Principles of pitching
In this unit, we explore the principles of pitching. We look at the purpose of pitching, your various prospective audiences, and the formats you can use.
Why are you pitching?
Every time you deliver a pitch, you should have a clear purpose in mind.
It's common for company founders to view investor pitches as an opportunity to get an immediate commitment for funding, as you might see on shows like Shark Tank.
However, this scenario rarely plays out. Most of the time, a pitch is just the start of a conversation. By getting people interested in what you're doing, you're encouraging them to connect with you afterward to find out more.
If you give your pitch at a public event such as an accelerator demo day, the purpose of your pitch is to act as a short teaser that gives your audience some small nuggets of information and makes them want to know more.
If you pitch an investor such as an angel group or a venture capital fund, it's likely that most of the people in the room know little about your company, and your pitch is the first of many meetings before you actually have money in the bank.
Who's your audience?
The most impactful pitches are delivered at just the right level for the audience. By understanding your audience's objectives and their current level of knowledge about your company and sector, you can deliver a pitch that's informative without being condescendingly simple or overloading them with unfamiliar terminology.
Most people underestimate the gap between their own knowledge and that of their audience. This gap can result in the audience missing key points because they don't understand the industry, the technology, market dynamics, or terminology.
If you lose your audience early in your pitch, it's likely that they'll switch off and you'll struggle to keep their attention for the remainder of your presentation.
Tip
Road test your pitch on people who aren't involved in your startup and don't work in your sector. Doing this can help you identify concepts that need to be explained up front, and it ensures that you're not using jargon, technical details, or names of other companies that are familiar to you but not to others.
A good rule of thumb is to refer only to things that you're confident that at least 90 percent of your audience knows about.
Pitch formats
Startup founders need to be familiar with several pitch formats. Let's review some of the most important ones.
Elevator pitch
An elevator pitch is a short, pithy description of your company that you can use in casual conversation.
Let's say you're at a networking event. You meet an investor, and they ask: "What does your company do?" What do you say? Try it right now. Can you, in one or two sentences, give a clear and compelling explanation of what your company does? Do you think your elevator pitch would get a potential investor interested to know more?
Unless you've had significant practice at this, it's likely your elevator pitch needs work. Many startup founders find it helpful to script their elevator pitch and memorize it rather than attempt to come up with something on the spot.
One format that's proven to be a good starting point is the Gaddie Pitch, named after marketing expert Anthony Gaddie. It comprises three sentences:
- You know how <target-customer><problem>.
- Well, what we do is <description-of-how-to-solve-the-problem-or-deliver-benefits> by <solution>.
- In fact, <facts-and-examples>.
Here's an example of a Gaddie Pitch for Canva:
You know how good graphic design is important to every company?
Well, what we do is provide simple online tools for anyone to make professional presentations, social media graphics, and more in just a few minutes.
In fact, since we launched in 2012, our customers have created over five billion designs using Canva.
Demo day pitch
Startups that pitch at an accelerator demo day are typically asked to deliver a pitch ranging anywhere from one minute to five minutes. Demo day pitches generally have a firm time limit, allow for a small number of PowerPoint slides, and might or might not allow time for questions from a panel at the end.
Some demo days are delivered to a public audience, which can amount to hundreds of attendees (or many thousands if it's delivered online), or they can be restricted to an invitation-only list of mainly early-stage investors.
Investors who attend accelerator demo days are usually there for one reason: to find new investment opportunities. Investors, like everyone else, suffer from FOMO (fear of missing out), and an investor's worst nightmare is attending a demo day event and not following up with a startup that turns out to be the next unicorn.
Therefore, your primary aim at a demo day pitch should be to convey that your startup has a shot at huge success, and investors would be wise to follow up with you.
Since the beginning of the COVID-19 pandemic, almost all accelerator demo days have moved completely online, and this trend is likely to continue. Your pitch might exist online in perpetuity, which means you should avoid disclosing anything that's highly sensitive or that could jeopardize fundraising opportunities in the future.
