As of April 2021, I have invested in more than 20 businesses since I decided to try my luck on the other side of the entrepreneurial rainbow.
Not all of them were successful investments but there was always something that moved the needle enough for me to take the risk.
In most cases, that something was the pitch.
Being an investor and entrepreneur, I feel like I have a solid vantage point of both sides to share what passes off as a winning pitch these days.
Of course, you’re going to have a professional pitch deck that explains the problem you are trying to solve and outlines your USP. Every entrepreneur knows these basic guidelines or theoretically, should know.
What I’m talking about is something else.
In all my years as an investor, I’ve found out that there are certain elements in a pitch that shed light on the people behind the brand, their vision, and their ability to handle the storm they’re entering or about to enter.
Some of these elements are often overlooked by fellow entrepreneurs and speaking as an investor, they could make a difference in the end.
So, from a person who’s been on both the giving and receiving end of a pitch, here goes:
1. Use storytelling wherever you can
As a means to get any point across with maximum effect, nothing beats a story.
Stories have a universal appeal because they easily convey meaning and purpose. They have the power to influence and inspire because they forge connections, not just among people, but between people and ideas too.
Also – stories are memorable. Dry facts and figures are not. In fact, research has proven that stories are six to seven times more memorable. It’s just the way our brains are wired and have been for thousands of years.
As such, storytelling represents an amazing tool to portray your company’s culture and values in a more immersive and entertaining way.
If you’re pitching to me, I want you to take me on a journey. So, it’s best to leverage three key elements of every storytelling pitch:
In other words – a beginning, middle, and end, like all stories have.
You begin by telling how you identified a problem and what it means to you. I will always prefer entrepreneurs who are solving a problem they have to deal with themselves. Those almost ALWAYS end up as better businesses than those formed by identifying an opportunity based on something that was picked up from the news.
Move on to what life looks like with this problem unchecked. Use sensory language (descriptive words that describe how we experience the world) to present the challenges and captivate your audience.
Then, transition to the solution by showing the ‘after’ picture and how you and everyone affected will feel once the problem is solved. Explain why it works, how the combination of your company and the investor can be the heroes in the end.
For instance, Yotpo – an e-commerce marketing company – has a really cool concept of comparing itself to a flamingo. When fundraising, Yotpo was adamant from the start that they’re not building a unicorn but a real animal, which correlates to the company’s vision – to provide real value to customers, employees, and shareholders.
A well-constructed narrative can move people – especially those who are used to looking at graphs, spreadsheets, and other usual pitch-related documents.
2. Picture the relationships within the team
Sounds abstract, I know – but it’s incredibly important.
Here’s what often happens when I meet with an entrepreneur: we sit down and they start showing off amazing levels of confidence in their idea or company. Often, something akin to “we are going to change the world” can be heard.
That’s perfectly fine. I like confident entrepreneurs. Being confident means they believe in their abilities, that they aren’t afraid to explore new territories and take risks.
But from the very start of such a pitch, something’s off for me.
It’s because only a very small sample of investors invests in the idea itself.
First and foremost, most investors invest in the entrepreneurs that are standing in front of us.
At least that’s exactly what we at M51 do (my private equity company). The rationale is that if we believe in the founder(s) even if we don’t believe in their idea, we still might be interested in investing in them one way or another. Like every investor worth their salt, we understand that from the moment the company we invest in begins its journey, it will likely pivot.
It may be once. It may be twice. Maybe three times. The point is that by then, it’s not the same company that was pitched to me. Hence, I’m not investing in the company – I’m investing in the idea of a successful entrepreneur.
And we very much want to know who the people are.
It’s important to note that the focus on the team goes far deeper than the who’s who on a slide.
Team credentials are necessary but the crucial stuff is what happens behind the scenes – the chemistry. That’s what most of the investors will be looking for.
You are as strong as your team is. Investors want to know about your collective passion and commitment, as well as how you complement each other’s skills and experience – but also personalities. You have to show how coachable you are as well, especially if you have finite experience and competencies in your domain.
The idea is to make it crystal clear that not only are you devoted to building something great but that all of you will be able to navigate challenges as a team, resolve disagreements, and stay strong together. By the way, fun is a bonus factor that goes a long way too.
