Knowing how to pitch in a venture capital meeting is a critical skill every entrepreneur must learn. What distinguishes a memorable pitch from one that is completely forgotten?
A good pitch that impacts investors is the one with a mix of attractive numbers, a demonstrated MVP, and a winning persona.
However, “remarkable” does not automatically imply “profitable.” The reality is that venture capitalists in Silicon Valley receive many pitches each week, but not all of those good proposals turn into the chosen ones.
The Ultimate Guide To Pitch Decks
Therefore, if you genuinely want to be noticed, you must:
- Do your homework
- Craft a competitive pitch deck and pitch
- Know your investors
This article will show you how to pitch in a venture capital meeting, effectively and successfully.
So without further ado, let’s take a look at how you can use the following five-step process which will help you better prepare for a venture capital meeting.
These steps include:
- Gather your data
- Identify what you need
- Research your VCs
- Prepare your pitch
- Perfect your pitch
After familiarizing yourself with the above steps, you will be well prepared for your next pitch.
Let’s take a closer look at each one.
Keep in mind that in fundraising, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Here is the content that we will cover in this post. Let’s get started.
- 1. 5 Steps to Pitch in a Venture Capital Meeting
- 2. Step 1: Organize Your Plan & Key Metrics
- 3. Proof of Concept
- 4. Product/Market Fit
- 5. Profitability
- 6. Customer Acquisition
- 7. Valuation
- 8. Step 2: Determine Your Requirements
- 9. What Do You Need?
- 10. Shortlisting Targeted Investors
- 11. Step 3: Study Your Venture Capitalists
- 12. Step 4: Organize Your Pitch
- 13. Proper Greeting
- 14. Scenario A: Emphasizing Market Demand
- 15. Scenario B: Emphasizing Metrics
- 16. Craft An Effective Pitch Deck Presentation
- 17. Demonstrating the Value
- 18. Demonstrating Profitability
- 19. A Capable & Passionate Team
- 20. Strong Finish
- 21. Step 5: Pitch Perfect With Others’ Help
- 22. Conclusion
5 Steps to Pitch in a Venture Capital Meeting
Step 1: Organize Your Plan & Key Metrics
As one might assume, several factors influence whether or not to invest in a business (a few quantitative and a few instinctual). Each investor will give each metric a different weight. With that said, the majority of the early-round investors are concerned with a few data points and factors.
The following are the most critical metrics and factors to be aware of:
Proof of Concept
Do you have a lot of traction? Anyone can make a pie graph and project market share, but those statistics don’t mean anything until you can show that there is a need for your product.
How have you proven that you’ve created a hit product, that is not only needed, but wanted, worth paying for, and will take off.
The requirements for month-over-month income and growth rates may vary based on the kind of startup and investment. Know your unit economics, how that stacks up in your industry, and what your investors expect.
What is the average cost to acquire a customer for your startup company? How do you go about acquiring new consumers? What makes your approach so effective and unique?
From the beginning, marketing should be a vital component of every business plan. It’s not enough to tell your investors that you “do web marketing.” You should prepare specific details such as organic search traffic techniques, paid marketing campaigns, or cold calling.
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While valuing mature companies is relatively straightforward, with sales multiples and market capitalization as a strong base, the valuation of startups can be a little more confusing.
Among the most widely used methods of appraisal are:
- Risk Factor Summation Method
- Scorecard Method
- Berkus Method
Step 2: Determine Your Requirements
What Do You Need?
What are your goals in this fundraising round? Are you just looking for money? Or do you need connections, access, strong advisors, validation, and credibility?
What do you need to raise money for? Do you need to develop the product, build out infrastructure, hire more people, amp up your marketing, or something else?
Be sure to add a cushion to get you through to your next milestones, and cover your operating expenses through closing the next round. These are critical estimates to make when working out how to pitch in a venture capital meeting.
Shortlisting Targeted Investors
After collecting your supporting facts and determining what you need, you should target the investors who are aligned with your goals
Conduct research to identify businesses or people who invest in:
- Your industry sector
- Amounts that correspond to your target financing round
- The stage of development of your firm
- Personal compatibility
How many should you target? You may have to deliver 30 pitches to get one term sheet. Some have had to deliver hundreds of pitches to close a round.
Step 3: Study Your Venture Capitalists
Once you are done narrowing down the list of potential targets, spend some time studying the backgrounds of the individual investors and partners of that firm to find out the best match. Take into account the kinds of investors you will be meeting, and adjust your pitch accordingly.
You should ask yourself the following questions:
- Do they have a thorough understanding of our industry?
- What is the size of their investment portfolio?
- What winning startups have they formerly backed, and why did they do so?
- What do we share in common with those businesses (and how can we prove it)?
- What additional support and value can be expected beyond the money?
As you collect this data, you may discover a wealth of background information that may help you better your pitch.
Remember to customize your pitch to each investor.
Would you like in-depth information on how to create a pitch deck that will impress venture capitalists? Check out this video I have created where I demonstrate some key pointers you are sure to find helpful.
