There are many posts, books, and seminars out there already that cover how to pitch investors. As entrepreneurs, it is important to realize that there are many ways to pitch investors and each investor is different. For instance, some investors may care more about the team than the idea where others may want to see real traction before they invest. The most important thing you can do first is identify the right investors for your business and learn everything you can about how and what they invest in before reaching out. The right investor will be more than just an injection of cash. The right investor will bring loads of value in the form of mentorship, connections and added credibility.
Considering that Boris Wertz is one of Canada’s most notable super angels, we thought it would be helpful to learn his tips on pitching early stage investors. As an angel, Boris has invested in more than 20 early stage consumer Internet companies in the Pacific Northwest including Summify, Sparkbuy, Tynt, Suite101.com and Techvibes to name only a few and sees his share of approximately 150-200+ pitches per year. Out of those 200+ pitches, he many only invest in about 5-6 companies, which means you have to be pretty stellar to cut through all that noise and land a term sheet.
Step 1 – How to Find the Right Investor
I know you are busy building a company but you have to poke your head out of the garage once and a while to meet other entrepreneurs, angels etc. and get to know the influencers in your community. Through your interactions and presence at events, you will quickly learn more about the types of investors you should consider approaching. Boris stressed that you really need to do your homework before you start knocking on doors, so you do not waste anyone’s time. Once you have compiled a list of investors, dig deeper to find out more about the stage (early stage vs. later) what sector (software vs. ecommerce), business model (b2b or b2c) and geography each investor is interested in as well as who you know that can personally introduce you.
Step 2- The Warm Introduction
As I have learned first hand and Boris noted in his presentation, it is always best to get a warm introduction to an investor rather than cold call or shoot off an email out of the blue. An introduction from someone an investor trusts and respects could make all the difference in getting you a face-to-face meeting. And when you finally do get an introduction – don’t send the investor a 20 page business plan ahead of time. Just an executive summary with a link to your product will do.
Step 3- Nail the Pitch
Nailing your pitch is way easier said then done but if you have done your homework and been introduced to the right investors, you are off to a great start. Boris and many Internet investors I know look at the team first. A strong team can weather many storms and iterate and pivot when needed. The idea will change, so Boris recommends that in your first meeting you:
- pitch yourself not the idea
- show a product demo
- focus on a the high level concept, rather than digging deep into the long term plans and financials
- keep your pitchdeck to 10 slides. Something Guy Kawasaki also preaches
What Not to Do:
- Ask Investor to sign an NDA – If you ask for an investor to sign an NDA, you may not even get past your first slide. Investors see hundreds of pitches every year and chances are there are many other entrepreneurs, who are working on a similar idea. If you ask your investor to sign an NDA, you look like an amateur.
- Share a detailed business plan and financials. In your first meeting, going into too much detail is not necessary. Explain what problem you are solving first and show a demo of the product if you can.
- Schedule a 30 minute or more meeting – Any meeting longer than 30 minutes is too much for Boris. If you are pitching an investor and he starts asking questions, seems engaged and you go over the allotted 30 minutes, that’s probably a good sign. If you aim to deliver your presentation in less than 20 minutes and allow time for questions, you will be in good shape.
Remember, every investor is different. Boris likes to spend time getting to know you before he invests. Other investors will be quicker to write a check. Venture Capitalists usually take 4-6 months, if not more to paper a deal. So, the be sure to allow yourself plenty of time to raise funds.
If you missed Boris’s presentation, he has posted the presentation on his blog here. Thanks again Boris, for dropping by.
What Have You Learned?
As always, we love hearing from you too. If you have an investor Do or Don’t that you learned a long the way, please share with the rest of us in the comments below.
NOTE: Next Bootup seminar will be on February 23 – Social Marketing Ku Fu, Yellow Belt “Listening Everywhere” with Dave Olson. Sign up. He rocks!