Tip #15: No demo videos

Tip 15: No demo videos. Almost always, doing a "demo video" is a mistake.

First, potential investors have come to hear you and ask questions, not watch a youtube video, listen to the voice-over guy, or sequence of testimonials.

Second, almost every time a 3-minute demo video is used it’s the generic sales video. Helpful for potential customers so they can sign up online, but this is a different audience with a different goal - and a generic demo is not necessarily an effective way to reach the goal.

Thirdly, videos present problems of logistics. If they work, which they often don't as synching videos with audio that people can hear in a conference room is no easy task, demo videos lose momentum and use up time switching between presenters. Then another 15 seconds are wasted moving slides back in and getting re-calibrated.

And then finally, to compound a sub-optimal start, the entrepreneur will then almost always launch into their “Intro to Us and Our Product” slide – duplicating the info we already have.

So now we are ~5 minutes into the pitch, and still on slide 1. This is not going to end on time.

Tip #14: Demos must work

Tip 14: Demos. If you can, provide a demo of the product or service. However, only demo if you are completely certain it will work. A failed demo means no investment – even if it’s not your fault.

If you are showing off your product, it mustn't fall apart as it's passed around the audience. If it's a SaaS tool, you mustn't get an error message (or an interminable loading screen) when presenting it.

Don't make all the pitch dependent on the demo. Bearing in mind tip 13, there will be technical difficulties somewhere. Make sure that if the demo does go wrong the rest of the pitch makes sense "standalone."

Screen shots of the key activities are often an effective trade-off between functionality and reliability. Another approach is to give people the simple website link for a demo so they can see the product ahead of time, or follow along on their phones while you’re talking – though be careful they don’t get distracted.

Tip #13: Tech snafus

Tip 13: Technological snafus. There will be some. Projectors break, internet connections fail, files corrupt, HDMI cables get forgotten. Be prepared to respond.

How? With some technology, you can bring backups. Bring your own version of a presentation on a laptop and thumb-drive. With others you can revert to “old school” solutions. For example, bring hard copies of something for people to read while you speak - your one-page executive summary would probably be best and manageable.

The ultimate preparation is being able to deliver the pitch without slides. The goal of practicing the pitch is to allow you to present it in your sleep. Awake (and armed with a handwritten list of bullets on a 3x5 notecard?), you should be able to deliver it with no trouble.

By now, this technical snafu might even have worked to your advantage. The audience has nowhere else to focus except on you, so will be listening hard – and will be especially impressed by your storytelling ability, knowledge, and adaptability if you can pitch unaided.

Tip #12: Practice a shorter version

Tip 12: Practice a shorter version. If you have 15 minutes to pitch, practice delivering it in 12 minutes.

Why? In front of a live audience, you will inevitably ad lib more content – even if you have very carefully practiced. You will change your content to a live audience. You will react to puzzled expressions by providing a little clarification or repetition. You will probably be tempted to try to turn the scowl into a nod. And when you are hit with a question mid-flow, you will need a bit of time to get yourself back into your pitch.

That is all OK. No-one can resist it, and in fact responding to your audience is critical. (It is why we require pitches to be in-person, rather than virtual, where it’s harder to respond to non-verbal communication).

But, if your practiced version is right on 15 minutes, your live version is now violating tip 10. So over-deliver in practice so that you can deliver on the day.

Tip #11: Recover to time subtly

Tip 11: Recover to time subtly.

Let’s imagine you are failing to stick to your time limit. Perhaps you’re 8 minutes into a 15 minute pitch but only 25% through your pitch. What can you do?

While there is never any excuse for running out of time, there are ways to recover - and some of them can even work to your advantage.

First though, something to avoid: if you are getting behind, the worst thing you can do is say “I’m getting behind so I’ll have to speed up here.” You are wasting time saying that and highlighting that you are losing control – something probably most members of the audience probably hadn’t even realized yet!

“Speeding up” appears to be the favorite “solution” – but this only makes things worse. It’s hard enough to deliver effective pitches a 1.0x speed; it’s impossible at 1.5x speed.

