Startup Stories Part 16: on How to Make a Compelling Pitch

Here’s the 16th part of my bi-weekly column with The Star Metrobiz. Read the original post Hope this helps.

Pitching

In the past one year, I’ve heard hundreds of pitches and presentations from Malaysian entrepreneurs, be it early-stage or growth-stage. If you’re a Founder and CEO of a startup, you have to learn and master how to sell your product and story in a compelling way. If convincing others is simply not your strong suite, that’s fine, consider getting a co-founder that can fulfill that role as CEO instead.

A Founding CEO should ideally be able to sell the company and product vision, not only to potential co-founders, but also to potential early employees, investors, partners, customers, users and the media. Clear articulation of the company’s vision is important as many early-stage investments are first made based on the strength of the team and traction next, rather than just the product or idea itself.

The following are three parts to creating a compelling elevator pitch, a 15-page investor presentation deck and the importance of having a founder story.

Part 1: Compelling Elevator Pitch

An elevator pitch is meant to be a succinct and persuasive summary used to quickly define a company or product’s value proposition. The name “elevator pitch” reflects the idea that it should be possible to delivery the summary in the span of an elevator ride (approximately 30 seconds to 2 minutes), also delineating a scenario where an accidental meeting with a potential investor arises in an elevator. A successful pitch will result in an exchange of business cards, and the investor wanting to hear more at a later meeting.

The problem with most elevator pitches I’ve heard is that it’s too complicated or doesn’t clearly delineate the solution to the problem the company is trying to solve. I always tell entrepreneurs that if they cannot distill their product down to a one-liner, then their product is too unfocused and too complicated. They’ll have to go back to the drawing board and really focus on what that one core value proposition is that will differentiate them and make them a market leader in the industry.

A simple formula to creating a good elevator pitch is the following: “My company, _[company name]_, _[unique value proposition]_, is building a _[product solution]_ to solve _[problem]_, addressing the _[addressable market]_. Feel free to tweak the formula, but all the basic elements should be there.

For example: “My company MaGIC, that is run by entrepreneurs for entrepreneurs, is building a platform for high-growth and social entrepreneurs to be exposed to a regional and global mindset, educated in specific startup skills, and for their startups to be accelerated to be investment-ready, addressing the 620M market opportunity in Southeast Asia that they can potentially capitalize on.”

Once you get this 30-second one-liner, you can expand into your 2-minute pitch by adding the traction that you have so far, or the credibility of your team.

Example of an expanded pitch: “In just one year, we’ve educated over 14,000 budding entrepreneurs via MaGIC Academy workshops and we’re specifically proud to have created over 200 new developers who can now code and build products. In fact, we just launched the MaGIC Accelerator Program (MAP), where we received over 1,000 applications from 26 countries, and selected 77 early-stage startups to be part of our first cohort over the 4-month program, making it Asia’s largest equity-free accelerator. Finally, 70% of our entrepreneurs who were part of our e@Stanford exposure program have raised funding. We’ve just published our 1-year impact report that you can find at impact.mymagic.my.”

The pitch should almost always end with a “call to action” or an “ask,” like this: “If you’re interested to be part of the MAP Demo Day and our investor newsletter (we already have 550 investors signed up), I’d love to take your business card and add you to our listserv.”

For the entrepreneur, a credible call to action could be something like this: “I’m looking to raise $500K for my startup and already have $250K commited from angel investors. We’re still looking to raise the remaining funds from value-added investors. If this is something you’re interested in, perhaps we can exchange business cards and have coffee next week.”

Part 2: Investor Presentation Deck

Beyond the elevator pitch, most entrepreneurs also have a presentation deck to pitch a potential investor when they meet. Here are the important elements that should be in a good presentation deck:

Page 0: Startup Logo, Startup Name, Founders Names, Tagline (if any)
Page 1: Problem Statement (Why is this problem important to the world?)
Page 2: Founder Story (Why this problem is important to you, the founder? Why are you passionate about solving this problem?)
Page 3: Proposed Solution (Is this solution a “painkiller” or a “vitamin”?)
Page 4: Product Screenshots (Show how it works. Visuals speak a thousand words)
Page 5: Why Now? (Why is this the right timing for your product to succeed?)
Page 6: Unique Proposition (Why you’re better than existing solutions? Who are your competitors?)
Page 7: Initial Target Market & Eventual Market Size (You can start with the addressable local market size, but need to show the larger ASEAN market opportunity for this to be interesting to investors)
Page 8: Unit Economics & Business Model (Show that the math for your business makes sense. Do you understand the costs and profit margins of your business at scale, even if the economics early on will be different?)
Page 9: User Acquisition & Distribution (What are the different channels you’re going to use to acquire your customers and the costs for each. Are they scalable and sustainable?)
Page 10: Traction Over Time (Growth chart since your product launch)
Page 11: Validation Factors (Testimonials or proof of concept from early customers)
Page 12: Team (Credibility and background of your team. Why you’re the right team to execute on this vision?)
Page 13: Existing Investors or Advisors (If any)
Page 14: Call To Action or Ask (How much are you raising? How much has been committed? What are you using the funds for?)
Page 15: Conclusion (End with a bang!)

Entrepreneurs can play with a variation of this and rework the order of the slides. However, make sure pages 5, 6, 8, 9, and 10 are there, which is often missing from most decks I see. They are absolutely crucial to show that you really understand your business.

Part 3: Founder Story

Another part that is often neglected is the founder story. It’s so important for investors to hear why a founder started the company, how it started and how the co-founders got together. The story is important because everybody wants to know why you’ve given up a stable corporate job for something so risky and where that passion came from.

If you find your story a bit shallow, then really question why you’re building this product and whether you’re in it for the long haul. The best entrepreneurs tend to be those who’ve figured out their “Founder-Product-Fit” (as opposed to “Product-Market-Fit”). So make sure you can tell a good story for why you care so much about the problem you’re working on based on your background and experience.

Last but not least, it takes a ton of practice to get comfortable pitching and presenting. You have to always put yourself out there and solicit feedback. You can usually tell if you’re engaging your audience or whether they seem disinterested, so keep tweaking and changing your pitch until it’s compelling enough and until you gain more confidence. And don’t forget that humility is important for personal improvement and growth.

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