View from the FishBowl: The Perfect Pitch, Part 3: Finally, the pitch
About the Author: William Fisher, a partner at Treetop Ventures in Omaha, is a regular guest contributor to Silicon Prairie News. In his series, View from the FishBowl, Fisher calls on his experience as a business executive and technology investor to lend his advice to entrepreneurs in the Silicon Prairie.
For Fisher's bio, including a listing of companies he has been or is involved with, visit treetopventures.com.
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William Fisher advises businesses pitching to investors consider seven major factors in putting together their pitches. Photo from IntelFreePress on Flickr.
Editor's note: This is the third installment of William Fisher's three-part series, "The Perfect Pitch." To get up to speed, see Fisher's previous posts: Part 1, "Know your audience;" and Part 2, "Know your company."
OK. We know our audience, and we have down cold both the industry and the company we are pitching. Now, let’s make some sausage.
I like to get those I work with to follow some simple rules that I have witnessed that are effective. My idea of a perfect pitch is one that tells them up front in five minutes what you are going to tell them, then tells them exactly that in a 30 minute presentation, and then summarizes what you just told them in the last five minutes of a presentation that's 40 minutes total. You will typically get an hour; they are impatient but polite, and you will either engage them or they will begin the "fly flicking" motion on the iPhones a few minutes after you start.
1. Slide presentations
Don’t create a PowerPoint pitch that is all words and read it to them; there is nothing they hate more. Use pictures and let them grasp the graphic while you get your points across. If you must use words, assume they are well educated and can read fast and talk about key points other than the ones you mention in writing. It is OK to focus on one of the six lines you put on a slide; if you read through or address all of them, you will lose your audience. Let them stop you and ask about something they see in one of the lines; engagement is halfway home in getting them to like you. Whatever they ask, feed their ego. These are smart people who like to be told that.
2. Hard copies
Give them a hard copy of the pitch before you start. They like to take notes on these and file them. Yes, they will race to the end and yes, they will look distracted as they rifle through the deck. However, this isn’t their first rodeo, so they know how to glean data from this sort of presentation. Show them you are confident by giving it to them. Also, create the presentation in a dozen slides if you can but don’t be afraid to add lots of supporting data in the appendix. Just don’t take the VC’s through that data. I end up advising this a lot; founders want to tell the story with adequate detail even if it takes 150 slides. Use a subset that gets the point across; provide a variety of evidence in no particular order in an Appendix.
I like to select one person to do all the presenting; typically, this is the CEO or a key founder. There are lots of different views on this one, but I like it because of control. You should have several people who can deliver the pitch, but it should be delivered by one person and the others in the room (always have at least two people there) can help with the questions. You have to get done in the allotted time and be available for questions, and having one person helps with that. Don’t lose control in any manner; get through the pitch!
4. Your business
Don’t tell them their business; tell them yours. The most specific case here is when you ask for the money. “We are looking for $5 million for 20 percent of the company.” Tell them you are looking for $5 million and let them decide how they value the company and what they may propose. It may be that you can argue with them later and get exactly what you are asking; however, don’t take the chance that with only an hour of dialogue you might turn off the VC by asking for something that they feel is not in the realm of things. They might come around when they know a lot more about what you have.
5. Sector, size and stage
VC’s by nature invest in themes; know what theirs are. The questions are what I call the three S’s – sector, size and stage. They know the sectors they focus in — might be consumer advertising models. They know the size of investment they like to make — might be in the $8-10 million range. (Side note: Lots of people don’t understand this one. They feel if the VC typically invests $4-5 million in a single investment, the investor would be happy to only invest $2 million in your company. This isn’t about the size; it is about the bandwidth they have and how much money their partnership requires them to oversee. If they are asking to take their fair share of a $500 million fund with nine other partners, then they have to invest and oversee $50 million. If each investment is in the $7-8 million range, then they will be on the board of, say, sven companies. If it is $2 million, then they will oversee 25 investments. It isn’t going to happen.) They know the stage of the company they like — might be pre-revenue or might be only those with positive ebitda. If they know that you know about them and how you fit, it shows them just that much more about how serious you are about them.
6. The CFO
Don’t be afraid to answer the question with "I don’t know; can I find out and get back to you?" I intentionally don’t like to have the CFO or numbers person in the business presentation. The VC’s are number guys and can spend the entire hour trying to figure out how you created a specific number; this isn’t of value to you in the early pitch. Tell them you will get them the full model and get the CFO on the phone to walk you through it. This gets them off the "puzzle" and back to the macro level view of the business.
Once you have completed and answered any questions they have, give them some time to digest this in comparison with other companies they are looking at. Typically, if they get serious about you, you will be presenting to their entire partnership on a Monday when they gather everyone and consider new investments. My history says that you won't expedite their interest if you are low on funds or impatient. The only thing that moves them to get something done is another term sheet from a competitor; otherwise, they will take their time and complete their due diligence, which includes watching you for several months (yes, months) and validating whether the things you told them are materializing. Therefore, and this is point No. 7:
Be very careful and very specific about things you expect to happen in the next 3-6 months. If you tell them you will be getting the big contract within days (big guy already told us so), be prepared for them to slow down when you don’t get it. Nothing is as important as this point; make sure that you properly caveat that it could happen so you don’t create expectations that you cannot fill. There will be enough time for this after they have invested and start influencing your annual growth plans.
I hope this has helped. My caveat is that this is one person’s view and there are wiser and smarter people than me that have created pitches before, so take it all with a grain of salt (not sure what that actually means but Grandma told me that a lot).