A recent report published by Octopus revealed that “not knowing where to start” is one of the key barriers to young people taking up a path towards becoming an entrepreneur. As part of our Future Founders series, we’re sharing insight and know-how from the people at Octopus who know what it takes to start a business from scratch. In this instalment, presenting your business ideas to others.
You’ve grabbed the attention of potential investors, and now you’ve got the chance to sell your business idea in person. How do you put together a pitch that’ll knock their socks off? We asked two Octopus Ventures colleagues, Venture Partner Manager George Whitehead and Investment Manager Will Gibbs, for their advice on creating the perfect pitch.
How long should your initial pitch be?
Will suggests you keep it brief, but you need to explain your idea and what you intend to prove in the early months. In his experience, most initial pitches last around five minutes, with later meetings to secure commitment and action running closer to 45 minutes or an hour in length. George comments, “if you’ve got an hour slot with a venture capital fund (VC), you should expect to talk for longer than five minutes. That said, you don’t want to be speaking for the full 60 minutes. Be ready to do a 30-minute presentation and then leave plenty of time for discussion. You want to give yourself the time to answer their questions and to gather their feedback”.
What should your pitch cover?
With just five minutes to wow your audience, George suggests you keep it focused: “talk about who you are and what your business is trying to achieve. You can then move on to talking about why you’re suited to running this business and who, if anyone, else is involved. It’s always good to close by talking about just how much potential you believe the business has.
“An early pitch is really like the executive summary in your business plan. Those few lines where you communicate what you want, what you do, and what you’re looking for. Cut everything down to the bare essentials where investors and backers can very quickly say ‘tell me more’, or ‘OK, that’s not for me, but you should speak to this person’. Your pitch is really a sales call, so all those messages you use in selling your product apply to your pitch too”.
What do most start-ups talk about?
Will surveyed more than 60 of Octopus Ventures’ portfolio companies to identify the top ten categories included in their pitches. All mentioned their team and most their product. Many included the problem, business model, company purpose, market size, solution, competition, financials. Fewer than half explained: “why now?”.
Quality pitches, Will adds, contain a clear message about where the company’s competitive advantage comes from, include a “why” or mission statement, and leave the audience engaged and keen to know more.
But Will highlights a common pitch problem is a lack of transparency. Include the challenges and threats to your business idea too, and be prepared to talk about them.
Things to leave out of your pitch
Will finds pitches often fall flat because the pitcher assumes the audience has a lot of background knowledge. To make sure your pitch doesn’t fizzle out, you need to strip out the complexity and jargon, and include enough information for your audience to understand the significance of your plans.
And be mindful of the language you use to ‘sell’ your business or idea. Will has been forced to sit through an unhealthy number of pitches where the business owner is claiming that any and every market is “broken’. If you want to cut through the noise and convince people that you’ve really got something different to offer, you might want to use a less overused phrase.
Make market data count
Don’t throw broad industry numbers into the presentation. Focus instead on the total addressable market. You can’t predict the future, of course, but a considered approach to your calculations will show potential investors that your team is capable and focused.
What supporting data should you bring?
Trying to squeeze everything into your first meeting with a potential investor isn’t going to lead to a quality pitch. But be prepared for the conversation afterwards.
George explains, “you’re going to have to do a PowerPoint pitch to communicate, very simply, what your business does, what your market is, who you’re selling to, how you’re selling, what the team is, what the plans are for the future, what’s the long-term ambition, etc.
“But eventually someone’s going to ask you for a business plan and follow up with a bunch more questions. You need to go into your pitch with your executive summary, the pitch deck and the business plan”.
“And, you can have as many appendix slides as you want so you’re ready for every possible direction you can imagine the conversation taking you. Being prepared to talk numbers is simply good salesmanship”.
Learn about the panel you’re pitching to
Don’t forget to do your homework on your audience. Will notes that in the best pitches, presenters reference common connections they have with the panel. They put the effort in to build a bond and show they’ve done their research from the start.
