What happens at a startup pitch and what investors wish to hear
What happens in a startup pitch session? While we have all seen some version of this on the TV series ‘Shark Tank’, does a real-life pitch bear any resemblance to it? What should go on the deck? What makes the investor sit up and take notice? What makes the investor decide to meet you again and possibly fund your idea?
“It [preparing for a pitch] isn’t an easy task. Entrepreneurship itself is tough, and if you add pitching to that it just adds on to the stress,” said Sameer Brij Verma, Managing Director of Nexus Venture Partners, speaking during the pitching sessions of the IIM Lucknow Alumni Entrepreneur Meet.
An invite-only event, the meet was held last Saturday in Bengaluru, with the pitching sessions at SAIF Partners' office. The pitching sessions were held across three different panels: Panel 1 on consumer, fintech, healthcare; Panel 2 on B2B tech and B2B SaaS; and Panel 3 on consumer tech, agritech, and social tech.
Startups from these sectors pitched to Mridul Arora, Managing Director, SAIF Partners, Ravinder Vashisht, Co-founder, Roots Ventures, Sameer Brij Verma, Managing Director, Nexus Venture Partners, Ganapathy Venugopal (or VG, as he is popularly known), Co-founder and CEO, Axilor Ventures, Prerna Bhutani, Partner, India Quotient, and Darshit Vora, Principal, Kalaari Capital.
Observing the sessions from the sidelines, one thing stood out: early-stage startup founders differ in the way they pitch. While the consumer-tech founders were focussed on market size and numbers, it would be safe to say the B2B SaaS and deep-tech founders were primarily focussed on talking about the technology.
On the basis of the pitches they heard, here are some of the key pointers the investors had for startup founders:
When you are in early-stage, try talking about the team
“When a company is in its early stages, the investors back a company not on market size or numbers but primarily on what they see of the team and the founders. Most of the other details like the market can be easily researched by the investors,” said Mridul.
And, if the founding team has some background in the space, it helps; the experience adds additional weightage. Social media company Square, in fact, leveraged this in their winning pitch. The company’s team comprised Twitter’s Founder Jack Dorsey, software engineers from Google, and others from Facebook.
Find an interesting and easy way to explain what your startup does
To explain what your startup does, it is best to focus on the pain-point that your startup solves.
“Try focussing on one thing that stands out and build a strong use-case,” said VG.
This helps getting the investors’ interest and attention immediately, according to the experts. If there is something that stands out about the product, try starting your pitch with that.
This approach would be similar to what Airbnb took in its early pitch. In the introduction to itself, Airbnb described its business in an interesting way. An important point or question to keep in mind is: will a five-year-old understand what your business does? If they can, then your pitch works.
Focus on the use-case
While preparing for your pitch, pause and ask yourself these questions: Who are the clients? Who will pay for your product, and will they continue using it?
Even if yours is an early-stage startup, it is important to understand if people are willing to try the product and come back and buy it later.
“One of the problems with deep-tech stacks is that the industry use-case is limited. What looks good on paper does not necessarily look good on ground,” said VG.
If you have numbers to show, show them off
You may not have numbers to show or they may not be boast-worthy in the early stages. But if a startup does have them, why not flaunt them? It is what Facebook did in its first pitch.
“Whether it is the number of people using the product, or the tests done; if there are numbers to show, please add them to the deck,” said Ravinder.
Do your homework, know who you’re pitching to
While most investment firms are sector-agnostic, some have specific preferences.
“Try understanding from the ecosystem and the portfolio the firms have if the sector you are working in is what the investors are interested in,” said Anshu Parsher, Board Member, IIML Alumni Association and General Partner, Whiteboard Capital.
Anshu pointed out that investors too are human beings and draw from their experiences. “In the end we are putting in someone else’s money, and, if in a particular sector we have already burnt our fingers, it is obvious we will be careful and wary. Also, we have our biases,” he added.
Keep your deck short and sweet
The golden rule in pitch presentations seems to be the ‘10-slide’ rule. “Try not to add too many details on each slide. It just becomes too much information, which cannot be easily processed and understood. In a short span, we meet several startups. It is, therefore, important that a deck stands out,” explained Mridul.
Clear go-to-market strategy
Early-stage companies need to have this slide up at the top in their deck. “How do you intend to reach your target audience? Do they need the product and why? If you put that in clear pointers, it is clear to us that you as the founder are focussed on selling the product early on,” said Sameer.
What problem are you addressing?
While the market size of different sectors varies, it is important that founders hone in on the one problem that they are laser-focussed on solving. How big is that problem, and why do they think their startup can crack that problem?
If you are preparing for your investor pitch, give these pointers a good, hard think. Address them all, and you may just get that much closer to impressing the panel of VCs and bagging those funds.
(Edited by Athirupa Geetha Manichandar)