Step 4: Organize Your Pitch
Keep in mind that investors are also humans. You want to make an excellent first impression on the people you’ll be meeting.
Create an introduction of just two minutes that sets the tone for the rest of the presentation.
Include the following information in your introduction:
- The name of your business
- Your full name
- Your job title
- A catchy phrase that encapsulates your entire vision
- A description of who you serve, what you offer, and why you do so
- Why they should pay attention
The idea is to make things simple so that VCs don’t have to guess what the presentation will be about. It’s one of the essentials of how to pitch in a venture capital meeting.
If this were one of those “choose your tale” novels, you’d now have the option of choosing between two plot lines: Highlighting Market Demand vs. Highlighting Metrics.
Scenario A: Emphasizing Market Demand
How did you become aware of this particular market need? Why is there such a tremendous desire? Why is it that your product is best suited to meet that need?
It’s great to emphasize TAM and market share once more. However, consider including visual aids that depict the exact market niche you’re targeting. Your main goal is to persuade the VCs that there is significant demand for what you’re giving and that there is nothing else like it on the market. If you don’t explain why your product is unique, investors may be suspicious of its unproven status.
Scenario B: Emphasizing Metrics
Use your data to back up your story.
Here are specific metrics that you should highlight:
- Sales Revenue
- Number of Customers
- Pipeline Leads
- Market Share
You want to be able to clearly connect everything you share to sales.
Keep the following in mind once you’ve determined which KPIs to highlight:
- Do you use industry-accepted metrics?
- Do your figures complement each other?
- If pressed, could you elaborate?
What if you haven’t gotten any traction yet? Is it still necessary to lead with numbers? While highlighting factors like Total Market Share (TAM) will help you emphasize future growth, you should start by stressing the specific problem you’re trying to solve. Any metrics that can prove your concept is working will help, even if the numbers are still small.
Craft An Effective Pitch Deck Presentation
This is not the time to try and reinvent the wheel. Use a proven template that follows the flow that investors expect.
Keep it clean and simple. Test it out and get feedback from knowledgeable advisors. Also, get valuable tips on how to pitch in a venture capital meeting.
Demonstrating the Value
Sell the sizzle, not the steak.
It’s a well-known term in the field of sales and marketing, and for a good cause. It’s tedious to list out a long list of characteristics. As a result, while explaining the product details, spotlight the benefits rather than the features. Some people, understandably, have difficulty distinguishing between the two.
A simple way to remember is that a feature is what your product does, while a benefit is what your consumer can do or feel as a result of using your product, such as convenience, savings, or peace of mind.
Knowing why people will care about a new startup is one of the significant stumbling obstacles for many VCs. It’s your job to show that your offering is unique and that buyers are eager to pay for it.
Now that you’ve proven the value of what you have, it’s time to talk about money.
Throughout your presentation, VCs will ask themselves, “What makes your product special from what is already on the market?” This is also simply a matter of the math.
In the early stages, investors may not expect you to be profitable. They may not even demand revenues. Yet, you don’t have a real business, and they won’t get a return unless you can show a path to profitability.
Numbers are significant, but they aren’t decisive. When judging businesses, excellent ideas and terrific teams can be equally significant. As a result, you’ll want to wrap up by discussing how your team is uniquely prepared to accomplish this.
A Capable & Passionate Team
It makes no difference if you have the best invention; it won’t function unless you have the right team to support it. Passionate and capable founders often tilt negotiations in their favor even if they don’t have impressive data.
Prioritize relevant experiences that demonstrate that you know what you’re doing. Highlight anything that shows you are the best in this field, won’t give up, and are really committed to seeing this through.
Recap your presentation. You should stress what you do, how you do it, and the metrics that best demonstrate your credibility, just like you did in your introduction. Also, think about concluding with the tagline you devised before.
Deliver a strong call to action and what the next steps should be.
Be sure that you are prepared for questions. You can’t cover anything in a short investor meeting and pitch.
Know the most common questions you’ll get. Be prepared to answer them well. You may also create a FAQ or appendix for your pitch deck, or upload them separately in your virtual data room. Develop this checklist when learning how to pitch in a venture capital meeting.
Step 5: Pitch Perfect With Others’ Help
Thrilling. Intimidating. Time-consuming. Pitching investors is an unavoidable element of establishing a startup company. No matter how you describe it, if you’re passionate about your product, you’ll go to great lengths to spread the word.
Surrounding yourself with knowledgeable people about the process is one of the best methods to improve your pitch. Get all the help you can, before going into a meeting.
Then practice, practice, and practice some more. Collect feedback with every pitch. Then use it to keep on improving until you close the round.
To conclude, learning how to pitch in a venture capital meeting is not always a walk in the park. However, if you do your homework correctly and provide the right information to your potential investors in the right amount of time, you can succeed. Organize your plan and key metrics, determine your requirements, study your venture capitalists, organize your pitch, and make your pitch-perfect. If you follow these five steps to polish your presentation in a venture capital meeting, your pitch will stand out from the crowd, and position you to get funded.
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