Do you have a startup idea? Do you need to pitch your idea to others? Perhaps you want to engage investors, partners, or just the general public. Regardless of whom you are pitching to or its purpose, a well-crafted startup pitch follows the same principles. This article discusses those principles to assist entrepreneurs in developing a killer pitch.
What do I know about pitching? I recently won the 2nd prize in the Unimelb Startup Pitch Competition. My reasons for entering were of course the prize money, but more importantly, I just wanted to have fun. It was as much a learning journey for me as it was rewarding. With the help of reading tips online, watching other people’s pitches, and speaking to mentors, I learnt a lot about how to develop a business idea and how to pitch for it. My old boss used to say that it is not about what you have learnt; it is about how you share the knowledge with others. So here I am, summarising what I believe makes a good startup pitch, and hopefully you will find them valuable.
1.The Business
The first thing a founder needs to do is to develop a sound business. This sounds very basic, yet it is often neglected. If the business is not well thought-through, or the idea doesn’t make business sense, then even if you are the best public speaker, your pitch will fail. Many founders, especially those from a technical background or have no prior exposure to business development, jump straight to the solution, and they don’t even realise what they need is so much more than just a product.
So what more is involved in a business than a product? The starting point is a lean canvas, a good template is provided here. Essentially, it is a very high-level summary of the business, including headings such as problem, solution, value proposition, channels, customers, cost, and revenue. Each heading should have at most three dot points, and each dot point should have at most two sentences. It is a short and concise ‘map’ of the most important ingredients in any business, and since it is only a succinct summary and should take no longer than an hour to develop, it is a great starting point.
Once you have a basic idea of what the business will look like, it is time to give it more details and make it real. Time to develop a business plan! Here is a template for you. A business plan is a blown-out version of the lean canvas, which requires you to write down, in substantial detail, every aspect of the business. That includes all the headings in the lean canvas, plus things like business premises, organisation and management chart, role and staff definitions, insurance, risks, operation, marketing strategy, SWOT analysis, competitor analysis, action plan, and the financials. It should be detailed enough such that you can give it to other people, and they will know how to execute your idea.
It is worthwhile to make a note of the financials here. If your business is already in operation and you have real cost and sales figures, then use them. However, if your business is still entirely on paper or you are predicting into the future, then any estimates must be reasonably founded. Try to be realistic and justify your assumptions. Extravagant numbers will attract a lot of questions and will more likely expose holes in your business plan.
2.Research
Anything you say in the pitch must be supported by evidence, especially when it comes to identifying the problem and justifying the size of the market. What evidence is there to suggest this many people have this problem? There are a number of sources of research, including academic research literature, government reports, news article, books, or surveys you conducted yourself. This research is likely to take place simultaneously as you are developing the business plan, and it will inform both the business plan and the pitch deck.
Perhaps the trickiest part of the research is finding competitors. A Google search is nowhere near sufficient. At the Unimelb Startup Pitch Competition, one of the judges kept asking teams “have you heard of …?” and it was apparent that the judge knew many of the teams’ competitors of whom the teams were not aware. Even I was able to think of competitors that were not mentioned by two teams. This will immediately discredit your pitch, because you clearly do not know enough about the market and industry into which you are trying to break.
LaunchVic found that 80% of high-growth startup founders have more than 6 years sector or industry experience. This means they are already familiar with the competitive landscape. So if you are not experienced in your sector, then you need to go out there and ask your target customers how they are solving their problem currently. Approach experts in the sector and pick their brains. Be creative about how to solicit information.
In the pitch competition, I pitched the idea of a postnatal care home. My advantage was that I am a father with a newborn baby, so I lived through the pains of early parenting and I had spoken to obstetricians, paediatricians, midwives, and many other new parents. With my online research, I mainly focused on what problems new parents are facing and what existing postnatal care homes in other countries are doing.
3.The Slide Deck
Now we are ready to build the slide deck. A normal pitch should have the following sequence: cover slide, problem, solution, market opportunity, market validation, team, competition, business model, financial projections, the Ask, and closing slide. Each section should consume one page at most. Let’s look at each section one by one.
3.1. Cover Slide
The cover page is the simplest. First thing you need is a logo of your company. A simple search of ‘logo builder’ on Google yields many options if you need one. Then you need the name of your company, and it should have the largest font size. Next is a very short, extremely high-level description of your company, which should not be longer than 15 words. Note that this is NOT a tag line or slogan. It simply tells people what your product is. Think ‘I’m loving it’ vs. ‘fast food chain that sells hamburgers’ and ‘just do it’ vs. ‘sport apparels and fashion staple with celebrity endorsement’. Then with smaller font, you need the occasion of the presentation and the date.
There are two ways to start a presentation which are aimed at capturing audience engagement from the get-go: posing questions and telling a personal story. I started my pitch by asking if there were parents in the room and what they felt about their parenting experience. This immediately caught the attention of everyone, even those who were not parent, because they had to think for a split second if they were a parent. Then I told my personal story when I moved on to the problem section.
