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Crafting your Pitch

Taylor Davidson

@tdavidson taylordavidson.com

@tdavidson

I’m Taylor

MD at Unstructured Ventures, startup finance and funding Ex- VC, strategy consultant, startup CFO, private equity. Still a photographer. MBA Finance, Tepper School of Business at Carnegie Mellon BA Economics, University of Virginia

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What you’ve already learned about: Business Models Creating assumptions and Testing Ideas

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Hopefully you’ve convinced yourself of your thesis, and perhaps even your solution to the problem. Now let’s convince others.

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Pitching

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Content & Process & Audience

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Content i.e. what to pitch

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You control your story.

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Pitch decks have a flow that investors expect to hear.

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VCs expect problem and solution right at beginning.

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•  Mission •  Summary •  * Team * (can float) •  Problem •  Solution •  Product / Technology •  Market •  Sales / Traction •  Competition •  Milestones •  Financing

http://venturehacks.com/articles/deck

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The order isn’t the key; the most important thing is to get someone hooked.

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Figure out how you can hook them, and lead with that.

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Why you (and your team) is uniquely predisposed to execute better than any founder in the space.

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Why the market has a problem and needs a solution.

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Why your product or technology is better truly breakthrough or innovative, or simply much better.

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Why an investor needs to be a part of what you’re building.

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Flow tells the story…

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… why you’re uniquely predisposed to solve …

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… this problem you discovered …

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… and how you created a solution …

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… which is a major innovation …

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… in a huge, growing, accessible market …

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… and you’ve already started getting traction…

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… given your unique position v. competitors…

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… and here’s how you’re moving forward.

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The flow for crowdfunding and foundations is very different.

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The “proof” around the how varies drastically.

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Early-stage venture = prove there is big market + a potential business model

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Late-stage venture = prove the business works and needs capital to execute and escape

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Crowdfunding = prove it’s something that people would buy

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Foundations = prove it fits our criteria.

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All experiences are different and unique.

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Common Gaps

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The why: why do you care about this?

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Clear, crisp description of the problem and solution. Product demo, screenshots, hands-on, anything to get people connected to what you’re doing. Let them be a part of it.

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Define your market and addressable market with clear logic. Logic is better than sheer size.

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There are always competitors Just because nobody does exactly what you do, doesn’t mean there isn’t competition.

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Crystal clear ask. Money, support, advice, mentoring, business development, etc.

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Create materials that are professional but approachable. Easy for readers to skim (don’t assume people read details). Big headers, big quotes, big numbers, charts, graphics. Talk about your ideas: don’t hold back

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Tactical fundraising

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What do I send someone?

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Elevator Pitch Paragraph Summary Intro Email

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PPT Deck Teaser v. Presentation v. Exec Summary v. Word Doc Business Plan

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Financial Model -> Summarize!

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How?

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Warm intros. Find a connection.

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Connect at a human level.

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Seed VCs don’t expect you to have all the answers. Expect honest, transparent, grounded and well-thought out rationales.

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It’s a relationship business.

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Ask for advice before you have to ask for money.

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Build relationships with investors far before you need them.

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Determine what you need.

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Funding Network Domain expertise Past success Brand name (note: popular =! fit)

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Don’t optimize for valuation. Optimize for resources for success.

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How much? Make it grounded.

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Target: example raising $750K Rationale Runway: 18 months of runway 3-6 months to raise, 12-15 to execute enough to justify a next round Key milestones Key milestones to be accomplished in time period and runway, enough to justify success and traction for next raise

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Round size is more art than science.

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Round size impacts valuation and dilution Sell 10-25% in each round

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Create forces to get a yes. Competition, growth, fear.

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Commitments are extremely valuable social proof.

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Audience

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•  Investment thesis •  Too early •  Too late •  Founder •  Team gaps •  Immature product •  Immature market •  Product / market fit •  Competition / “Winners” already identified •  Conflict with portfolio investment •  Valuation or terms

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No doesn’t necessarily mean you’re wrong; you could be pitching the wrong audience.

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Story depends on your stage & your audience.

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Understand their incentives.

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Find the right partners.

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Incentives differ from angels, seed VCs, growth VCs, nonprofit donors, crowdfunders

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Look for partners, not just funds. Crunchbase, Angelist, LinkedIn… and people.

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Absence of a yes is a no.

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No means no, but not for the reasons you may think.

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Learn as much as you can until you have to say yes.

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More info, more time, more traction, less risk.

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VC is a lagging indicator.

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Crowdfunding is a leading indicator.

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Buying a product when it’s only an idea.

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Foundations have different goals, so the pitch is different.

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Defined application process.

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Publicly declared criteria.

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Balancing conflicting goals.

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Commit to pitching & fundraising mode.

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More resources: About the fundraising process psychology and incentives: http://www.paulgraham.com/fr.html For statistics and process around fundraising seed rounds: http://www.slideshare.net/schlaf/raising-a-seed-round For a good explanation of VC and fundraising: http://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalist/dp/0470929820 For resources on pitch decks, process, and financial models: http://foresight.is

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foresight.is

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