Instead, cut some content from the slides coming up, and quietly get back on track. This is obviously easier said than done – but it’s also much easier done if you’ve practiced this pitch many times. Have two “initial customers” on the next slide, or two team members on the team slide, or three exit strategy channels on your exit slide? Only give detail orally about the most important then you're back on track.

Tip #10: Stick to time

Tip 10: Stick to the time limit. If your slot is 30 minutes including Q&A, you must be done in 30 minutes having had Q&A. If you aren’t, you have lost.

Sticking to time is the presenter’s responsibility, not the meeting organizer’s. In the same way that it’s rude to overstay your welcome at a party, it’s rude to overstay your slot at a pitch.

You might think that overrunning is helpful, as it gives you more time in front of a group that could fund your company. This would be wrong. If you don’t stick to your time limit, you lose credibility, are probably not telling your story effectively, and the audience is upset because the rest of the meeting’s content is disrupted.

On the other hand, if you are clearly sticking to the time rules, feel free to rub it in. “Well, that’s my pitch, right on 15 minutes. I believe we have 15 minutes for Q&A so I’d be delighted to take more of your questions.” No need to be subtle about it.

Tip #9: Present to the audience

Tip 9: Present to the audience.

Face the audience.

Speak to the audience.

Maintain eye contact with the people in the audience.

DO NOT FACE THE SCREEN AND READ YOUR SLIDES ALOUD.

Easy, no? I guarantee that 50% of those that present at our next funding cycle meeting will read the screen at least five times, and one will read verbatim a long quote that is written on the screen. That will be the company that is not asked to pitch to our groups.

Perfecting Your Pitch - The Tips

So far we’ve outlined what we won’t fund and probably won’t fund, given you in-person “how to pitch” sessions, and outlined our five key philosophies for angel investment pitching – “Pitching is a Process”, “Do your Homework”, “Maintain Credibility”, “Keep it Simple”, and “Practice, Practice, Practice”.

So far, so obvious, right? Maybe, but strangely so rarely seen in companies seeking funding. Nonetheless, some companies do deliver on at least some of these principles – and almost all of the 3% of companies that we fund deliver on most of them.

So over 2017 we’ll be sharing some shorter tips on how to beat your competition by pitching more effectively.

Of course, there is no single “right way” to pitch. Some of our tips disagree with others (including some other early-stage investors) and very likely disagree with how you think you should present it. That’s fine: take what you find useful, ignore the rest, and give us your best shot. Proof comes when you get funded. Or not.

We’ve tried to arrange these tips thematically, starting with the format, high-level content, and delivery, and ending in specific tips on detailed content for each subject area and slide. Still, we jump around a bit: if you want a logical and coherent list, better come to a workshop or better still get the guide.

Philosophy #5: Practice, Practice, Practice

You would think this is obvious and everyone embarking on a fundraising process would be well prepared and practiced. But you would be wrong.

If the first time you’re delivering your slides to a live audience is at our funding cycle meeting, we guarantee you won’t get funded by us. If you confess “I’ve never had that question before” (particularly if it’s an elementary question), you’re toast. If you can’t deliver your pitch without your slide deck as a crutch, you won’t beat the next presenter – who can.

Practice, practice, practice!

Philosophy #4: Keep it Simple

There is a lot to learn about a business in a 30 minute pitch session. Hundreds of potential subjects to address, areas to consider, thoughts to encourage (or avoid), questions to answer. How can you hope to cover everything a potential investor “needs” to know?

You can’t. But fortunately you don't need to. All you have to do at each stage in the investment process is get to the next stage of the process. Provide just enough to make that happen.

How? Always keep things as simple as possible.

Generalist investors can’t “learn” your industry and its problems in two minutes, understand all 15 of your innovative product design features in one minute, or digest your five previous management positions in thirty seconds.

The best we can do is learn you have found a big and genuine problem, you have a solution, and you can build a company worth $25 million in five years by providing that solution. That's enough for us to move you into due diligence.

