Scoring capital for your early-stage company can feel like winning the lottery—it can seem more about luck than skill. VCs and other investors are notoriously opaque, with decisions based on concerns you don’t know and can’t control: who they funded last year, their recent successes and failures, what industry reports they read over breakfast.
From a heartburn-induced bad mood to suspicion of anything that resembles a prior startup disaster, funders have myriad reasons to say no. So what factors can you control? How can you optimize your pitch to get investors to say yes?
Start by ensuring you’re nailing the basics. Here are eight tips to guide you.
1. Get it all on slide #1
Investors are busy. Make your first slide something they can’t ignore. Think of this slide as your 30 second elevator pitch; it should give your audience a snapshot of your company, your traction, your goals, and where you’re headed.
2. Follow that up with a dynamite pitch deck
A good pitch deck is worth its weight in gold, but it shouldn’t weigh a lot: think 10-12 slides. Be concise: Present only what they need to hear. Be thorough, but keep it high-level. The nitty-gritty can go into your appendix and additional materials.
David Ehrenberg of Early Growth Financial Services wrote a great post for us on everything that needs to go into your pitch deck.
3. Do your research
Don’t go into your meeting without knowing what makes these money-people tick. Look at their portfolio: Do they fund companies your size, in your field, and at your stage? Do they fund in the amount you need? Investors like to see that you’re conversant with their history and interests—it shows that you know how to do your homework.
4. Know—really know—your market
What will be happening in your market three or five years from now? If you can’t speak to this in detail then VCs and other investors won’t be convinced you have the smarts they’re looking for. The most successful entrepreneurs can see the future of their market clearly.
5. Don’t fiddle with the financials
Leaving financials out of your pitch deck is a cardinal sin. And don’t try to fudge by sticking in weird metrics, like using “quarterly MRR” to make your revenue seem larger. There’s a reason MRR has the word “monthly” in it. You’re only going to annoy your would-be supporters by trying such sleight-of-hand.
6. Be transparent about your customers
Investors need to know about your revenue sources, and that requires full transparency. Divulge who your customers are, including which are pilots and which are paying customers. Be prepared to talk customer concentration: Is half of your MRR coming from one big account? That’s vital info for potential funders to hear.
7. Be honest about your weaknesses
Sure, you’ve got a viable product with paying customers and a growing market share, but if you can’t see where you’re vulnerable, investors will wonder how competitive you are. What do your competitors do better than you? How could they have the upper hand as the market shifts?
8. Be easy to work with
Be remembered for your savvy, professionalism, and respect. Make your future investors’ lives easier: Arrive promptly, come prepared with all the materials they need to make their decision, and know how to answer the hard questions. In short, show them something that’s worth their time.
Even if you play your cards perfectly, nailing down funding is a bit like rolling the dice. Investors’ decisions are heavily informed by past experiences and instincts. Maybe you’re too similar to someone who messed up last year. Maybe your company is part of a trend they’re dubious about. Or maybe you’re exactly what your new funders didn’t know they were looking for.
You can’t control investors’ attitudes, but you can come prepared and do everything in your power to make your roll of the dice a strong one.
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