I first wrote about elevator pitches more than a decade ago. It was 2006. At that time, I'd heard more than 2,000 elevator pitches and I wanted to share the ins and outs of how entrepreneurs initially capture investor attention.
An "elevator pitch" is a quick explanation of your startup -- it's something you could say in a short elevator ride. It's the first thing you'd say in any investor, partner, or employee meeting. It's the sales pitch for your company.
Since 2006, I have seen a lot of elevator pitches. In preparing for a recent tour to support my latest book, my co-author Brad Feld and I counted all the pitches we have seen during our work with Dragons' Den and Techstars, and as partners in several venture capital funds over the past two decades.
The final tally was somewhere over 20,000. So what did we learn from spending more than 10,000 hours hearing founders pitch their hearts out? What's changed over the past decade when it comes to elevator pitching? Turns out, lots.
What hasn't changed?
An elevator pitch is still made up of two key concepts: your problem statement and your unique value proposition. Together, those two statements will be enough to explain your company to potential investors and even be used to craft your sales pitch. Also unchanged are the criteria pitches should meet:
- Irrefutable. Your pitch is a statement about your company. You want to state who you are and what you do, to the point that no one can deny your claims.
- Succinct. The pitch needs to be quick and easy, something you could say in one or two breaths.
- Understandable. Everyone should be able to hear your pitch and get a proper snapshot of your company. No tech talk!
- Attractive. You want to show the reward is worth the risk.
So what's changed?
A lot. We're currently in our third wave of startups (dot-com, web 2.0, and the age of unicorns). During that time, the cost of launching a startup has dropped from approximately $5 million (1997) to $500,000 (2007) to $5,000 (2017).
This means we can take our solutions to market much faster and for way less money. It also means investors are no longer required prelaunch.
Today's investors -- even seed investment funds like mine -- now expect founders to have much more evidence (often called proof of concept or traction) proving their ventures' assumptions before they come looking for cash. This has forced elevator pitches to evolve in three ways:
1. The "show, don't tell" rule
My co-author Brad started looking for this as far back as 2009. He tells founders seeking funding: "I don't want to hear you describe what you are going to do, I want to see it. Or, if it's not built yet, see an example of it."
He calls this the "show, don't tell" rule. Don't tell investors you are great. Show them what you do so well they will conclude you are great. Let me illustrate by example. Which of these would capture your attention? Which has the most compelling credibility?
- "Our customers love us."
- "In the past 30 days, 93 percent of our new customers returned to make an additional purchase" or "This quarter, our customers on average returned to buy more every 10 days."
See the difference? In all my years with Dragons' Den, I never once heard a founder say, "My venture sucks." It's always, "This is the greatest opportunity these investors will see." So investors now discount entrepreneurial enthusiasm and instead rely on objective quantifiable data trends.
2. Investor transparency
The internet has done a lot to change the relationship between investors and entrepreneurs. For most of the 20th century, venture capital and angel investing was a black box, the internal dealings of which remained highly guarded secrets.
We now know a lot more. This allows entrepreneurs to be much more knowledgeable about the process, the parties, and the best practices.
Investors have also become more accessible. Where once you had to "know someone" to get funded, today platforms like Kickstarter, Product Hunt, and AngelList encourage both funders and founders to be proactive. This allows you to customize your pitches to highly targeted audiences while making networking more accessible and less location-reliant.
3. Asynchronous pitching
Previously, you'd hear most elevator pitches onstage at startup funding events. Today, few founders wait to be onstage. Pitching in video form allows you to circulate your pitch much more widely and eliminates the requirement that founder and funder be in the same place at the same time.
These video pitches can get posted to your startup's website, AngelList, Product Hunt, and another dozen places where investors hunt for the next big thing. Digital pitches allow you to ensure only the best version of your pitch gets heard.
Video pitching is a boon in an ever-growing global marketplace where more and more transactions are asynchronous and geo-agonistic.
Why this matters
We live in a noisy world filled with choice. For every deal an investor does, he or she has to listen to dozens, even hundreds, of pitches. To cut through that noise, you need a clear, consistent, compelling pitch delivered with confidence.
How well you communicate to investors is a proxy for how well you'll be able to sell to early adopters, and how likely you are to recruit top talent. Failing to deliver may signal to investors that you don't have the business acumen to succeed.
So if you want to raise investor capital in 2018, learn to ride the (now virtual) elevator all the way to the top.