3.2. Problem
There isn’t too much to say about the problem section. As long as you have done your research right, there shouldn’t be a problem. Nonetheless, a personal story works quite well to convey the magnitude of the problem. If you are specific enough, the story will make the problem relatable to the audience and they can feel what it’s like to experience the problem. I told a story about my daughter being sick and we didn’t know what to do or whom to go to, and the emotions we went through. Once the audience appreciate the problem, you are halfway through achieving their buy-in.
3.3. Solution
Refine what you’ve written down in the solution section of the lean canvas and put it on this page. Also important to include is the value proposition, again part of the lean canvas. What value does your product bring to customers? Why do customers want your product?
Show is better than tell, so if you have a working prototype, demonstrate it. Please keep in mind that PowerPoint animations never work on the day of presentation, so do not include any animations in any of your slides. If your product lives in a web browser, then open the browser prior to the pitch, and exit out of the presentation during the pitch to show the demo.
Once again, a narrative works best here. Tell a story of a future customer, how their lives are made so much better by your product. I talked about how smooth and relaxing my life would be if I had access to a postnatal care home.
3.4. Market Opportunity
Market opportunity is an area in which we see lots of rookie errors. The biggest mistake is to say here is an enormous market and we will earn a fortune even if we take a small slice of it. It is seldom possible to justify such claim and it will most certainly raise eyebrows. The prudent thing to do is to use a bottom-up approach: discuss the early adopters first, which is a customer segment with very specific characteristics and small numbers, then move up and generalise into the bigger market. In my pitch, my early adopters were Chinese parents who gave birth in private hospitals in Victoria, and the bigger market was all parents who gave birth in private hospitals in Australia. This makes your business plan seem more realistic and feasible, and it demonstrates that you have a clear strategy to break into the market.
Some terminology. People talk about total available market (TAM), serviceable available market (SAM), and serviceable obtainable market (SOM). Those words are meaningless. Just think about the smallest group of people that are most likely to purchase your product and are easiest for you to capture, and then move up logical levels. Those jargons are provided here just in case your investor mentions them.
3.5. Market Validation
What you have done so far are mostly what you thought of on your own. They may make sense on paper, but you still have to prove they reflect the reality. Have you spoken to customers and really understood their problems? Have you followed the rigorous techniques of questionnaire and survey? Have you done a pilot of your product and gathered customer reactions? How do they like your product and how much are they willing to pay? Do your customers feel your product really solves their biggest pain points? The answers to these questions can only be obtained if you interact with real customers.
This was basically the reason we lost to the 1st prize winner. They wanted to teach financial literacy to high school female students, and they had spoken to two private girls’ schools about the challenges schools currently face and the interest in financial literacy program. They did a better market validation, so they won the 1st prize.
3.6. Team
Another common misconception is that people invest in the idea. This could not be further from the truth. People invest in people, because coming up with a great idea is easy; executing the idea is hard, and executing takes people. This is where the team comes in. Don’t bother putting resumes into your slide, because everyone has stellar resumes. Put a professional headshot and the most recent job title for each team member, then talk about the unique advantages they bring to the business. Ask yourself: if other people are doing the same business, what do they lack? For my pitch I said my partner and I are both Chinese, so we have the social network and language skills to penetrate the early adopter market. Also important was the fact that I am a father myself.
3.7. Competition
The aim of this section is to show your competitive advantage or differentiation. There are many ways to approach this. Probably the most popular, and the one I used, is magic quadrant. Just Google it and you will see many examples. It is basically a two-by-two matrix, and you choose two parameters to label the two axes. The parameters are artificially chosen to paint your company in the best light. You should ensure your company sits in the top right quadrant, and is the furthest from the origin. For my pitch, I chose professionalism for the horizontal axis and timeliness for the vertical axis, and the final verdict was that my business is the only service provider that provides instant access to health professionals.
Other methods of illustration include a table where you have product features for the columns and competitors for the rows. You make sure your company ticks all the feature boxes and all competitors have some features missing. You can also use a Venn diagram.
The most horrifying mistake I saw on the pitch competition was teams claiming they have zero competition. Even if you have no DIRECT competitor, people are still getting by and living lives, so they must be doing something to solve the problem. And this something, is your competition. One team wanted to install virtual reality game booths on university campuses to relieve student stress. But what are students currently doing about their stress? They might go for a walk, buy coffee, watch Youtube videos, listen to music, play sports, and more. All of these are competitors. For my pitch, I identified family help, nanny, GP, and even online search, as my competitors.
3.8. Business Model
A business can only be good if it can make money. So this section is where you talk about how you are going to make money. Where does your revenue come from? What is your pricing strategy or structure? How much does it cost to acquire a customer and what’s the customer lifetime value? How do you collect the money? You may also want to talk about how you will get to your customers. Make sure you justify the things you say.
3.9. Financial Projections
Here comes the fun part. There are almost too many financial metrics you can show here, so select the important ones. I displayed graphs of accumulated revenue vs. accumulated expenses and quarterly revenue vs. quarterly expenses. The former was to display the breakeven point and the latter was to show when the business starts to make a profit and expand. Other metrics that could be important to your business could be market penetration rate, client numbers, or paid customer conversion rate.
