Back when my daughter was in middle school, she had an incredible math teacher, who didn’t teach to the standardized tests and was much more interested in developing his students’ analytical skills and maximizing their learning experience. One way he accomplished this (in addition to developing his own math video games) was to post sample tests prior to every exam. Although the practice tests were different from the actual ones, they were very effective at helping kids master many different math concepts.
For many years the Pasadena Angels has done something similar. Through multiple iterations of our website, we’ve always posted our investment criteria, covering all the areas we expect to see when companies pitch. Like my daughter’s math tests, we’re giving away a lot of information before the meeting about how your company will be judged. Although we freely share this information, it still surprises me how many companies present to us that haven’t taken advantage of this and have missed the mark when they pitch.
Based on our criteria, the key topics for your pitch are pretty straightforward:
Title Slide (with contact info)
If we’re not at your presentation but are excited when someone forwards us a copy of your slides, it’s helpful to know who to contact at your company…You’d be amazed at how many companies don’t include their contact info.
What challenges/pain are customers facing and what are the economic or other consequences associated with these.
What are you doing to change the world and why is your technology vastly better than anyone else’s.
How does your product/technology work & what’s the underlying magic
How large is your market and how quickly is it growing. As I mentioned in the previous post, this should be a bottom up forecast and not “we’ll get 3% of the total market estimated by Dataquest.”
How will you make money.
Customer acquisition and marketing/sales/distribution strategy & tactics
Current status and what you’ve achieved so far
List the key members of your management team, board members, advisors and any significant current investors. You’ll win a lot of extra points if you cite prior experience in your target market and prior examples in past companies of returning money to investors.
The financial forecast should extend out five years and contain not only dollars, but also key metrics such as how many customers you’ll have along the way.
How much money are you raising both now and total in the future, use of proceeds, your expectations on deal terms, key near-term milestones and exit strategy.
Once you have the basic pitch, here are a few more suggestions worth considering:
Many years ago a local company was pitching to us that had developed an elegant GPS device. The device was advanced for its time and should have crushed competitors such as Garmin and TomTom. Unfortunately the company’s CEO spent half his time trying to convince us we had a traffic problem in LA—along with a lot of stories about how bad it was to drive on local roads. Fast forward to 2016 and I got to sit through a pitch from a great company, where half the time was spent telling stories designed to convince me we have a water shortage…Guess how well these pitches did with people in our group?
- Avoid death by Powerpoint (courtesy of BBC)
Unfortunately some presenters get carried away using too many of the features and functions of Powerpoint. When it comes to your slides resonating with investors, we’re interested in content and that it shows you know what you’re doing. Nobody ever got funding because they had superior fonts or slide transitions.
- Don’t try to be the next Steve Jobs
Guy Kawasaki (former Apple evangelist and marketer extraordinaire) is the author of Art of the Start and other great books for entrepreneurs. Guy has some great advice on LinkedIn about developing the minimalist pitch—some of which I agree with and some I wish most entrepreneurs would ignore—or put less emphasis on. The part I wish most entrepreneurs would avoid is the comments about slide format. Although Guy has some great ideas about how to improve the aesthetics and readability of your slides, I’ve found over the years that many entrepreneurs spend too much time on this at the expense of content. The best example of this was years ago when a CEO was determined to copy Steve Jobs’ slide format and presentation style—and despite our advice to the contrary. If you’re wondering how it went…it bombed, as very few people are effective at pulling that off. You’re also not launching the iPhone, so it’s generally not a good format when pitching prospective investors.
- Don’t forget the intangibles
Your slide content can be great, but if you sound like Ben Stein in Ferris Bueller, you’re probably not going to get very far. For more advice on raising money (particularly the human intangibles that we look for), you can find a good video by David Rose of the New York Angels from Ted World.
- It’s show time, folks
In the movie All That Jazz, Joe Gideon (the late Roy Scheider) looks in the mirror and says“It’s show time, folks”,which is a good way to think about going into any investor pitch (minus the amphetamines). As with most people, Angels respond emotionally as well as to reason, and it’s critical to show both high energy and enthusiasm. Most of the time you have the initial two minutes of a pitch to get maximum impact with your audience.
I know I suggested no story telling above, but I’ll leave you with an interesting anecdote. Years ago a first-time entrepreneur did one of the best pitches we’ve seen, right after recently immigrating to the US. His English skills were a distant second to his native language abilities. It was also the first time he had ever pitched to investors. Despite his lack of experience and English proficiency, the key difference was that he took advantage of the time and advice offered by a few of our members when he was putting together his pitch—which is no different from what we offer to all the other companies that meet with us.