The Pitch: investors invest in stories

I read the book “Pitching Hacks” by venturehacks.com:

a thin booklet with a lot of valuable insights how to get in contact with a venture capitalist (VC) via middlemen and how to setup a pitch. They are not talking about the classical 3minute pitches which are known from pitching contests, but about a

  • written elevator pitch with ideally just 100 words, containing a
  • high-concept pitch: a single phrase like (e.g. “Flickr for Videos” for YouTube).
  • and sometimes a “ten-slide” deck as an attachment.

My learnings from the book:

  • Investors care about traction more then everything else – or how the authors say: “Trackion speaks louder than words”. If you are not able to demonstrate real traction numbers like increase of users per month, increase of revenue or profit per month then “put the idea on a piece of paper and start testing it with customers”
  • VCs want to invest in you if the market is large and your traction is great.
  • The best middleman is somebody who successfully brought business to the VC in the past (and never accept another investor who declines to invest in you as a middleman)
  • There is a difference between a high-concept pitch (e.g. “Flickr for videos” for YouTube) which addresses the investor, and a tagline or claim (e.g. “Broadcast yourself” for YouTube) which addresses the customer.
  • The high-concept pitch is important as you want others to spread the word about you. They cannot remember a 3minute pitch but they can remember one phrase.
  • The 100 words elevator pitch must contain: traction, product, team, and social proof. It can be forwarded per email by the middleman. A template/example is given in the book.
  • The slide deck schould follow the “10/20/30 rule“:
    10 slides
    20 minutes
    30 point font size
  • The slides start with the cover with the logo, tagline and contact info; the summary (key facts similar to elevator pitch); the team; problem; solution; technology; marketing; sales; competition; milestone for the next 1-3 quarters; a conclusion stating what can be accomplished if the plan is realized; and financing. See book for details.
  • Storytelling is an art, not a science“. Storytelling is not covered in the book but refers to http://bit.ly/Uw4h and http://bit.ly/hUTy (read it!).
  • Talk about what you have done (lessons already learned, testing and revising hypotheses) and not what you could do (today, almost anybody else could do it, too).
  • Do not submit confidential information and do not even think to aks the VC to sign an NDA – a VC will never sign an NDA. You can add a sentence: “please don’t forward this outside your firm”.
  • Many startups think they have secrets: “They tend to believe there is a lot of value in their idea alone (there isn’t) or the idea is particularly novel (it usually isn’t).”
  • VC have to spend their money. If you don’t get it somebody else will get it.
  • Be sure your pitch is great – not just good.
  • Focus the pitch on the key questions of your stage!
  • They recommend some must-reads for startups, e.g. their own venturehacks.com or avc.compaulgraham.com/articles.html, 37signals.com/svn and startuplessonslearned.blogspot.com and many others.

 

 

 

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About heisss

http://www.michael.heisss.at
This entry was posted in Book Review and tagged , . Bookmark the permalink.

One Response to The Pitch: investors invest in stories

  1. Michael, this is Manuel from Linknovate.com
    I bumped into your blog, very interesting! We discovered Venture Hacks years ago, it contains invaluable advice. I like a lot the part where it explains the ranking of who you should get an intro from to an potential investor (typically a VC). I found Paul Graham essays to be the most professional and well written startup advice of all, though. Cheers!
    Manu

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