The other day I was on a call with a good friend. He’s a great entrepreneur and asked if he could run the pitch for his new company by me. It was a great pitch. He shared the problems he’s solving, what the product does, the size of the market, and how much the company is looking to grow.
For all intents and purposes, it was a typical well-done pitch.
As I reflected on the pitch, I realized two things—
First, he never mentioned any part of his background. This guy is an incredible leader. He has been building products for years, has already been successful on numerous fronts, and has more than enough chops to show any investor what he’s capable of achieving.
Secondly, he left me wondering what in the world the next few years look like. I know for a fact that he’s building a product that is going to grow exponentially, but he didn’t mention a 1-3 year roadmap.
Unpacking What’s Missing
Each month, I hear up to 100 pitches from startups, and there have been some months where the number is higher than that.
Most startups are really good at sharing the following in their pitch:
- The problem they’re looking to solve.
- What the product does.
- How big the market is.
- The startup’s long-term growth outcomes or market domination strategy.
- A brief biography of the founders – usually a slide with a bunch of logos.
This is all good and in many ways the basis for what venture investors are looking for. And, in a quick five-minute pitch, there isn’t much more you can share.
Yet, I’m often on pitch calls where there is plenty of time for founders to share more. I find that there are two missing components to their pitch that I want to dig into:
1) Their personal background and the reason the founders are particularly capable to run this company.
2) The middle-term (1-3 year) next steps for their company.
While I’m not advocating for founders to necessarily put these two topics in a deck for a quick five-minute pitch, it’s important to be prepared to answer these questions and proactively share the answers during a longer pitch. Here’s why this is so important.
It’s All About Trust
I started dating my wife in Washington, D.C. in 2007, and we ended up getting married in 2009. We had, in my humble opinion, an excellent dating experience in one of the greatest cities on earth. And, as I’ve been reflecting back to all of those dates on the Lincoln Memorial and Kennedy Center, most of the conversations we had were around understanding if and how we were going to be a fit for one another. It involved us learning all about what happened so far in one another’s life (e.g., our college experiences, who our friends were, what our families were like, etc.), and asking what we thought the immediate next few years would look like (e.g.., where would we live, what jobs would we have, etc.). While we could have spent hours talking about our hopes and dreams for the future, we both found that it was more important to build trust with one another by sharing where we’ve come and where we plan to be in the next few years.
Our mutual understanding of our backgrounds and short-term plans led us to a place where we could trust one another because, without saying it directly to one another, the belief is that our pasts (in many ways but not all) inform the future, and we both want to have an understanding of what the next few years would look like together. The same holds true for your potential investors.
Back to the Pitch
So, when it comes to the pitch, it’s important to do the following, whether in the initial pitch or in subsequent conversations with an investor:
Share your background.
Most slides I see about someone’s background is a list of logos, and I have no idea what the founder did or why those particular logos even matter. Meaning, founders have the opportunity to share why their previous background leads them to a place where they are uniquely qualified to run this endeavor. Pausing to share what you did and why that background makes you so good for this startup will do leaps and bounds for the trust you’re looking to build with investors. Saying something like, “During my time at McKinsey I worked with the same customer set as our startup. Through this experience I gained intimate knowledge of the problems our customers were facing, bringing me to a place where I fully understand the problems our customers are now facing. Since I know our customer so well, I have a clear roadmap for what we needed to build to help them.” That builds so much more trust and credibility than “I worked at McKinsey.”
Share your 1-3 year roadmap.
Every investor is trained to look at your problem and market, and if you’re able to share where you’re going in the immediate next 1-3 years, it makes your vision that much more attainable. I can’t even begin to tell you how many calls I’m on where, when I ask what the next three years will look like, I’m met with silence or an unclear answer. For instance, most startups can tell me what their “domination” strategy looks like (e.g., “we are going to be in every city in the United States, serving over 20 million people, making over $250M annually). And yet, while that’s important, I want to know what the founder thinks the world will look like in the next three years because that’s when their company will take off (or not), and it gives me a great idea of how the founder thinks about their business. It also makes the product and market very clear and understandable. As an example, try to say something like “We know that in the next three years, we will be in 20 different cities in the country and five countries outside of the United States and have these four products that we are offering to our customers. We should have sold around $3M in services by then as well.” It makes your product that much more real and believable.
The goal is for you to build trust with your investor. And, as you reveal your background and thoughtful medium-term roadmap, you’ll do just that.