Typically, you would project 5 years into the future. If you have real figures, then use them. And in your future estimates, please be realistic and reasonable about growth and show sanity. You need to be able to back up your numbers. Investors are usually attuned to numbers and they are acutely aware of spreadsheet engineering, the practice of artificially manipulating numbers and formulas in a spreadsheet to make the numbers appear as desired. If your audience sense this is what you are doing, then you are ending your pitch on a bad note.
3.10. The Ask
Now that you have given them all your hard work, it is time for you to ask something in return. If you are seeking investment, then tell them how much you need in exchange of how much equity. Disclose any previous investments and additional investors in the current round. It would be wise to tell them what you need the money for, where you will be spending it, and the expected burn rate and runway. Avoid making too many demands or stipulating conditions. That gives people the impression that you are not open to negotiation and are not sincere about getting help from investors. All the detailed conditions and terms can wait after the pitch, where a formal negotiation process will take place.
If you are looking for a partner, then illustrate what traits and skills you are seeking, what kind of commitment you expect, and how you are going to reward them. Again, there is no need to give too much detail, just enough to entice them.
If you are just entering a pitch competition or raising public awareness, then you might not need the Ask.
3.11. Closing
The last sentence you say in a pitch should be a high-level description of your business in 25 words or fewer. Then it usually goes into a Q&A session.
What do you show on the screen during Q&A? Visuals have a subconscious effect on how people feel, even if they don’t realise they are being influenced, so the closing slide is tremendously crucial in getting the audience to be less harsh in the questioning. In short, you need to make the audience feel good about your business. What I did was I put up a single photo that covers the entire screen. It shows a happy family of three, with the parents holding up and kissing a baby between them, and the baby smiling towards the camera.
As part of the preparation, you should brainstorm possible questions that might be posed to you and formulate intelligent answers. This gives you confidence walking into the pitch. Lastly, you are allowed to think, so don’t be afraid to remain silent and think for a few seconds before answering. It is also perfectly OK to not know the answer, so say ‘I don’t know’ with honesty.
4.Presentation/Public Speaking Skills
- Up until this point, what you’ve done is generic. To make your pitch really special, you need to research the important people in the audience, find their past experiences, and pitch to their interests. This increases your chances of fulfilling the purpose of the pitch.
- A good pitch deck should have few words. If people are trying to read your slides, then they are not listening to you, and that is a failure. Each slide should have at most 3 points or messages, and each point should have fewer than 20 words.
- The point of the pitch is NOT to get investment or partner. It is to spark enough interest so that people want to speak to you offline, after the pitch. It is to make people want to have a further conversation to know more. So you really don’t need to show every single detail.
- Use visuals to replace words when appropriate. If you want pictures that are free to use commercially, go to Pixabay or Pexels. Or if you want icons, then Flaticon is a good place to explore.
- The pace of your speech should be slow. Talking slowly is the only way to articulate clearly. People have the tendency to talk faster when they are nervous on stage, so you might think you are going too slow, but you are really just speaking normally. Moreover, if people can’t comprehend what you are saying, you are just wasting everybody’s time.
- Take pauses in your speech. Pause for three seconds before you move on to the next slide, just tap your foot three times inside your shoe. And pause every time you finish saying something important. This gives the audience time to let the content sink in, and it really makes you seem confident.
- Body movement is essential. Your hands should not be dangling down; you should display gestures and wave in the air (like Donald Trump). When you click to the next slide, raise your hand to make the motion apparent, so that the audience can follow you. Pace on the stage, walk towards the right of the room, face them, look at the audience and make eye contact, finish a point, then move to the centre, repeat, then move to the left, and repeat. You get the idea.
- The pitch needs to flow smoothly and different sections should be cohesively linked together. So think really hard about what to say for the transition between slides.
- Get friends and family to proof-read your script. There just may be a better way to say something. I had my English teacher checked mine, and the improvement was drastic.
- Pitch to family and friends. Not only is this a chance for you to practise, they can also tell you if they understand your idea and comment on your performance. Your idea will seem obvious to you, but is it really?
- Record yourself pitching. I know this may be embarrassing, but it is better than being embarrassed in front of a real audience.
- The font size of the deck should follow the 32/28 rule. 32 for headings and important points, 28 for the rest. This will ensure people at the very back of the room can read your slides.
- TTT: touch, turn, talk. Use this when you need the audience to focus on any particular points on your slides. Use your finger or laser pointer to touch the word on the screen, turn towards the audience, and continue talking.
- Keep saying to yourself: “I am NOT here to sell something. I am here to share a story.”
tl;dr
- Develop a water-tight business plan; start with a lean canvas.
- Do the research and have evidence to back up claims.
- Engage audience from the beginning. Asking questions is a good way.
- Tell a personal story.
- Demonstrate your product.
- Focus on a small, specific customer segment (early adopters).
- Interview customers.
- Never say you have no competitor.
- Be realistic about the financials.
- Talk slowly. Take pauses.
- As few words as possible on the slides. Use visuals.
- Practise pitching to people.
bigWU 