “We’re implementing feature X” vs. “We’re going to implement feature X”\n\n\n
- R\n\nAs we mentioned earlier, the audience will define exactly what is desired. This is a starting point. \n\nSometimes you will have more, sometimes you will have less.\n\n\n
- R\n\nSo I’ve spent all this time preparing the presentation, and it’s only 10% of the meeting? \n\nNo, you’ve spent all this time preparing yourself.\n
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