Investors can’t be expected to evaluate these key foundations while we are trying to understand your jargon, read 10,000 words of text on your slides, and ask you questions all at the same time. You have to make what you are doing easy enough for anyone to understand – immediately.

Philosophy #4: in everything you present to investors, keep it simple.

Philosophy #3: Maintain Credibility

There are lots of discussions about why people invest in early stage companies. Fear of missing out? Emotional gut reaction? Sensible diversified portfolio? For fun?

All of those discussions are interesting, but perhaps more important is why people don’t invest: because they don’t believe you can do what you’re proposing. Somewhere along the pitching process you have lost credibility.

People evaluating your early-stage business have very little material to evaluate. We don't have five years of historical financials, years of customer behavior data, or often much scientific data proving that your product even works. Minor things can therefore take on disproportionate importance.

Has this individual been 100% truthful and clear? Did they charge a $6 Starbucks to the startup or did they have a $2 filter coffee on their personal card? Are they shady, eccentric, scatterbrained, organized, thoughtful, considered?

Some of these first impressions might be entirely unfair, but they happen. Your defense is to present a credible picture in everything you do when fundraising – and, in fact, any time, because we will learn what you are like when you are not just in “pitching” mode.

Underlying philosophy #3: maintain credibility throughout your fundraising process.

Philosophy #2: Do Your Homework

No authors write well without knowing their audience; no salespeople sell well without knowing their customers; no companies pitch well without knowing their potential funders. You can only know your funders by doing your homework.

What is the right kind of investor for my business? Where are those investors? Do I fit VentureSouth’s investment criteria, or Wells Fargo’s funding criteria, or SCORE’s advising criteria?

What kind of return are they seeking, and when, and who am I competing against for their attention? How can I differentiate myself from the other companies raising money?

What kind of deal should I offer? How do I prove my traction effectively? How painful is this process going to be? What can go wrong?

You need to have good answers to these questions before you even approach a funding source. Connecting then learning is not the way to go. “Hi, I’m not sure if I’m a good fit but I was wondering if you would fund my company” is a certain way to get to "you're not a good fit."

But that’s why you’re reading these posts, right? And why you’ve already read this page.

Philosophy #1: Pitching is a Process

We start out with five “philosophies” of angel investment pitching – meta-guidance that underlies many of the future tips.

1)      Pitching is a process.

The “pitch” is one part of raising capital. It isn’t the first or last step. The entire “pitching process” is deliberately a series of hurdles and challenges to test different business characteristics and presenter qualities – understandability, sell-ability, fundability, credibility, resilience. You need to understand the whole process in order to be successful in any given part.

This diagram summarizes the steps of our investment process. Pitching is important, but note how few companies actually make it to the pitch: the chances are the pitch has failed even before you reach the "Pitch Deck" (stage 5). You need to be a high quality candidate at every stage of the process in order to get funded - starting with the opening email!

 
 

Perfecting Your Pitch - Introduction

Every few weeks, we run an educational workshop to share the insights we have gained from seeing many hundreds of companies pitch to angel investors. The most recent, in Greenville last month, was a packed house of entrepreneurs looking for advice.

These events are popular. We’re going to try to bring this workshop to all the locations with a VentureSouth angel membership group, but it is hard to do that while running angel groups. We also pack a lot of material into 90 minutes – as you will see if you attend. (Subscribe to our newsletter to hear details of future events.)

So we have decided to add this repository of tips and suggestions. This post kicks off a regular feature where we share a quick idea on how to improve your pitch, or how to avoid a pothole along the way.

Some of these suggestions are specific to angel groups, but most apply to any form of capital raising. Our goal is at least one a week until all our candidate companies have the "perfect pitch."

Why are we qualified to do this? We're not really. We are not a general “pitch practice” company, sales training consultancy, or public speaking trainer. But over the course of the nearly 2,000 business plans we have reviewed and nearly 200 companies we have seen pitch to our groups, we have learned what works in our groups – and what doesn't.

We hope you find them useful, and welcome your feedback, debate, criticism, and suggestions for improvement.