Before we get into how to pitch your startup to investors, you should determine whether venture capital or bootstrapping is the right fit for your business.
Don’t worry – we’ve got you covered. These two resources on our blog should help you decide: Bootstrapping vs. Venture Capital: Which Is Best For Your Business? and How To Raise Capital: The Complete Guide.
Okay – now that we’ve covered bootstrapping vs. venture capital, let’s talk about how to pitch your startup to investors! Luckily, one of Acuity’s co-founders Matthew May is well-versed in this. He’s the President of Atlanta Technology Angels and Advisory Board Member for Venture Atlanta.
Matthew’s Top 4 Tips on How to Pitch Your Startup
- Talk about your customers instead of use cases. All investors hear is, “nothing is working yet.” Use customer stories! What’s working for them?
- Talk about what your product does, not what it doesn’t do. People have a tendency to name their biggest competitor and lead with what their product can’t do yet. Leave that out and you’ll be better off.
- Start your pitch with a customer story. This immediately separates you from other startups because you have customers, not just an idea.
- Build two pitch decks: one for big groups and sit-down conversations. Don’t try to use the same pitch deck for both. (See more tips for building pitch decks below!)
For more about these tips and how to pitch your startup to investors, watch this video from Matthew:
I’ve seen about a thousand pitches over the last 10 years. And here’s what I’ve learned. Here are some simple tips for you. You’re pitching to investors. Here’s a pitch tip. Don’t use use cases. Talk about your customers. What do I mean? “My product could do this and do this…” All an investor hears is things that are on your roadmap and it feels like you’re too small and nothing’s working yet. Flip the script – start with a customer story. Joe has this problem. Joe uses our product to fix this, this, and these several things. If you start with a customer story, first, you separate yourself from the pack and show that you have customers. There’s lots of people who pitch with just an idea. Second, it really helps people understand your product. So you can really get into the meat of kind of the story (all the other stuff you want to talk about). Sometimes, in a pitch, somebody will lead out with, oh, we don’t quite do what [name your biggest competitor] does with this feature. Just skip it, leave it out. Your investor doesn’t know about that feature. Talk about what your product does do. Don’t lead with your chin.
Stop using the same pitch decks for big crowds and sit down conversations. You need two pitch decks. You need a pitch deck that can be presented to a group of people in a big room. Lots of pictures, not very many words. Something that you can get through in five to 15 minutes. Second, you need a pitch deck for the sit down conversation. You can have your words on it. You can have your statistics. You can have the sources, the Gartner charts… everything you want on that pitch deck.
If you’re building a pitch deck, best source that I’ve found is Canaan Partners. They walk you through all of the main things you need in a pitch deck. They talk about team and explain what they want there. They talk about opportunity, competition, business model, and most importantly to ask, what do you want to get out of this pitch? If you’re not raising money, do you want ’em to help you find customers? If you’re not finding customers, do you want ’em to help you find employees? If you’re not finding employees, do you want ’em to help you raise money? Make sure to have an ask. Those are your pitch tips. I hope they help.
Best Startup Pitch Decks
Another important component of how to pitch your startup successfully is your pitch deck.
We recommend that you build two pitch decks.
For Big Groups: Create something visually appealing with few words. Ideally, you should be able to get through your pitch in 5 to 15 minutes.
For Sit-Down Conversations: Create a fuller pitch with words, statistics. Gartner charts, etc. Everything that you need to cover should be on that pitch deck.
In addition, if you’re building a pitch deck, we recommend Canaan’s pitch workbook.
They walk you through all of the main components of a solid pitch deck. They talk about team, opportunity, competition, business model, and most importantly – the Ask. What do you want to get out of this pitch?
If you’re not raising money, do you want them to help you find customers? If you’re not finding customers, do you want them to help you find employees? If you’re not finding employees, do you want them to help you raise money? Make sure to have an Ask.
FAQs About Pitching to Investors
What should I look for when choosing an investment company?
