Prepare a pitch. The basicstechatnyu’s Flickr ]
Now that you’ve raised up the foundation of your startup and already established your network of connections, you should start thinking of ways to attract further funding. One way to do this is by convincing a VC firm to invest in your company.
I’ve already explained to you the different stages of VC funding and seed rounds. You can take a quick look at the article on funding your startup business, so you should know what to expect after you strike a deal. But before the actual deal, you need to be convincing, appealing and very well prepared. So, let’s see what you should do to prepare a pitch before a VC and what you shouldn’t do, in order to be successful.
First of all, the basics:
- As Brady Bohrmann writes on his post for Mashable you must “do your homework!”. This is essential if you want to make a good impression, and you know that saying “First impressions always count”. That’s why it is better to make a plan from home, and to work with a team of important people from your startup and decide how you are going to impress the VC. Also, you should try to find out as many details as possible about the VC firm and the possible funding. As Brady Bohrmann suggests “if you’ve done your homework[…] you will have secured a warm introduction, evaluated the firm’s portfolio for state and fit and generally determined whether your company is a good match for the fund.”
- Another basic tip is “know your company: what you do” as Brian Witlin shows in his post. This should come natural to you because you represent your company, so you should know what it is about. Even so, Brian Witlin suggests that “many founders don’t have their elevator pitch streamlines. They’re too in the weeds.”That’s why you should make sure to find out what your business is about, and you can do this by answering a few questions:
- What does your business/product do?
- Who are your users?
- What is your company’s mission?
- What is your long-term company vision?
- What is your exit strategy?
Assure your startup successful financing
[ Photo credits:IBM Events’s Flickr ]
Now I want you to take a look at what you should do in order to secure successful financing:
- Be a team-player. VCs pay much attention to your team, the connection between you and the passion shared in your work. Abhishek Sharma states it loudly: “Don’t undersell the Team”. (Read more…) You need to know what value you have and what you’re missing in your team. So, skills, experience and the knowledge of your team are essential. What’s more, you should know their strengths and weaknesses. Brian Witlin thinks is advisable to think about a hiring plan, why your team is determined to win, because you might be asked such questions.
- Know your competition. You should know you are not the only one who aims for funding, so you should try to show why you are unique and how you stand out among your competitors. So, do some research beforehand and find out who are your competitors, what are their advantages, what do you offer in addition. Also, when you present your market, you should start from a macro market size and go into a micro one, adjusting the size to the market you are interested in. What’s great is to present, at the same time, the key themes and market trends that exist at the moment.
- Dream big and get big. When you make predictions for your company, you need to be proactive. Some founders only dream big and estimate how great their company will be in 5 years and that it will be worth millions of dollars, but not so many have such a strong product/startup to actually reach their goal and get big. What you should try to do is to make a strategy for getting there. You can also find out if you have initiatives to assure the success of your business, and if you are prioritizing your efforts and initiatives over the year, and what will this prioritizing offers you in the long run.
- Who are you selling to? In other words, you should know your customer. This shouldn’t be a guess, but a knowing answer. You need to present to the VC your real customer, and this clarity should be seen through your whole presentation. That’s why you should try to find out as many details as you can about your customers: gender, age, career, tastes, reasons for interest in your product, etc.
- What do you offer? Of course, you know your product/idea, but the audience you are presenting to is not so close to it, so you need to make it look and sound real. In order to do this, you should present it in a clear way, with short, high-quality videos. You can also include screenshots. Try and connect your product to your potential customers and show how it can benefit them, how it can uniquely solve their problem or be of real value in their life.
- Will your business outlive threats? This is not something often answered when startups prepare a pitch, but the fact is the VCs are interested whether you are in for the long run or not. So, you should document on the factors that make your business defensible from threats.
- State how the VC firm can be helpful. When you are determined to get something, you know exactly what you need it for. So, instead of just mentioning the sum you need, you could state how and where the particular VC could help you. This is helpful to both parties, to you, because you become assured whether the VC firm is right for you, and for the audience, as you make a natural impression.
Don’t make these mistakesIBM Events’s Flickr ]
We’ve seen what you should do when you prepare a pitch, so I want to see what are the mistakes some startups did when they pitched before a VC. I’ve seen this 4 common mistakes made by entrepreneurs in this article from Forbes:
- Not presenting your product. I’ve already told you the importance of going into details with this and making it sound real, because the audience doesn’t have your knowledge of it.
- Forgetting about your competition. “If you wish to be taken seriously, never pitch without describing the competition and a plan to tackle them”. Even a search on Google is better than nothing.
- Pitching on your own. No co-founders, no team. This is not advisable, as I’ve already told you how important your team is to a VC and the skills they share. You can’t be the one holding all the skills and knowledge in the world, so you should try and be cooperative and a team-player.
- Bringing team mates who don’t add value. You need your team to be strong and focused, so those who cause weaknesses and a lack of communication are only to your disadvantage.
These are the key factors you should take into consideration when you prepare a pitch before a VC firm, and I should like to add you shouldn’t over-pitch, nor bluff, because VCs like your honesty and authenticity.
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Would you now consider pitching before a VC?
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