The Shocking Truth About Startup Pitches: What Investors Really Think

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The Shocking Truth About Startup Pitches: What Investors Really Think

In this article, we’ll dive into the surprising truth about startup pitches and what goes on in the minds of investors during these presentations.

What Makes a Great Pitch?

Elevator pitch

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Before we dive into what investors are thinking, let’s first establish what makes a great pitch. A great pitch is one that effectively communicates the value proposition of your startup, showcases your team’s expertise and passion, and leaves a lasting impression on the audience.

The Elevator Pitch

The first and most crucial element of a pitch is the elevator pitch. This is a short, concise summary of your startup that can be delivered in the time it takes to ride an elevator – about 30 seconds to 2 minutes. The elevator pitch should effectively communicate the problem your startup solves, your target market, and your unique solution.

Your elevator pitch is your chance to grab the investor’s attention. It should be clear, engaging, and easy to understand. Remember, the goal is to entice the listener to want to hear more about your startup, not to overwhelm them with too much information too soon.

A strong elevator pitch is also memorable. It should include a hook or a story that makes your startup stand out. The more unique and personal your pitch, the better the chance it will stick in the investor’s mind.

Lastly, your elevator pitch should reflect your startup’s culture and values. Investors are not only investing in ideas but also in people and their vision for the company. Your pitch should give a sense of the ethos that drives your startup.

The Pitch Deck

Pitch deck

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The pitch deck is a visual presentation that goes into more detail about your startup, your team, your market, and your financial projections. It should complement your elevator pitch and provide more in-depth information about your business.

Your pitch deck should be visually appealing, easy to understand, and have a clear storyline that flows from beginning to end. It should also be able to stand on its own, meaning that someone who reads it without you presenting it should still be able to understand your business and its value proposition.

When creating your pitch deck, think about the narrative you’re telling. Each slide should contribute to a cohesive story about your startup’s journey, challenges, and vision for the future. Avoid clutter and unnecessary information that can distract from the main points you are trying to convey.

The design of your pitch deck is also vital. It should be professional and reflect your brand’s identity. Use high-quality images, consistent fonts, and colors that resonate with your brand. Remember, the aesthetics of your deck can influence how investors perceive the professionalism of your team.

Passion and Delivery

A great pitch also requires a passionate and engaging delivery. Investors want to see that you truly believe in your startup and are willing to put in the hard work to make it a success. Your delivery should be confident, but not arrogant, and should convey your passion and excitement for your business.

Body language is a critical component of your delivery. Use open gestures, maintain eye contact, and move with purpose on stage. These non-verbal cues can reinforce your message and make your pitch more compelling.

Your tone of voice also plays a significant role in how your message is received. Modulate your voice to emphasize key points and to keep the audience’s attention. Speak clearly and at a pace that allows your listeners to absorb the information you are presenting.

Lastly, practice your timing. A great pitch is one that respects the audience’s time. Rehearse to ensure that you can deliver your pitch within the allotted time without rushing or leaving out essential information.

What Investors Are Really Thinking During Your Pitch

Now, let’s dive into the meat of this article – what investors are really thinking during your pitch.

“How Big is the Market?”

Market size

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One of the first things that investors think about during a pitch is the potential market size for your startup. They want to know if your business has the potential to grow and become a major player in its industry. If your market is too small, it may not be worth the investment for the investors.

Investors are looking for scalability. They want to see that your startup can not only capture a niche market but also has the potential to expand beyond that. They are interested in your growth strategy and how you plan to increase market share over time.

Understanding the market dynamics is also crucial. Investors will be curious about the current market trends, customer behaviors, and potential shifts in the market that could impact your startup. Be prepared to discuss these elements and how your startup is positioned to adapt to changes.

Moreover, investors may question the validity of the market size you present. Be ready to back up your numbers with credible sources and research. This will demonstrate that you have a strong grasp of your market and are making informed decisions based on data.

“What is the Problem You’re Solving?”

Investors are also thinking about the problem your startup is solving. They want to know if it’s a big enough problem to justify the need for your solution. If the problem you’re addressing is not significant enough, it may not be worth investing in your startup.

Clearly defining the problem is essential. You need to articulate why this problem matters and to whom. Investors will be interested in how many people are affected by the problem and how they are currently dealing with it.

Investors will also consider the urgency of the problem. They want to invest in startups that are addressing immediate and pressing issues. If the problem seems too distant or not pressing, they might question the necessity of your solution.

Additionally, investors will evaluate whether the problem is a “pain point” or a “vitamin.” Pain points represent urgent problems that need solutions, while vitamins are nice-to-have solutions that may not be as critical. Investors are typically more interested in startups that are solving pain points.

“What Makes Your Solution Unique?”