Video pitch
Many accelerators and other startup programs require a short video pitch as part of their application process. These pitches vary in length, but 60 to 90 seconds is typical.
Distilling the essence of your startup into a short video can be challenging, but remember that your objective is to convey briefly why your startup should be accepted into the program ahead of others. Later, you can go into detail about your product, the size of the market, or the backgrounds of your team.
Accelerators usually invest in the startups they accept so, as in a demo day pitch, it's important to convey in the video pitch that your startup has a shot at building a hugely successful business.
Accelerators also look for startup teams that are coachable. They want to know that you're genuinely interested in the advice and guidance available from the accelerator, and that you recognize that certain aspects of your startup need outside help.
Tip
As you build an accelerator application video, take advantage of the following tips:
- Stay within the requested time limit.
- Upload your video to YouTube and provide a link. The video can be marked as unlisted but not private or password-protected.
- Don't use slides or fancy graphics, only the founders talking.
- Use clear audio (use an external mic if possible).
- Keep it informal, not as though you're reading a script. Of course, preparing your thoughts in advance is a good idea.
Here are two video examples worth checking out:
Task: Create your own Gaddie Pitch
If you don't yet have millions of users like Canva, you can use the in fact sentence to describe your early traction, the size of the market, or a recent customer anecdote.
When you're happy with your pitch, test it out on some friends. Ask them to pitch back to you, describing what your company does in their own words. If they can describe your company reasonably accurately, that's a sign that your pitch is on target. If they struggle with it, you have more work to do.
Investor pitch
An investor pitch is one where you've been invited to present to a certain type of investor, such as an early-stage venture capital fund, or to a group of investors, such as an angel group. This opportunity ordinarily comes after the investor has reviewed some preliminary information and has met informally with the founders.
A typical investor meeting might run for 30 to 60 minutes, and it's common for the first half of the meeting to be used for you to deliver your pitch, followed by time for questions and discussion.
To prepare for an investor meeting, it's essential to know:
- To whom you're presenting, so that you can research the backgrounds and roles of key individuals.
- The length of the meeting and how long they expect your presentation to run.
- For online meetings: The video platform to be used, to ensure that you're familiar with it and the audio and video are set up for good quality.
- For in-person meetings: The exact location, so you can plan your route and parking arrangements and be there on time.
- What audio-visual facilities are available. If you're using your own laptop, you might need to bring adapters. If you're using their equipment, you might need to send the presentation in advance.
Types of pitch decks
There are two distinct types of pitch decks that your startup should prepare before your talk with investors. For each type, you also need to write a short executive summary.
Presentable deck
A presentable deck is the one that you'll use when you deliver your presentation either in person or online. It should be light on words and display the key graphics or images that support the points you make verbally, rather than trying to describe them in writing.
If you were to send a presentable deck to someone, it's likely that they wouldn't be able to glean much about your company from it.
Readable deck
Many angel groups and venture capital funds ask founders to submit a pitch deck online before they'll consider inviting you to present.
The deck that you send to an investor should be self-contained and have enough detail that someone who knows nothing about your company could read it, make sense of it and, most importantly, conclude that your company is a candidate worth meeting and investing in.
It's always a good idea to be cautious about who you send your readable deck to, because it's likely to contain confidential details about your company.
Executive summary
It's useful to write a one-page executive summary that complements your pitch deck.
The executive summary is an excellent way to follow up with a potential investor whom you meet at a networking event or demo day. It presents a brief, high-level overview of your company and can include the following information:
- Company overview: a brief description of what your company or your product does.
- Current status, including any recent notable milestones.
- Key metrics, including traction, revenue, conversion rate, growth rate, churn.
- Ideal target customer.
- Total addressable market (size of opportunity).
- Leadership team, including names, LinkedIn profiles, and skill sets.
- Previous funding amount (if any).
- Current funding round: how much you're raising, what you're using it for, any funds already committed, terms.
Tip
Save the executive summary as a PDF file to a shared location such as OneDrive, and have a link to it readily available on your phone. When you meet a potential investor, you can quickly send them the link.