Whoever you’re about to talk to, search LinkedIn, their company profiles and trawl Google to understand their expertise. As George says, “this might be your first meeting with someone who’ll be sitting on your board for the next eight or ten years. This could be the beginning of a really important relationship”.
Practise, practise and practise your pitch some more
Of course, the more you practise your pitch, the more polished you’ll be. But what will really pay off is time spent preparing for a robust discussion afterwards.
George says, “a lot of pitch prep is more to do with your genuine business plan and you having thought through different scenarios. Then when questions come up, you’ve got numbers at your fingertips. You won’t be floundering, and you’ll be confident in your delivery. Investors want to see you’re in control, and that you can take this business and make it a success”.
Be careful who you choose as your test audience though. “I’m really an advocate of people testing out their pitch, but with one important caveat. Friends can be rubbish at supplying feedback. They’re all being too supportive and nice”, George comments. “You want people who will push back, question what you’re doing and be tough. Find the most commercially-minded people you can and pitch with the understanding you want really constructive feedback to make it better”.
The Octopus approach to getting feedback – asking for three positive things and then three developmental things – can be helpful. Once your practise audience has said nice things about you, they’ll probably have the confidence to talk through some of the less positive ones too.
Use stories to draw your audience in
Will fervently believes that the most persuasive pitches are those that include stories. Whether it’s talking about how you came up with the idea for the business, the vision or purpose of the business, or validation from your early customers, stories can really help to bring your business to life.
Your pitch will be more engaging, and move far beyond just numbers on a chart, if you can help your audience feel what it would be like to your customer. If you can, include mock-ups and screenshots of your product too. George explains, “even if you don’t have many customers yet, if the people you have sold to are really enthusiastic, that starts to tell a story you are building something exciting”.
Don’t forget – you’re a big part of the offer
For all the business detail you’ll need to present, you personally are under just as much, if not more, scrutiny. Investors want to know you’ll be able to handle the pressure and challenges of start-up life. Do you have the energy and the passion to convince future customers, suppliers and employees to stay the course?
George explains: “you can’t say ‘there’s a real opportunity here’ without getting excited by it. You’ll need to show real belief to convince people to take on the risks, especially in the venture space. Investors look for entrepreneurs who are energised and articulate about their vision”.
Will offers a reminder that speaking poorly of the current market players and your competitors probably isn’t going to reflect well on you. You want this to be the start of a relationship, so show you’re the kind of person they’ll want to work with and recommend to others.
Create a message others can pitch for you
Will believes that really great pitches include a one-liner that’s easy to understand and easy to repeat. George talks about the importance of creating a pitch that, essentially, others can do for you. Focus on creating a simple message about what you need and do, and you’ll make it straightforward for others to talk about you.
George explains, “I want people to know how to introduce me well, so when they meet someone in two weeks-time whose company is looking to raise money, they’ll say ‘let me introduce you to George: he runs a venture capital fund that invests in companies from an early stage up to £25 billion’.
“Then someone’s doing the networking for me. I wasn’t in the room. I didn’t even know their connections. If you’ve been very clear in your pitch about your request, even if it’s not the right project for the people you’re presenting to, you’ve left something memorable, and they can be out there helping you achieve your business objectives”.
Spend time listening to others’ pitches
If you haven’t pitched before, or you’re looking to sharpen up your delivery, you can find plenty of inspiration online. Y Combinator has posted past pitches on YouTube. The ‘Demo Days’ organised by Entrepreneur First are another great resource.
You can even pick up some tips from watching episodes of Dragons’ Den. According to George, “one of the good things about Dragons’ Den is you can tell a bad pitch instantly, and it is pretty obvious when they’re pitching well. See what works and what doesn’t and use it to shape your presentation”.
Perfect your pitch and start opening doors
Create a crisp and compelling pitch for your start-up and be prepared to show you’ve thought about the challenges ahead. If you can share your passion for your idea, remain calm and talk openly, you are well on your way to finding the support you need.