Remember, we are talking about a period of five to ten years where you will spend a lot of time together with your team members. So what I’m always wondering is this:
can these people truly stand the shitstorm they’re entering, and come out on the other end?
From an investor’s POV, we can never know if things will work out in the next six months, two years, and so on.
But – we do look for dynamics within such as body language, the way entrepreneurs interact between themselves, and every little detail that can help us ascertain team cohesion. That’s what you have to pay attention to and present in the best possible light.
So, what you need to convey in a slide is:
- How long you have known each other and how you met
- Previous joint work experience
- What’s so unique about the team that is capable of executing the business plan
- What talent is needed short-term to complement the team (show that you’re self aware and know what you’re missing)
Try to cover how mission-driven and passionate your team is, your grit, persistence, and problem-solving – the characteristics that will transform the potential investment into a profitable one.
3. Discuss future events (plan b)
By future events, I primarily mean pivot.
Failure to pivot destroys about 7% of startups on average, while another 10% shut down because they do a shitty job at it. That means they either didn’t see the need to make the transformation or didn’t know how to execute one.
If you combine those two stats together, you’ll realize that one in every six startups fails due to pivot-related issues.
I know, hindsight is always 20/20. I’m not here to play the general after the battle but you have to, at the very least, acknowledge the possibility of a pivot.
If not, that’s how I know when a pitch is made by people who don’t really understand the full scope of being an entrepreneur or running a startup.
However, do note that pivoting for pivoting’s sake means nothing. Plenty of businesses have failed after numerous reorganizations, big and small. A pivot needs to be calculated and deliberate based on relentless testing.
The same principle applies to your exit strategy, in that you need to show one.
When all is said and done, we all want to make money. The sooner, the better. It’s ok to be hung up on your product or service (enthusiasm helps sell the story) but there needs to be a clear path to payoff present. You have to show the benefit to the investor, which ultimately translates to one of the main reasons why you are the person to invest in.
Make the ‘exit strategy’ segment your end-with-a-bang moment. It’s a key concern for investors and by showing where the business will be in five years or so, you’re basically buying them peace of mind.
4. Build a rapport with the investor(s)
My co-founder and business partner Tomer Irge calls this ‘being a professional researcher’.
Whoever is at the receiving end of a pitch has different interests and experiences from fellow peers. All you have to do to uncover them is go online. The majority of investors are public figures and have or offer readily available information in various corners of the Internet.
Naturally, there will also be some that prefer privacy – in those cases, you may wish to network with people they invested in and/or rejected to get the inside scoop.
In either case, if you come and say before or during the pitch something like:
“Hey, I saw that you invested in a company that is doing this and that. I see a good correlation between my idea and this company.”
and explain why, the conversation moves to a different point – the point of negotiation. It’s a psychological trick of sorts where in the mind of the investor, they are already thinking about investing due to the correlations you identified.
Such an approach shows responsibility and grants appreciation because you took the time to learn who the investor is instead of going through the motions.
There’s a lot to be learned this way. It’s about doing due diligence to not only secure funding but also to see if the investor in question is the match for you. Contrary to some belief, you are allowed to be picky as there is such a thing as a wrong investor. But, that’s a story for another time.
The goal is to gain an understanding of how to get your audience involved, as well as how to focus your presentation the right way to achieve the effect you want.
And yes, don’t go with a generic template – go the extra mile to create a pitch deck per each investment opportunity.
Bonus: M51 pitch deck template
We’re not the ones to be all talk and no substance. So, here is a template for a pitch deck based on this article. This is by no means the ultimate pitch deck template – just something that’s been proven to work with certain powers that be.
We hope you find good use out of it.
There is no template for a perfect pitch. Different investors look for different things when investing so you have to adjust for each one.
However, there are certain common elements that make a pitch great and convey your investability: team and its chemistry, your understanding of the startup world and the investors you’re targeting, along with the inevitable solution you’re selling.
There’s no room for fluff here. Startups have to nail their story and hit all the key points. Be honest about your challenges – you can’t kid a kidder nor bullshit a bullshitter this time.
Trust me on this: us investors get tens of pitches a week. We’ve seen it all and we’ve heard it all before. And – most of us have a certain cap when it comes to our investments. So, only those who make the right impression are the ones that get the investment.
By following through on the processes outlined in this post, you’ll cover all the crucial points that are in your power. The more prepared you are, the better your chances.