Are you seeing an imbalance in the force when you’re talking to VCs where you feel like you’re always pitching them? One way to flip the script is to ask for a referral. Ask to talk to one of their portfolio companies. That’s a great ask. It puts them on the other side and changes kind of the dynamic in the room. It shows that you’re doing your diligence and you’ve been there done that. Third, it gives you access to somebody who’s done this successfully. Think of all the questions you can ask that portfolio company, not only about that investor, but about the process, and what they would do differently. And you can talk about other people that they liked in the space.
What should you ask an investor?
Need a question to ask a VC after your pitch is over? Ask them “How much do you save for subsequent follow-ons?” So you kind of know what they’re planning to do in this investment, but what is their policy for following on later? Say you figure out in 12 months, there’s a strategic acquisition you can make, or you’ve done really well. And you wanna double down. Are these people going to be partners that can write another check? Most funds have a policy. Sometimes it’s one to one, sometimes it’s one to 50 cents. But you can ask them up front and you’ll know what kind of partner you’ll be choosing if you choose them as your VC.
How do I follow up with an investor?
Have you talked to like a hundred angels and 10,000 VCs, and now you don’t know what to do? Get an update strategy, track who you’re talking to, and have a cadence that you go out with. This is just like having an SDR or a BDR in your organization. You need somebody that’s gonna send out every three months, a drip to those folks telling them here’s where ARR is, here’s the number of users…any kind of traction metrics. These should be bullet point lists…not paragraphs, not months…something they’re gonna read. Here’s a way to contact me if we’re right in your space. Don’t waste all that time. Having talked to like a hundred people, don’t lose it with not following up. Likely, it’s just that you hit him at the wrong time. So you have to follow up. So when it is the right time, they reach out to you.
How do you keep an investor interested?
Have you spent the last three months raising money, talking to hundreds and hundreds of people, and now you’re trying to figure out what to do, but you still don’t have an investment? You need a way to track and update those investors. You should be tracking what stage those people invest in, how much they like to write checks for, and how often they want to be updated. And no matter what you should update everybody, at least every quarter on your top five traction stacks — whatever that would be…ARR, number of active users per month…whatever your stats are. That should go in bullet point form. Don’t write paragraphs and paragraphs. These people want quick hits and way to contact you if you’ve reached their strike zone.
How do you end a startup pitch?
If you’re at the end of your investor pitch and your investors are asking you, do you have any questions for us, here’s a question you can ask them. Ask, “how big is your check size and what percentage of the company do you target to own?” So with those two pieces of information, you can kind of back into your valuation of what you’re gonna need to make happen for them to get the right check size and ownership percentage, and you understand what the valuation gonna be. Lots of people are gaming this and using this as a way to make sure that you have a win-win situation with investors.
How long is a typical VC investment period?
Not sure what to ask investors at the end of a pitch? Ask them how many investments they’ve made out of their current fund, what they’re investing out of them, and how many investments they plan to make later. For example, they might say, “Okay, we usually make 12 investments out of a fund. We’re on invest number eight.” So you’re kinda on the last half of their fund. Why does that matter to you? VC’s horizons are five to seven years, but if you get invested in one of the first three, you’ve got seven years. If you’re one of the last three, you’ve got five years left before you start getting pressure to get liquid. So it really matters to you to understand the relative time horizon. And it’s a really intelligent question to ask.
More Startup Resources
If you’re reading this, you’re most likely an entrepreneur looking to pitch to investors. If you’re looking for 2 great opportunities to gain exposure, we definitely recommend Venture Atlanta and Atlanta Technology Angels. Reach out to Matthew May to learn more!
Need a financial expert who speaks your language? Lucky for you, we’re fluent. Check out the SaaS and Startup page on our website to learn more.
We also offer outsourced virtual CFO packages created to help you build a model to pitch to potential investors. Visit our CFO pricing page to get started!