How to Successfully Pitch Your Idea to a VC
Vikas Datt, Managing Director and Partner at CerraCap Ventures
Vikas Datt, Managing Director and Partner at CerraCap Ventures
As a VC, we see hundreds of deals every year. However, less than 1 percent of such companies get funded. Sometimes I feel that our primary job is to say “No.” The reasons could be many such as timing, competition, target area, too early, or too late. However, the investment decision ultimately comes down to three aspects–1) the Fit, 2) the Founder, and 2) the Founders’ ability to convey his or her vision.
“The Pitch” is one of the key components for your fundraise. Over the years, I have found that most pitches are just poor. Founders are unable to communicate a coherent picture of the problem they are trying to solve, the market, how they are different, and how they will make money.
Here are the five tips to make your pitch more impactful.1. Take Clues Before You Jump Into The Pitch: Too many founders start their pitch, speak for an hour nonstop (unless the meeting is cut midway), only to leave with “No” as an answer. Before you start, ask, “Why the potential investor agreed to meet you.” Ask other leading questions to establish, connect, and understand their core area of interest. Prepare multiple versions of your pitch: have a long pitch, short pitch, funny pitch, etc., all practiced in advance. Adapt your pitch depending on the time and the interest of the investor.
2. What is Your Story: Startup investments typically are five to ten-year partnerships, and investors need to like you before they like your business. As humans, we may not remember facts and figures but will always remember a story. Your pitch should include your own story, and it needs to be interesting enough. Some areas you can cover are–Why you started this business, how did you get the idea, and what did you go through to reach here? Think of interesting events and personal experiences, and share your journey. There is nothing more powerful than a good story.
3. The Facts: Once you have completed your story, it is time to change gears. VCs have a standard checklist of questions they need to run through, such as what is your burn rate, how much is the ramp, what is the valuation, etc. Research these questions in advance and be prepared with sharp answers to cover during your pitch or as part of Q&A. It gives a sense that you have a grip on the business. When asked, how much money have you raised till now, investors are expecting a dollar number and not a story that starts with “it depends.”
4. The Traction: Investors do not have the expertise in every idea they invest in; they are looking for business traction to validate. Bootstrapping your idea and getting early customers is a pointer on multiple parameters, including your ability to execute. Spend sufficient time in your pitch on business traction and share your learnings from early customers. It shows the idea has been tested and that people are willing to pay money for your product or service.
Fundraise is not a onetime exercise; startups need to constantly fundraise
5. Engagement vs. Follow Up: After an amazing pitch, a founder walks out of the board room with a 2million dollar check, is just fiction. Investors need to be engaged and must go through the diligence process before they invest. And they are busy. Do not send everyday reminders starting with “just checking in”. You need an engagement plan. Send a follow-up note, share latest news about the company, ask their advice on something strategic, or share an interesting article. Be a loving pest.
Every startup, including today’s Unicorn’s, has and will face rejections. Even if you get “no” for an answer, ask for one-to-one feedback, references, and keep the investors updated on the progress. Fundraise is not a onetime exercise; startups need to constantly fundraise. Having a good pitch will increase your chances of success. Best of luck, and get funded!
