Pitching a Venture Capital Tips for Startup Founders

Although raising capital is very important, startup founders are often lacking knowledge on how to pitch potential investors. Preparation is the key to success.

To receive an opportunity for a capital raising, you must go through the application process. During this process, it is best to have a reputable referral to establish credibility with the potential investor. The most successful pitching catches the investors attention. Ask yourself: How can I create a pitch that catches the attention of potential investors? How can I make sure they are listening?

Suppose you have an impressive profile and have the opportunity to meet and pitch to an investor. You have 2-5 minutes to present, what will you say?

Use common words, be straightforward, and be as simple as possible

Founders often like to use complicated terms to create a professional persona. However, this makes communication difficult. Introduce your startup in a single sentence that is simple and easy to understand. For example, “Hi, we are AirBnB, and we help you rent the vacant rooms in your home.” Very simple. Don’t say, “We are AirBnB, and we are a trading platform for your space.”

pitching-venture-capital-for-startup-foundersBe simple and straightforward. Don’t talk around the point. For example: “We are Vber, we are the same as Uber but exclusively for the Vietnamese market.” The ultimate goal is to help investors understand your goals immediately. This is not a poetic competition, so avoid difficult words and keep it short.

Show them the investment

Investment is a bet on the future. A good pitch shows investors what their investment will look like as the startup grows. While creating your pitch, ask yourself: What market are you targeting? How big is it? Will that market be developing in the future? If so, how will you contribute? Will that market expand? What is the investor’s role in that expanding market?

Allow the investors to imagine what their investment will look like. Initially, their money might seem like a purchase, but in the future their simple purchase will turn into a growing investment.

Be specific about your growth momentum

A good example of specific growth momentum in a pitch is the following example, “This is a graph that shows our number of paid users in the last 6 months and a prediction of the next 3 months. Attached is the corresponding revenue chart. The momentum grows approximately 30% per month.” Investors need to know where your company is now and how long it will take to reach your future goals.

If you haven’t launched the product yet, talk about your timeline and show that your company is developing very fast. Explain that your company won’t stop whether it is funded or not. For example: “We started in June, in two weeks we finished MVP, in July there was a beta, we had xx users to try, and next week we came out v1 officially.”

What is the insight that investors and the market do not know?

After the first three sentences, if interested, the investor will give you the opportunity to continue. Otherwise, they will find a way to end the conversation.

The next thing they want to hear is what makes your startup unique and different. What do you know that other people don’t know? Make them surprised with your insight. Keep this to two sentences. If you can make investors “Oh!” with surprise, then you succeed. But if they respond with an “I know!” then you have failed.

How to make money? What is the business model?

You do not need to invent a completely new business model. For example: “We make money by displaying ads on apps.” This is simple and easy to understand. Of course, you can have many ways to make money, but there is no need to say if it is too small and does not have high potential. Only focus on the largest source of revenue.

Explaining co-founders and team roles

How many co-founders should your team have? Ideally, your team should only have 2-4 co-founders to ensure the highest likelihood of success. Increasing the number of co-founders only makes it more difficult and increases the risk.

What is each founder in charge of? What experience and achievements do they bring to the team? How can they help your startup take off? Why are the most suitable? Don’t only show your degree, talk about practical skills and experience.

How many people do you want to work full-time for your startup? Who is trying to work part-time? Investors don’t want to hear about a half-hearted startup. They want to find a completely trusting and focused group to invest in.

How is the relationship between founding team members? How long have you known one another? What projects have you worked on together? No investor wants to pour money into a group that has just become known and is experiencing their first time working together.

How much money do you need?

The close of your pitch should communicate how much money you need and it’s use. Do not use a vague number. Show that you know what you need money for and why. You must have a plan to launch and grow without asking for a large sum of money to begin.

“95% of the startups I know bring products to market with very little money. Therefore, never put give an investor so much power that you can’t do anything without their money. You always want to have power in a situation. Show your investors that although their money is an asset to the company, the team has control and will ensure the success of the startup. For example, ‘The startup is growing, we all quit our jobs, we all work full time. It is growing. If you want to jump in, that’s great. Otherwise, there are still many investors.”

This is the attitude you want. This is the confidence you want. If you need money early, always plan to need less money. Always show that you have a full-time team to push towards success quickly.

If you can show the investor that even though you have not launched yet, you can complete an 8-month job in 1-2 months, while communicating that you have a strong team that is fully dedicated and focused, then you have taken that advantage. But you will not have these advantages if your startup does not launch and grow.  Remember that. ”

– Michael Seibel

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