- 08 Oct 2019
How to pitch your company
- Updated on 08 Oct 2019
It is much easier to talk to an investor if they understand what your company does. As a founder you’ll have to pitch your startup countless times. To be effective, your pitch has to be clear and concise.
In this post Michael Seibel condenses the pitch creation process to answering seven questions. If you can answer all seven questions succinctly you’ll be well ahead of the curve. Below we've summarized the article, and you can click here to read the full details.
The Seven Questions
1. What do you do?
Start with the name of your company and what it does. For example “Socialcam is a mobile app that makes it easy to take videos and share them with friends and family.” There’s no need to set up the problem, you can just get to the point.
Too many people spend too much energy trying to make their idea sound impressive. It’s ok to keep it simple. Actually, it’s preferable. You want to explain what you do in the simplest language possible.
Your goal when answering this question should not be to have me understand your whole business but rather make people interested enough to ask follow-up questions.
2. How big is the market?
There are two ways to get market size. If you’re entering a pre-existing space (like small business banking) you can research it. If you’re creating a new product or space (like Slack), you can estimate the number of customers that would want your product and approximate how much you could charge them.
For example: Bellabeat makes an activity tracker for women. There are X women between 14 and 45 in the US. The lifecycle of our activity tracker is two years. Our market opportunity in the US is Y.
You can also refer to Analyzing your market opportunity in the D3 Startup Library.
3. What’s your progress?
What the audience should understand here is how fast you produce work. What is the ratio between what you’ve done and how long you’ve been working on it?
The investors should be impressed with how much you’ve done in the period of time you’ve had to do it. This can apply to a company that’s one week old or ten years old.
4. What’s your unique insight?
This is similar to “What problem are you solving?” but the bar is higher. What I really want to understand is what you know about the problem that everyone else doesn’t. This is usually derived from multiple conversations with customers, deep analysis of current products in the space, and often personal experience.
For example: Gmail. A unique insight was that the email inbox is a personal database of communication and documents. Why would a user ever want to delete anything in their personal database? Gmail gave people enough storage so they would never have to delete a conversation. It’s not that people needed email. It already existed. And it’s not that people needed better email. That’s too vague. A unique insight is specific and doesn’t contain complicated language.
Your insights should come from your interviews which you can learn how to conduct here.
5. What’s your business model?
There are two types of startups, those that know how they’ll make money and those that haven’t figured it out yet. By and large, if you’re in the second category you’re going to either make money by growing big and turning on advertising or you’re going to copy the predominant business model in your space. A small subset of companies in the second category will propose a new business model that makes sense given how you product changes the market–freemium is a good example of this.
One mistake business often make is offering a potpourri of business models (virtual goods, product placement, chat ads, contests, etc..). Own the simple business model.
6. Who’s on your team?
How many founders? Is there a technical co-founder? How long have they known each other? Is everyone working full time? What is the equity split among the founders (hopefully equal or close to equal)?
Mention any extremely relevant credential as well. For example: You’re building a rocket company and you used to be the rocket scientist for SpaceX. Basically, if you’re focusing on a deeply complex or regulated space, having the expertise in house to plausibly tackle those problems is important.
7. What do you want?
There’s no need to dance around the ask. If you want people to invest, ask. If you have a question, ask. Though to be clear, “What do you think?” is a bad question. “Do I have a good idea?” is another bad question.
Improving Your Answers
Once you have answers to each of the seven questions your challenge is to make the answers as clear as possible. To do that you need to eliminate jargon, acronyms, marketing speak, and any ambiguous terms such as “platform”. Basically, make it sound dumber than you think it should.
How to design your pitch
The images below were extracted from the sourced article for your convenience. Please refer to the original article for richer details and explanations.
Use big fonts to make sure that people sitting anywhere in the room can read.
Make sure each slide only has one idea. Below is a before and after of a company's slides.
Obvious slides are ones that can be understood at a glance. Here’s a simple test you can use to test if a slide is obvious: Show it to a stranger and ask them to tell you what it means. If they don’t immediately say your idea, you lose.
Screenshots are almost always illegible, complex, and non-obvious. They break all 3 rules! The text in most interfaces are too small (not legible). Most interfaces do multiple things (not simple). Most screenshots take longer than a glance to understand (not obvious).
Instead explain what your interace does with example like the ones below:
Below are two excellent examples that you can get inspired by for your own pitches.