You might know that I’m an avid writer at Quora, I really like that Social Media platform because you can reach out directly to people who have doubts and, often, burning pains they want to see solved immediately, and you can feel tremendous impact in a much faster way, by helping all those guys.
And, today, I wanted to share the answer I wrote for an interesting question about how to pitch to and impress an investor, especially when you’re really young.
So, with no further delay, let’s jump right in the question. I hope it can help those of you who are precisely in the same spot and don’t know exactly how to speak in front of judging eyes.
How does a young entrepreneur impress an investor?
I’m a college dropout gone full-time startup CEO, currently seeking investment. I have some investor meetings lined up in the coming weeks and worry that my age will deter potential capitalists. How can I overcome this barrier (we do have a publishing deal plus great feedback from Microsoft)?
Thanks for the Ask-to-Answer. I understand your position.
Let me try to give you some humble tips about body language and overall communication. I’m guessing you already know the business model stuff, and if your product stinks, I won’t be able to help you here. Besides, in my own experience interviewing startups, one of the major issues about the pitch is constantly related to the language and presentation.
So, here we go:
1#: Don’t speak too fast. Beware that your tone of voice is crucial, it highly indicates your maturity level. Notice that older and more experienced people usually speak slowly. I know this might seem ridiculous, but it really matters.
2#: The best thing you can do every time they ask you something is starting by saying “Well, as you know, we cannot be absolutely sure about anything…” This will definitely show deliberation, prudence and wiseness. They know you’re trying to sell them your product, but the humbler your appear to be, the better.
3#: Listen really well. Do NEVER interrupt a question, do not stress up in replying to the investor, take your time, take a deep breath before every question, work with the momentum.
4#: Smile and show a calm state of self-confidence. When I was presenting my startup to a board of investors, I got this feeling that you should never worry if you don’t have all the answers, if they don’t like your product, or even if you mess up with the words. It’s fine! Pitching to an investor is really not a big deal, you’ll have infinite opportunities to sell your business to an investor as long as you keep in business. So, if you present a confident and happy positioning, it can highly impact the perception investors have on you.
To wrap up the communication chapter, I’d like to leave you a final note about voice tone.
Investors spend a significant part of their time listening to startup pitches, and it can definitely get boring, trust me (especially in those speed dating events in which you meet 30 startups in 1,5 hours). So you want to make sure to stand out.
Now, how can you do this solely by working on your pitch’s tone?
- Bring all your enthusiasm and passion for this business to the surface and show it in your pitch
- Guarantee that only one person speaks at the presentation to be coherent, structured and easy to follow
- Speak slowly and learn to highlight the keywords to better impact the audience
Don’t underestimate the importance of how you speak. Remember that more than 90% of communication is body language and tone.
Now, I’d like to give you some help with the most common stuff as well.
One of the things I also find critical is not knowing how to correctly sell a business.
Often people will tell you that you focus too much on numbers or technology. In other cases, they will inform you that they don’t see how your product can be unique, or why would anyone buy that product. Thirdly, some guys tell you they do not understand what’s the business case.
All of these sentences mean the same: you didn’t sell them your product.
Now, it doesn’t mean the investors need to be future customers. Definitely, that’s not what I mean. But investors are usually experienced in a wide range of sectors, and they can easily understand a robust business case.
So the first thing you need to know is that the most important part of your pitch is the Business Case. It is the sentence in which you completely ignore the product features and the technology and just focus on explaining how the end customer will benefit from the product in a really clear way.
What is the particular need you’re addressing? And if you can directly imply how much (financially speaking) would your customer benefit from the product, that’s ever better, because you can then say that you can quickly ask for 10% of what your customer wins.
Let me give you an example:
Now, if they present it like this, an investor might not perfectly understand how great this product really is and which need does it solve.
So I’ll make my best to exemplify a better way of pitching this technology’s business case:
“A leading edge and simple-to-use technology that allows an engineering team to visualize the end user’s web browser in real time, which helps the organization decreasing the correction time of bugs in 75%!”
Do you like it? This is just an example, I’m sure you can do much better in your own case.
You see, in one sentence you’re saying that:
- It is a leading edge technology
- That it is very simple to use
- Its target is the engineering team who will be fixing bugs
- The correct time is now decreased by 75%
- We can directly calculate a 25€ saving in each hour of labor.
Now, if you want to learn how to create a perfect pitch and what are the typical mistakes entrepreneurs do, in a more detailed and technical perspective, head onto the following links.
- How to Pitch to a VC by David S. Rose on TED Talk
- 5 Worst Mistakes Entrepreneurs Make When Pitching Investors by Jason Fell
Finally, let me just give you an example of what’s a good business case that you could present to an investor to convince him of your business’ profitability potential:
“From the people who entered my website from a Google Ad (at a cost of €7 per click), 2% clicked on our PRE-ORDER button. That means that my customer acquisition cost is €350 through online advertisement.
Then, I estimated that my typical customer will pay €20 per month and will stay with us for 5 years, which means that my customer lifetime value is €1200.
So, if my operation costs to serve this customer amount to €500 during his lifetime, then it means this is a profitable business, at least in the present market conditions.”
And there you go.
Wish you good luck!
P.S. If you haven’t downloaded yet my 10-Step Quick Guide to Raising Money for the First Time, I’m sure it will help you a lot structuring your ideas and action steps to building a remarkable business and, who knows, the next tech giant.
Click on the image below, sign up, and I’ll send you the Quick-Guide immediately.