Knowing Your Business v. Helping Others Get to Know Your Business
Last week, Jonathan and I had the privilege of joining an SMU MBA class as the judges for the final assignment of the class: pitching a business born from a mod-long hackathon. During the break, we held a small Q&A session and one question we were asked by a student was, “how far are we from the real thing you guys see on a day-to-day basis?”
To be fair, this class strictly focused the ideation, market research, and MVP demo of an idea so the answer was quite far. However, SMU does a nice job of offering entrepreneurial-minded students the chance to take classes which get them closer to a finished product.
This interaction did inspire me to finally begin writing a series of blog posts I have been contemplating on pitching and the fundraising process. I’ve long assumed it would be worth writing a few thoughts on these topics but wanted to do so outside of the standard pitch deck structure, which I cover extensively by providing examples in my previous 50+ Resources for Entrepreneurs post.
Most venture investors at the seed-stage will tell founders one of the first things they are looking for is a strong team. Particularly, we are looking for great leaders and communicators who generate a lot of energy for their team.
These leaders take the noise, rather internal or external, and produce a clear message from it. For me, the clear message is key especially in a world where you have your consumer’s attention for less than 60 seconds in most cases.
This skill manifests itself in several different parts of the pitch meeting, but none more obvious than the initial setup explaining what the company does and why it does it. Here are a few tips on how to clearly explain the mission while getting investors excited to hear the rest of the pitch.
1) Let the audience create their own frame of reference and ask a question to which you know the answer. For example, in this Y Combinator video, Sam Altman is pitching a company from his cohort that is an all-in-one app to house all of your personal EMR’s.
The first question he asks a potential angel investor is, “What do you believe the biggest problem in healthcare is today?” Sam has actually done something very clever. When the prospective investor says, “rising costs,” Sam immediately educates him on how this new product is going to drive down the exponentially rising costs in healthcare.
2) Avoid the “imagine a world” type statement, and tell a personal story instead. We’ve always been a fan of the saying “the best inventions serve the needs of the inventor” primarily because it often translates to founders being more likely to deeply understand their customers.
The team at BioLum does an amazing job using this strategy in their pitch. All three founders are asthma sufferers, and as a result solving the problem is deeply important to them personally. The most successful founders are often obsessed with solving the problem over all else; if that problem is personal to an entrepreneur the desire to find the solution is amplified by a significant amount.
Over the next few posts, I will continue to focus on nuanced tips and wrap up with a post on how we think about running the process of fundraising including this deck on which we will elaborate further. Until then, I’ll be in Austin for Startup Week until Wednesday. If you’ll be there, feel free to find me and say hello.