How to Sell Your Idea in Less Than 3 Minutes
One thing I have learned over the last few decades of listening to entrepreneurs pitch their ideas is this: it takes me less than three minutes to either tune out or want to know much more. In general, if you can’t win over a potential investor in those critical three minutes, you will need to keep trying with someone else.
To be sure, there are many factors that determine the success or failure of your pitch with particular individual. Among those are the fit between your industry expertise and that of the investor as well as whether the investor has confidence in you.
You can’t control all these factors but one thing that you ought to learn how to do very well is to deliver what is known at Babson College, where I teach strategy and entrepreneurship, as a Rocket Pitch.
The Rocket Pitch is a three-minute; three-slide presentation that focuses the start-up team on its main opportunity and helps convey what makes the business idea better than the other ones competing for an investor’s checkbook.
The entrepreneur has no way of knowing what other ideas the investor is considering, but the Rocket Pitch should do the best possible job of covering three topics.
1. The Opportunity
A Rocket Pitch should explain the opportunity you have identified, why you care about it and how you will overcome a customer’s reluctance to buy from your start-up. To achieve these goals, the first slide of your Rocket Pitch should answer these questions:
- What problem or opportunity have you identified?
- What is your solution to this problem or how do you plan to capture the opportunity?
- Which customer pain will you alleviate?
- What is your vision of the business and why do you care?
2: The Market
If you can persuade an investor that your start-up is going after a real opportunity, the next challenge is to make a compelling case that the opportunity is worth a bet. To that end, your second slide should answer these questions:
- Which group of customers will you target?
- How big is the potential market and how fast is it growing?
- Who is your competition and why will your start-up prevail?
3. The Business Model
Finally, your Rocket Pitch must explain how your start-up will make money. Doing that means not only explaining how you will generate sales, but also explain the costs of running your business and how much profit it will generate. To that end, your third Rocket Pitch slide ought to answer the following questions:
- How much will you charge customers for your product and why will they pay the price?
- What are the variable and fixed costs of your start-up and how much profit will it generate?
- How many customers can you win over time and why do you think they will come on board?
The Rocket Pitch cannot answer all an investors’ questions about your start-up but if you do it right, the investor will want to spend much more time with you to get those answers.
You can save yourself and potential investors a lot of time by being disciplined about giving this pitch only to those with experience in your industry. If that doesn’t work you can always try people who don’t know your product, but the odds of winning them over may be less.
A final piece of advice is to practice your Rocket Pitch at least five times in front of different friends or acquaintances who have experience receiving pitches for investment. Each time, you practice make sure you revise the Rocket Pitch to respond to their questions and concerns.
By this point, you should be ready to try out your Rocket Pitch on a real potential investor.
Strategy consultant, startup investor, teacher, corporate speaker, pundit, and author of 11 books, Peter Cohan has invested in six startups, three of which were sold for a total of $2 billion. Before founding Peter S. Cohan & Associates in 1994, he worked with HBS strategy guru Michael E. Porter.