Tip #35: The importance of Q&A

Tip 35: The importance of Q&A. This might be our single most important tip of all.

VentureSouth pitch slots are generally 30 minutes, and we tell presenters to do 15 minutes of presentation and 15 minutes of Q&A. We guide presenters to reserve half their entire slot for Q&A. Why?

Partly because we know no-one listens to us, so presenters at least (usually) get the chance finish their “15 minute pitch” of downloading everything they want to by having 30 minutes.

But more seriously it’s because Q&A is just as important as the pitch. If you are exciting investors, their brains are engaged and they are going to have questions. To keep them excited, you need to answer these questions. If you don’t get chance to even hear the questions, your momentum is gone.

In general, you need to reserve time to give people the information they want to receive. Even with great preparation, homework, and practice, you can’t know what this particular audience wants to know (or doesn’t understand). Q&A is your answer.

It is also a great way to differentiate yourself from your pitching peers. You can prove your ability to think under pressure and demonstrate your profound knowledge (not just the “rehearsed script” that every graduate from every incubator/accelerator can do) – and in a format where you are directly engaging in conversation with people.

Yet, almost all pitches score poorly in Q&A. Future tips will help you excel at Q&A, but for now just recognize that you should spend nearly as much time preparing and practicing Q&A as you spend preparing and practicing your slides. Someone handling Q&A well is infrequent enough that it usually attracts comment in post-pitch discussion: “they handled Q&A very well” is rare, but it often gets companies into the next stage of the process.

Tip #34: Video yourself

Tip 34: Video yourself. Even better than the last tip: video yourself giving the pitch, upload the video to your (private) youtube/vimeo channel, and review it critically in full, in full screen. You will probably hate watching it – but then remember that your audience is seeing this, so if you hate it there’s a danger they will too.

You will find dozens of things you think could be improved in the delivery. Note them down, practice each slide again, then record yourself again, and again. Then go back and compare to the first time. See any differences?

Tip #32: Active listeners

Tip 32: Practice to an active listener. Following on from the previous tip, make sure these “generalist” listeners are really being “active listeners.”

Before you pitch, ask them to take notes and give you granular feedback afterwards on everything they can think of – length, slide quality, esthetics, content, delivery style, or whatever else they like.

Seeing what areas they focus on can give you great insight on what worked well – and what needs replacing.

 

Tip #31: Practice to a neutral audience

Tip 31: Practice to a neutral audience. Recall from our five philosophies that “practice, practice, practice” is key. Here are a few suggestions for making your practice more effective.

First, practice full length pitches to several different unrelated parties – i.e. people who know nothing about know your business. So, hopefully, not your husband or your COO.

You need to see if you are effectively conveying this story to someone hearing about your business for the first time and who has no existing relevant expertise to draw from to fill in the gaps. Even better is to pitch to people with no business experience. Are you making this so simple that anyone could get excited enough to say “this is worth learning more about”?

(Obviously be careful not to break any securities laws about fundraising when doing this.)

Tip #30: Citing sources

Tip 30: Citing sources. Don’t include the full citation of a source in the visual version of the presentation.

For example: “Data from Returns to Angel Investors in Groups, Robert Wiltbank & Warren Boeker (2007) and Tracking Angel Returns, Robert Wiltbank and Wade Brooks (2016)” or anything similar: cut it from the deck.

When speaking, you might want to tell us the source, especially if it’s industry-specific data. For basic data (like population) you don’t need to even mention even that.

For example, you want to convey that most backs aren't rubbed in the US. No sources needed on slides at all. In the oral delivery, I don’t need to hear how you know there are 319 million people in the US; but I am interested to hear why you think so many are neglected. “Of the 320 million people in the US, the National Chiropractic Association survey indicates over 200 million sit in uncomfortable chairs writing blog posts but have not had a back rub.”

You should have the original source material in your due diligence dataroom, so that whoever is working on due diligence later can understand and verify your data. During the pitch we aren’t going to be analyzing your sources, but if they’re a selling point use them.

(For the written version, a hyperlink to the source document is an elegant way to address both.)

 

Tip #29: Active voice

Tip 29: Active sentences, active voices. Avoid passive sentences and the passive voice.

For example: use “We provide on-demand back rubs” not “People with back aches can get back rubs from us.”

Similarly, use language to emphasize your role, action, traction, drive. For example, “We are poised to revolutionize the back rub industry” sounds exciting, but says you are just a nice idea. Instead, “we are revolutionizing the back rub industry” says you are a real, investable, business – even if you haven’t actually rubbed any backs yet.

And it’s fewer words: win-win.

[Editor's note: That last one wasn't a great example, because it prompted [not begged] the question of "how" when it should've answered it. But hopefully you get the idea.]

Tip #28: Remove unnecessary details

Tip 28: Remove all unnecessary details. Somewhat related to the previous tip, but slightly different. Remove details that do not matter – which are most of them.

There are hundreds of examples we could provide on this, but I cut most of them out because we don’t need unnecessary details. Here are a few.

  • Content details: 25 product feature details. Multiple product angles / pictures. Detailed information on deal structure. Detailed dates. Precise regulatory standards you meet.
  • Admin details: Your address including suite number. (Your address entirely.) Tag lines on each slide. Page numbers (if there are only 10 slides, we don’t need page numbers…)
  • Financial information: any P&L line item that is not integral to your story.

Again, be obsessive about this. Every character saved means more focus on the core message, more white-space, more time, and more funding.

Tip #27: Remove unnecessary words

Tip 27: Remove all unnecessary words. Self-explanatory? If your slide has the same word repeated in different places, two boring adjective or qualifiers, a ™ or © mark, or any other word that is not absolutely necessary – delete it.

Find the shortest way to say what you want to say. Turn “we are able to” into “we can” (or just “We”). Find every time 2-3 short words appear in quick succession: there’s almost always a way to rephrase to reduce word count.

Powerpoint 2013 has a word count (Under top-left File, then bottom right “Show All Properties”). On your first pass, try to eliminate 15% of the words. On every subsequent revision, remove 1%.

Be obsessive about this, down to the removal of any character you can. Use “$10B” not “$10 billion.” Take off the period at the end of bullets. Remove the gridlines and tick marks from your charts. Make everything as clean and simple as you can, remove distractions, demonstrate you can communicate effectively.

If you can say what you need to say in fewer words, you have space for more content or for more white-space. (And it saves time – this applies to oral delivery too.)

No-one does this, which makes it a unique differentiator for you.

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.