Unique solution

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Another thing investors are thinking about is what makes your solution unique. They want to know if there are other companies out there doing the same thing and how your solution stands out from the competition. If your solution is not unique, it may not be worth investing in your startup.

Differentiation is key. Your solution should offer something that no one else does – whether it’s an innovative product, a novel approach to a problem, or a unique business model. Be clear about what sets your startup apart from the competition.

Intellectual property can also play a role in establishing uniqueness. If you have patents or proprietary technology, be sure to highlight these as they can provide a competitive advantage and make your startup more attractive to investors.

Furthermore, the unique selling proposition (USP) of your solution should be tied to tangible benefits for the customer. It’s not enough to be different; your difference needs to resonate with your target market and meet their needs more effectively than the alternatives.

“Who is on Your Team?”

Investors are also interested in your team. They want to know who is behind the startup and if they have the necessary skills, experience, and passion to make it a success. Your team is a crucial factor in whether or an investor decides to invest in your business.

The team’s background and track record are often scrutinized. Investors look for founders and team members with relevant experience and a history of success. Highlighting past achievements, especially if they relate to your current startup, can build credibility.

Diversity and complementarity within the team can also be a significant selling point. A team with a mix of skills and perspectives is often seen as better equipped to tackle the challenges of growing a startup. Show how each team member brings something unique to the table.

Investors are also interested in the team’s dynamic. They want to see that your team has a strong working relationship, can communicate effectively, and has a shared vision for the company. Demonstrating a cohesive team can help instill confidence in potential investors.

“What is Your Business Model?”

Business model

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Investors are always thinking about the potential return on their investment. They want to know how your startup plans to make money and if your business model is sustainable. If your business model is not well thought out, it may not be worth investing in your startup.

Understanding your revenue streams is crucial. Be prepared to explain how your startup will generate income, whether through direct sales, subscriptions, advertising, or other means. Investors will be keen to understand the logic behind your chosen model and how it fits with your overall strategy.

Your pricing strategy is also of interest. It should reflect the value you provide and be competitive within your market. Investors will want to know that you’ve done your homework on pricing and have a plan to adjust if necessary.

Finally, the scalability of your business model is a critical factor. Your model should allow for growth without exponentially increasing costs. Investors will be looking for startups that can efficiently scale up operations to meet increased demand.

“What is the Traction?”

Another thing that investors are thinking about is your startup’s traction. They want to see evidence that your business has the potential to grow and become profitable. This could include metrics such as user growth, revenue, partnerships, or customer testimonials.

Metrics are the language of traction. Be ready to present key performance indicators (KPIs) that show your startup’s momentum. Whether it’s monthly active users, churn rate, or customer acquisition cost, these figures can help investors gauge the health and potential of your business.

Investors also value customer validation. Testimonials, case studies, or pilot programs can demonstrate that there is a demand for your solution and that customers are satisfied with what you offer. This kind of social proof can be very persuasive.

Traction also extends to partnerships and collaborations. Strategic alliances can be a sign that your startup is well-regarded and capable of playing well in the larger ecosystem of your industry. If you have notable partners or collaborators, make sure to highlight them in your pitch.

“What is the Competition Like?”

Competition

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Investors are also interested in the competition in your industry. They want to know if there are other companies out there doing something similar and how they are performing. If the competition is fierce, it may be challenging for your startup to stand out and succeed.

Understanding your competitors is just as important as understanding your own business. Know who your direct and indirect competitors are, their strengths and weaknesses, and how your startup compares. This shows that you’re aware of the market landscape and are prepared to navigate it.

Differentiation from competitors is essential. Investors will be looking for reasons why customers would choose your solution over others. Be prepared to articulate your competitive advantages and how you plan to maintain or increase them.

Investors will also consider the barriers to entry in your market. If it’s easy for new competitors to enter the market, they may be concerned about your startup’s ability to maintain a competitive edge. Be prepared to discuss how you’ll defend your position against potential new entrants.

“What are the Potential Risks?”

Investors are always thinking about the potential risks involved in investing in a startup. They want to know what could go wrong and how you plan to mitigate those risks. By addressing potential risks in your pitch, you can show investors that you have a thorough understanding of your business and its challenges.

Identifying and acknowledging risks is a sign of a mature entrepreneur. Investors appreciate founders who can openly discuss the challenges their startup may face and have thought about ways to address them.

Risk mitigation strategies are crucial. Whether it’s through diversifying revenue streams, securing intellectual property, or having contingency plans for market changes, showing that you’re prepared for adversity can instill confidence in investors.

Investors may also be concerned about the long-term viability of your startup. Discussing your plans for sustainability and growth can help alleviate these concerns. Be prepared to talk about how you’ll navigate the evolving market and keep your business relevant over time.