What We Look For In a Pitch
Jeff Loehr, Westchester, NY
February 21st, 2016
We see a lot of presentations from a lot of entrepreneurs. Many entrepreneurs, to be very honest, do not have good scalable ideas. Many have good ideas but no way to execute. Those that do have good ideas and can execute, often can’t present their ideas clearly. We look for that rare combination: Good product, quality execution and an ability to tell the story.
Story telling is important. The founders of a growth startup must tell their story over and over again. They have to excel at telling the story to investors, to partners and to customers, if they don’t then people won’t invest, won’t partner and won’t buy… often even if the product is stellar.
Though selection would be a lot easier if companies all followed the same template, they don’t. The contents of a good story never seems to follow a strict pattern, even if the basic building blocks are the same. But regardless of how the story is told, there are some things we are always looking for:
- A solid attention grabbing introduction. There should be something here that makes us want to listen to the rest of the presentation. This is the 30 second pitch, the headline, the explanation to a kindergartner, whatever you want to call it that explains what the business is. If the entrepreneurs can’t explain up front what the product is, we will probably never understand it.
- The pain or market need. We want to know why this product matters and why there is an opportunity.
- The market size. How big is the market, how many potential customers.
- The solution. Then we want to know how the company is going to fill the need / address the pain. We want to see a product / product description but we also don’t want it to go on forever – we want clarity and concision.
- The business model. How the company make money. Is the company selling a subscription, for example, or charging a fee for service? What does the business need, with whom will it partner. Sometimes the innovation itself is in the business model not the product, so we want to see clearly how this will work.
- Experience in the market / market validation. Feedback from the market, especially feedback from customers that addresses any obvious weaknesses.
- Channels to market / market strategy. Sometimes this is covered in the business model, but if now we want to understand how the company will drive awareness and sales. We don’t want to see how big 1% of the market is, based on the assumption that getting 1% of the market is easy.
- Competition: Who is it and how does this company compare. Every product no matter how innovative has a next best alternative, a competitor. Before the calculator people used slide rulers.
- Team: who is the team and why should we invest in that team. Angel investing is often more about the team than the product. The product may shift, the market may change, but this team has to deliver.
- Forecast / Plans: How much money by when.
- Exit strategy: Angel investors make money when a company is acquired. So we need to know who may be interested in acquiring the company. Entrepreneurs often don’t like thinking this way, but angel investors really only care about that exit.
- The Ask: What does the company need.
“And the best part: this should be done in 12 minutes. There is a lot of detail that entrepreneurs won’t be able to present, and we will get to that eventually but first we need to be interested. We want the highlights, the big picture story and we have to believe that there is enough there to delve into the details.”
We are looking for growth companies at an early stage with a strong business case. They often have little or no revenue but will have a prototype product and a well defined plan for growth. Some specific components that we look for:
Strong management team: only a strong team will be able to deliver through the challenges of starting up a company. A quality team is one of the key factors in making an investment – often it can be the make or break factor. Other things can be fixed.
An addressable market of over $100 million: this is really a minimum, $250 million is a better target, but sometimes we can find this bigger market through strategy or adjusting the offering. But the market must be large enough to warrant investment.
Defined market pain: this has to be clear and easy to understand. This is the issue you are trying to fix; from finding a ride to the desire to get to the moon, there must be a clear pain.
Clear product that addresses the pain: a new product or offering that addresses this pain. As a rule we are less interested in modifications to existing products. We want something that breaks the mold, is innovative, and offers the potential to take the world by storm.
Marketing strategy: a plan for getting this to the market. We recognize that this will likely change, but investors will be interested in the broad strokes right from the beginning.
Delivery and investment plan: defining what investment funds will be used for and what results the company expects to see from the investment. If it is buying equipment, hiring people or conducting research, there should be a clear plan linked to measurable expectations.