An effective pitch could land the right funding deal for your small and medium business. So it will be worth your while to spend enough time preparing, researching, scrutinizing and fine-tuning your pitch before submitting it to potential investors. Ramzy Ismail, director at Techstars Dubai, and Allen Taylor, managing director at Endeavor Catalyst, share some valuable pointers on how you can nail a winning pitch.
What you should do
- Pay attention to your body language and physical movements Ismail of Techstars Dubai, a start-up accelerator focusing on technology-related companies, said this is important when pitching on stage or in front of an audience. “That’s why you often see the benefit of improve acting [techniques] associated with start-up pitching and communication – audiences can be positively influenced through body language,” he said. Here are Ismail’s tips to mastering the body language tricks and ensuring you deliver your pitch confidently: when delivering your presentation, plant your feet on the ground, touch your index finger with your thumb, and make direct eye contact with your audience.
- Be cautious with ‘one-size-fits-all’ presentations – Ismail explains that this applies to sending pitch decks to external audiences. “Some decks are meant to be walked through with a narrative, [while] others can be self-read,” he said, adding that start-ups much recognize the difference between fundraising decks and teaser decks. “[They] must also make a judgment call on whether to use document tracking software like DocSend or Attach.io.”
- Do your homework? by creating an investor map – “Entrepreneurs should take the extra time to identify the most likely sources of capital through an investor map,” said Taylor of Endeavor Catalyst, an innovative co-investment vehicle through which Endeavor – a non-profit organization that supports high-impact entrepreneurs – can invest into its portfolio companies. Since launching in 2012, Endeavor Catalyst has raised more than USD 120 million across two funds and made over 70 investments in 20 countries worldwide.The first step to creating an investor map, he added, is to research firms that invest in your sector, then benchmark companies similar to yours to determine who has invested in them. “Although every investor mapping exercise is different, most are built on three vectors, or principal characteristics: the sector it belongs to, the stage of development it’s in, and its geography (target market). The goal is to identify the best matches among possible investors. Ideally, you and your potential investor should match on all three vectors, but aim for at least two.”
- Figure out what ‘smart capital’ means for you – Taylor explained that smart money is basically when your investors bring you more than just the capital of a partnership. However, the term can also mean different things to different businesses. “Ask yourself, and your co-founder(s): ‘Other than the money itself, what are we looking for with this round?’. He said scale-up entrepreneurs need to brainstorm the skills, relationships or expertise that they feel might bring maximum value to their company over the next 12 to 18 months. Accordingly, they use their investor map to narrow down the prospects who can best help them meet those needs.
- Help investors connect the dots – Before they invest in your company, investors need to gain more familiarity with who you are, how you run your business, and how you think, said Taylor. “In Silicon Valley, you often hear that ‘VCs invest in lines, not dots’, which means that no matter how impressive the pitch meeting, it is considered as a one data point. Nurture your investors by sending monthly or quarterly update; keeping them informed of your progress. In other words, the more data points you can give prospective investors, the easier it will be for them to eventually connect the dots into a line that might just come with a check.”
What you shouldn’t do
- Assume that VC is the best approach for every business – Take some time to learn about the venture capital industry before you draft your pitch. Brad Feld and Jason Mendelsohn’s book Venture Deals is a great place to start, according to Taylor. “Entrepreneurs who are technology-focused, are solving a problem in a big market, and have the potential to scale rapidly would find a VC as a good resource for building high growth.”
- Underestimate the power of the initial rounds of capital – Taylor adds that it is very important to pay attention to the initial rounds of capital as regional angel and seed funds are considered as an essential signal to later investors. It is also important to know that the majority of international investors probably will not get involved in rounds smaller than USD 5 million (AED 18 million), so utilize on the power of your initial funds.
- Focus only on the valuation – According to Taylor, the terms of the investment and the potential relationship with the investors are equally, if not more important than just the money.
- Think that an investor is interested in investing in your product – Techstars’ Ismail said this is a common assumption among entrepreneurs when it comes to pitching. “My Techstars colleague and general partner of Founders’ Co-op, Aviel Ginzburg, said it best: ‘As seed stage [investor], I’m not investing in what you’ve built thus far, nor am I investing in what you think you should build next… Fundamentally, when I invest, I’m investing in a team and a process, not a product. I want to know what your process looks like, how well it works, what you’ve learned evolving it, and how you’re going to use it to build a big business.’”
© Accelerate SME 2019