Pitching angel investors is challenging
Investors want a lot of information, and when you pitch investors you will not have nearly enough time to give them what they want. Even more frustrating, I assure you that If you ask 100 angel investors what they want to see in a pitch, you will get 100 answers. The primary reason for this? They don’t know.
Investors don’t know what they want exactly, but they know it when they see it. They need specific, detailed information about you and your business before they invest, but the role of the pitch is only to spark interest not provide all of the information investors will need.
When you pitch the angels, you typically have 6-10 minutes. No matter how simple your business is, you cannot possibly fit everything an investor wants in that timeframe.
You will be hard-pressed to fit that into a two-hour deep dive (which is why due diligence takes so long).
Even worse if you do try to put everything into your pitch, you end up with a long list of data that nobody can understand – you end up turning them off.
Let me restate that: if you try to give the investors all of the information they want in the pitch, they will most likely stop listening to you, not express interest and not invest.
I have reviewed thousands of pitches and can usually tell within the first few minutes who will interest our investors. So here is what I have learned about pitching investors.
Based on that experience, this is what I have learned about how to pitch angel investors
1. Know that your role is to show investors a great way to make more money
Keep in mind that investors are not interested in you or what you do. Their lack of interest sounds paradoxical, but they are interested in themselves and how they will make money.
Your job is to show investors how they will make money.
Your pitch should present a business idea that:
- We can easily understand.
- Solves a problem
- Sells into a big market.
And show that you have the team/capabilities to deliver.
2. Please, please, do not try to answer all questions in advance
At the Westchester Angels, we had a company present us with an idea for wind turbines. The idea was attractive to a few of our investors, but the pitch was a disaster.
The CEO showed slide after slide of data and information that none of us could digest.
At the end of the pitch, there was not one person interested in learning more about this business or working with the entrepreneur.
We tried to give the CEO advice on his pitch and explain how to improve it; he wouldn’t listen. He explained that it was impossible to tell a clear story because he had to “prophylactically” answer the questions that would come up.
Not many investors use that phrase, but many try to do the same thing: answer every question that might ever come up.
Don’t do that.
Even if you have every answer, providing them upfront will turn investors off.
This is true even though investors may tell you they want every answer.
And if you were to answer all of the questions, they wouldn’t ask any more questions, and you wouldn’t have the conversation you want to have after the pitch!
Which brings me to:
3. Know the role of the pitch and focus on getting it to its job.
You will not get investment as a result of your pitch. I have never seen that happen.
The role of the pitch is to get to the next conversation. That next conversation can happen immediately after the pitch in the Q&A session. You want investors to ask probing questions, that means they are interested.
The role of Q&A is again progression to the next conversation, which in our case takes place at the bar downstairs.
DO NOT SKIP THE BAR, or whatever the equivalent may be.
I have never seen a pitch lead to an investment; I have seen a bar conversation lead to an investment.
Mostly though each conversation leads to the next, the pitch is the first one. Use it to get to the next conversation.
4. Remember you are pitching to humans who are looking for inspiration
I was on a panel of angel investors watching lousy pitch after bad pitch when one of my fellow panelists turned to me and said:
“don’t they get it? We want to go to a cocktail party and be able to say that we invested in that great company in the beginning.”
And therein lies the clue to connecting with investors: they want to be the hero.
They won’t ever use this language, by the way, but that is what they want. When they are listening to an 8-minute pitch, they are looking for the numbers, evidence, and a great idea.
But, mostly they are looking for a spark of confidence that you are the next great entrepreneur and that by working with you, they transform themselves into better entrepreneurs, advisors, investors, whatever.
People, including investors, don’t remember facts. Facts matter, but they don’t connect. You must connect with investors with a great story. It should include the compelling market challenge but also the clear pathway to investors making money.
**Good pitches don’t inform or bombard with facts; they inspire.**
5. Get the content right
Content does matter. There are eleven concepts that you want to communicate.
You don’t have to communicate all of the detail. But you do have to address each concept, and you must be ready for rigorous questions around each of topic.
- Generally, the areas of interest are:
- A solid attention-grabbing introduction (Investors aren’t looking for this, per se, but it helps.
- The “pain” or market need.
- The solution (ONE SLIDE, maybe two. NOT the whole presentation).
- The addressable market size
- The business model, please show us how you make money.
- Experience in the market/market validation – the more, the better.
- Channels to market/market strategy
- Competition and how you compare, why you will win
- The Team – very important.
- Forecast / Plans
- Exit Strategy, remember investors only make money at the exit, so they want to know one is planned.
- The Ask – sadly often forgotten.
6. Be professional and present well
We know that the startup culture is one of ripped jeans and old t-shirts. But show us that you can also dress professionally as well.
Practice your pitch so that it flows. Go through it 2-3, 100 times. Try it on your friends. Aim for concise over wordy. Work on engaging the audience, speaking to them rather than sounding rehearsed.
I have seen some very poor presenters do well if the content is strong enough it can carry you. But don’t count on that. A professional presentation is within your control, so do what you can to show investors that you will do everything in your power to make the business work.
Don’t worry too much about being nervous or stumbling over a few words here and there. Preparation shows. Professionalism shows. Let it work for you.
7. Follow the rules
I generally lead our meetings with the support of our other partners, but I am the emcee. At one meeting, none of the other partners could make it. I was there on my own.
And one of the presenters decided not to follow the rules. We allow an 8-minute pitch and about 8 minutes for Q&A. We like this format. It is a good test of how well you present and gives us a few minutes for that next conversation.
That evening one of the presenters decided to ignore our rules and present for 16 minutes. And as much as I tried to be polite, he wouldn’t shut up.
He had a great product we loved.
He solved a real need that we understood.
But his behavior was awful.
So he lost the investment.
And know this: angel investors talk. We have a monthly conference call with other groups, and I assure you I was not quiet about my annoyance with this presenter.
Just follow the rules. It isn’t that hard.
So those are my observations on how to pitch angels. I’ll add to this as more occur to me.
In the meantime… good luck! With all of these requirements and constraints, the truth is we want entrepreneurs to succee