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Pitching Your Company

How Startups Should Pitch Venture Investors

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I had the pleasure of mentoring the 2013 class of entrepreneurs at Founder Institute Chicago. Here is the presentation I delivered on "How to Pitch Venture Investors". The lesson provides high level guidance on: (i) how to sharpen your elevator pitch; and (ii) what points to drive home in your initial conversation. This lesson helps entrepreneurs learn what venture capitalists are listening for from startup pitches, and how to communicate your story in a way that maximizes your chance for funding. The matching video for the audio part of the presentation can be found at https://vimeo.com/57294339. For more lessons, read my 101 Startup Lessons on the Red Rocket website (www.RedRocketVC.com). And, please follow me on Twitter at www.twitter.com/georgedeeb.

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Page 1: How Startups Should Pitch Venture Investors

Pitching Your Company

Page 2: How Startups Should Pitch Venture Investors

About George Deeb

• Managing Partner (2010 to date)

• Chairman & CEO(2009-2010)

• Founder & CEO (1999-2008)

• Investment Banker (1991-1999)

• BBA-Finance (1987-1991)

Page 3: How Startups Should Pitch Venture Investors

Elements of a Good Pitch

• Present the Factso Educate on your business/industry

• Identify Solutions to Real World Problemso Detail your fix to known industry pain points

• Create Excitemento Sizable market opportunity to yield high ROI

• Highlight Barriers to Entryo Highlight patent protection or high-switching costs

• Build Your Credibilityo Demonstrate management is smart and backable

Page 4: How Startups Should Pitch Venture Investors

Types of Pitches

• Elevator Pitcho Explain your business/opportunity in one sentenceo Best for networking events and email intros

• In-Person Presentationo Explain your business/opportunity in 10-15 slideso Best for 30 minute meetings

• Detailed Business Plano Explain your business/opportunity in 25-50 pageso Best for deeper dives during diligence—not upfront

Page 5: How Startups Should Pitch Venture Investors

Elevator Pitch

Page 6: How Startups Should Pitch Venture Investors

Opening Line to Every Pitch

My company,

is developing

to help

(company name)

(a defined offering)

(a target audience)

(solve a problem)

(with secret sauce)

,

.

Page 7: How Startups Should Pitch Venture Investors

iExplore Example

My company,

is developing

to help

iExplore.com

a one-stop travel website

90MM adventure travelers

easily find and book customizable tours

at prices 25% less than competitors

,

.

Page 8: How Startups Should Pitch Venture Investors

The Offering

• Be Specifico Not: “a pet business”o But: “an e-commerce website for pet supplies”

• Avoid Buzzwordso Not: “the Groupon of travel”o But: “group-buying for air/car/hotel bookings”

• Skip the Adjectives and Superlativeso Do not use terms like “the best”, “the leading”, “most

revolutionary”, etc.

Page 9: How Startups Should Pitch Venture Investors

The Audience

• Identify Specific Demographicso Not: “female consumers”o But: “new mothers”

• Identify Specific Marketo Not: “travelers”o But: “international air travelers”

• Clarify the Buyero Not: "large businesses“o But: “CTO’s at multinational companies"

Page 10: How Startups Should Pitch Venture Investors

The Problem

• Make sure everyone can understand what problem your business is solving and why there is a need for your business to exist.o Not: “industry is flawed”o But: “existing technology not easily customizable”

Page 11: How Startups Should Pitch Venture Investors

The Secret Sauce

• Explain what makes your business unique.o Not: “cheaper labor costs”o But: “a distributed crowdsource of stay-at-home moms”

• Explain what makes your business defensible.o Not: “the most unique technology”o But: “a patent-pending technology”

• Explain your revenue model.o Not: “travel revenues”o But: “a 15% travel agent commission”

Page 12: How Startups Should Pitch Venture Investors

MediaRecall Example

My company,

is developing

to help

MediaRecall

a B2B digital video technology

CTOs at major film studios

digitize their film archives

50x faster and 80% cheaper

,

.

Page 13: How Startups Should Pitch Venture Investors

Key Points to Communicate

Page 14: How Startups Should Pitch Venture Investors

Communication Points

• Your Business/Revenue Modelo Explain your business and how you make money

• Your Industry/Competitiono Communicate industry size, growth, competitors and barriers to entry

• Your Management Teamo Highlight relevant past experience of executives

• Your Go to Market Strategyo Summarize expected sales and marketing tactics

• Where You Are in Your Growth Curveo Summarize your progress and “proof of concept” to date

• How Much Are Your Raising and Use of Proceedso Summarize how much money you need, and for what purposes

• What Are Your Financial Goals/Expected ROIo Summarize how big a business you can build with that raise

Page 15: How Startups Should Pitch Venture Investors

Business/Rev Model

• What Exactly Do You Do?• What is Your Secret Sauce?• How Do You Make Money?

Make it Easy to Understand

Page 16: How Startups Should Pitch Venture Investors

Industry/Competition

• How Big is Your Industry?• How Quickly is It Growing?• What Market Share do Your Forecast?• Who are Key Competitors Today?• Who are Potential Competitors?• What are Your Barriers to Entry?

Show a Big, Defensible Opportunity

Page 17: How Startups Should Pitch Venture Investors

Management Team

• What is the Past Experience of Team?• Is Experience Relevant to Industry/Role?• Any Past Startup Experience?• Any Track Record of Success?• Has Team Worked Together Before?• How Does Team Think?• Is Their Pitch Credible?

Have a Winning/Credible Team in Place

Page 18: How Startups Should Pitch Venture Investors

Go To Market Strategy

• Are You B2C or B2B focused?• Are You Sales Driven or Marketing Driven?• What Tactics Do You Plan on Using?• Have You Successfully Tested Those Tactics?• What is Your Expected Cost of Acquisition?• How Does That Compare to Revenues?• What is the Lifetime Value of Your Customers?

Present a Well-Thought & Tested Plan

Page 19: How Startups Should Pitch Venture Investors

Progress to Date

• How Long Have You Been in Business?• Do You Have any Proof of Concept Yet?• Any Visitors to Your Website?• Any Buying Customers?• Any Key Partnerships Signed?• How Big is Sales Pipeline?

Don’t Approach Investors Too Early

Page 20: How Startups Should Pitch Venture Investors

The Raise/Use of Proceeds

• How Much Cash Do You Need?• For What Security, Equity or Debt?• At What Terms or Valuation?• How Will the Money Be Spent?• How Long Will Cash Last?• Will You Need Additional Monies Later?

Make Sure Reasonable & Lasts 12+ Mos.

Page 21: How Startups Should Pitch Venture Investors

Your Financial Plan/ROI

• How Big of a Business Can You Build With Cash?• Is That Reasonable Given Market and Cash Size?• What Are Long Term Exit Options for Business?• What ROIs are You Forecasting For Investors?

Show Credible 3-5 Yr Plan to 10x ROI

Page 22: How Startups Should Pitch Venture Investors

Further Reading

http://www.RedRocketVC.com

• Lesson #4: How to Raise Capital for Your Startup

• Lesson #7: Key Components for Writing a Business Plan

• Lesson #10: How to Best Approach VC’s and Angels

www.twitter.com/georgedeeb

Page 23: How Startups Should Pitch Venture Investors

Thank you!

www.founderinstitute.com/join/bootcamp