Your concept is terrific. You've invented a new product, and it's going to sell like hotcakes. It's the perfect solution to a major problem. It's simple and elegant, but no one else can make it. You've got a manufacturer ready to make you a great deal. You've exhaustively researched every market segment and have a killer marketing plan. Seriously, the product is great, you have data to back it up, the stores won't be able to keep the product on the shelves!...That is, if you can find an investor to get you started.
It doesn't matter how great your idea is. If your pitch is terrible, your chances of getting much-needed investor funding are practically nonexistent. Worse yet, maybe your pitch is bad, and there's a serious flaw in your plan that you don't even realize. If your awful presentation doesn't interest the VC enough to pay any attention to the substance, you'll never discover the problem - and then you'll really never get funded.
These issues came to mind this week as I've been preparing to deliver a webinar this Friday for International Deal Gateway, the world's fastest growing business investment matchmaking platform. I was invited to present during their Global Deal Week, an opportunity for learning, networking, and of course, deal making. I asked several International Deal Gateway members about the pitches they've seen, whether good, bad, or outlandish.
Here is their advice to help your presentation stand out from the crowd:
1. Come On, Man
Jeff Dennis is the Entrepreneur-in-Residence at Fasken Law in Toronto. He was the Co-Founder of both Ashton-Royce Capital and Flagship Capital, which focused on raising capital for emerging technologies and fast-growth businesses. If there's one repeated critical failure in investment pitches, Dennis finds it's often outsized founder expectations. He shares, "Over my 35-year career, I have been involved in a variety of industries - cleantech, medtech, fintech, cannabis, games, B2B, B2C, proptech, smart city, and more. What stands out as a common issue is regarding valuation and capitalization." Founders too often believe they can easily start from nothing and grow into the next Google. "Startups today think you can actually build a business in your basement with a laptop... but it is very hard to find great entrepreneurs," he says. This is especially meaningful because, "At the end of the day, I invest in people," Dennis explains. So when you go into your investor pitch meeting, make sure you don't inspire a groan of disgust.
2. Make Like Wayne Gretzky
Praveen Varshney is the Director of Varshney Capital in Vancouver, British Columbia, focusing on mining, real estate, technology, and social impact. Varshney is also a proud Canadian and hockey fan, and has learned some valuable lessons on strategy from The Great One. "Being Canadian, we love hockey. One of my favorite sayings is the Wayne Gretzky expression about not going to where the puck is now, but rather to where the puck is going to be," Varshney enthuses. He continues, "We're very good at spotting trends and investing in them before they take off. There are numerous examples, like the Canadian diamond industry, internet gambling, online contact lens sales, organic healthy food, and blockchain." And just like Gretzky hated to waste a pass from a teammate, Varshney is loath to waste dollars on unworthy investments. He describes his frustration with dysfunctional management teams, explaining, "Infighting is often caused by someone having a bad attitude, which is like cancer to the body. You have to reach in and rip it out before it spreads." He also cites frustration with disregard for shareholder money, saying, "Once you have one dollar of OPM (other people's money), you can't treat it like your own. You have to treat it better than your own - it's a higher standard." With the right approach, your company might be able to score 894 goals, too.
3. Shout the Headlines!
Brothers Richard and Lee Jabara are Principles of Southbank Capital in Melbourne, Australia. Their boutique investment advisory firm focuses on property, agriculture, IT, mining, energy, and finance, so they've heard their fair share of pitches from across the industry spectrum. "Most pitches seem to take forever to get to the punch line of why this company is going to be great," laments Lee. "Our success over the years has been to start the pitch with the headline about why you should invest. For example, say something like, 'This is the next billion dollar data play,' or 'This company is going to do to this particular industry, what Uber did to the taxi industry,'" he suggests. Richard believes starting with such a strong statement will kick off your presentation with the right kind of energy. "Headlines start the investor on a positive frame of mind, and create the excitement necessary to attract attention away from all the other opportunities that exist in the marketplace," Richard explains. Of course, you can't overdo it, either. Richard advises, "Be flexible with investors and listen carefully to what they are saying, not just to what you want to hear." If you aren't flexible, you could throw away the whole opportunity. "One start up we saw lost $9 million because the founder wasn't flexible in how he wanted to deploy the capital. The deal fell through and the start up failed," he shares.
4. Use Real Numbers
Ephraim Lindenbaum is the Managing Director of Advance Ventures in San Francisco, a venture fund and accelerator focusing on seed- and early-stage startups in sustainability, mobility, and enterprise and vertical IT. Silicon Valley is the mecca of tech startups, so Lindenbaum has seen the best and the worst. Sometimes it borders on fantasy. "When entrepreneurs present their investor deck, we inevitably come to the elusive 'customer' and 'revenue projections' slides," Lindenbaum sighs. "I've seen founders classify a quick conversation with a prospect as a full-fledged paying customer with a contract," he shares. "I've even seen founders calculate market size and revenue opportunity by using the total population of North America!" he laughs. Lindenbaum wants to help build great companies that take bold risks, but not based on ridiculous assumptions. "Don't do these things," he says, emphasizing, "Be honest and authentic. Don't embellish. Use real data." Make sure your potential investors are going to laugh with you, not at you.
5. Check Your Perspective
David Karandish is the Founder and CEO of Jane.ai in St. Louis, MO. Jane.ai is an AI platform for the workplace, and helps employees access the documents, resources, and institutional knowledge of a company. Karandish is also an investor in Varsity Tutors, the largest on-demand, real-time learning platform in the ed tech space. Whenever he considers a pitch, "I look at four 'Ts' to investing: teams, trends, tech-enablement and testability of the idea," Karandish says. Karandish loves what he does, saying, "I find a lot of entrepreneurs get excited about building a product, as we all do." But there's a difference between having a good idea and being able to execute on it. Karandish explains, "The entrepreneurs who understand how to take their idea and get it into the hands of customers - and getting them to do the unnatural act of opening up their wallets and paying - those are the entrepreneurs who end up succeeding." You have to be able to consider the product from a customer's perspective. Karandish continues, "The ability to test out your idea with real customers makes a huge difference in your ability to get funded." Another element that startups often miss: "One rookie mistake I see is not valuing the network of the investors. In many cases, some of your best clients will come through your investor community, which is a big help to a young company," he says.
6. Endpoint Visualization
Dean Lindal is the Co-Founder of International Deal Gateway, and has seen everything that can go wrong with pitches. He's been involved in investing for decades: he was a Founding Manager of Entrepreneurs' Organization, and established the Entrepreneur and Innovation Portfolio at YPO. He's also Co-Founder and Shareholder of Venture Development Canucks and an Advisor to the Edison Innovation Foundation. Lindal's first lessons in entrepreneurship and presentation skill came from his father, Vic Lindal. "He always told me, 'Begin with the end in mind. Create a picture of the outcome you want, and run movies in your head of what that looks like.' He called it endpoint visualization," Lindal shares. The advice has served him well: "I've used it effectively over the years in presenting and pitching multiple companies on funding, partnerships, and alliances," he says. Having a clear view of your goals is the first step to achieving them.