The road of entrepreneurship is paved with many speed bumps and detours.
Often, rousing investors, co-founders, and team members to get involved in making your idea a reality is chief among them. If you’ve never done this before, you may have found it to be a challenging endeavor. As a pitch coach and judge at some of America’s biggest startup events, including Google Startup Weekend and AngelHack, I have had the opportunity to hear thousands of new business ideas. I have found that most people whose ideas are unsuccessful assume that they need to focus on explaining the features and technology of the new product they wish to create, rather than on the task of exciting and engaging the listener. However, as a serial entrepreneur with several multi-million dollar businesses behind me, I’ve done my fair share of pitching and I can tell you that to be successful, you must master the art of storytelling. Your pitch is a story that has seven chapters, each building on the previous ones and leading to the eventual statement you want to hear from your audience: “How can I get involved?” Want to know more?
Take a second to watch Rapid Growth Guy, Matthew Pollard, explain in more detail during his feature interview with Fox 7’s morning show, “Good Day Austin.”
Swaying Investors – The Seven Chapter Story
Chapter 1: The Story of the Problem
Your idea isn’t about the “what” it will do, but the “whom” it will help. You must start any pitch by illuminating for your audience specifically whom your product or service will be helping.
When you create the concept for a product or service, you consider its effectiveness from a global perspective. Yet the idea likely originated from seeing a problem exhibited in a single instance. Either you had the problem, or you knew someone who did. This thrust you into action to provide a product or service to help. If you want your audience to have the same belief in what you are doing, you need to recreate this inciting event for them.
Take a second to think about all the bullying in schools: obviously it’s upsetting, but can you really feel the pain of all the world’s bullied children? Chances are, that pain seems very abstract to you at this moment. However, what if I told you about my friend John, who at just seven years old was bullied mercilessly every day, and the shame and embarrassment he continually felt not knowing what to do about it? Wouldn’t you feel John’s pain more than a general “world” of bullied children? Wouldn’t it motivate you more to take action to stop the daily torment he endured?
So, to achieve this, in the first part of your pitch you must individualize the problem to one person, a story of a specific individual that you’re helping—and most importantly, how they feel having the problem. You can do this in one of two ways: if you yourself have experienced it, you can tell your firsthand story and take them on a journey through the emotions you experienced so that they may feel your pain. If it’s not your problem but it’s one you discovered though seeing someone else experience it, tell the story of that individual, the emotions they feel, and the effect that seeing someone go through all that had on you, motivating you to want to help them.
You may be thinking, why is this necessary? Well, I’ll let you in on a secret: people are becoming more socially conscious. They want to believe they are changing the world, and they want to be able to tell their wife, kids, and friends at the golf course that they are making a difference in addition to making money for themselves. If they can’t identify with the emotions of a real person in pain that they can help, your pitch will just blur into the countless others they’ve heard this year.
Chapter 2: The Scope of the Problem
Now that we have our listeners emotionally invested in helping an individual, we want to discuss how big this problem is, and expand it outwards to a community of people just like the one described in our story. To better elucidate this point, we can again use our aforementioned portrayal and expand it outwards—in this case, to all the world’s bullied children. We could show statistics detailing how many people are just like John, all suffering and feeling the same way and, if you can find them, reports of the problem being endemic and its costs to society. Once potential investors can understand the scope of this issue, they will also see that by fixing it, there is probably a great deal of potential profit to be made. That said, this is not the time to bring it up—you will do this in step seven.
Chapter 3: Imagine if…
Rather than going straight into your solution, allow your audience to imagine a solution themselves. When doing this it is important to provide them with some direction to ensure their imaginings are in the context of what you’re trying to achieve. For instance, ask them, “What if there was an online portal for John to get help?” Some will begin to imagine a big, incredible solution and will get very excited; others will also become enthusiastic about the solution they imagine, even if it’s quite simple. Allowing the listener to envision a way to help will ensure they are invested in fixing the problem. It also has another nice side effect: it forces the listener to imagine solving the problem themselves, stealthily sidestepping the often disastrous “why do I care” barrier.
Chapter 4: Present Your Solution
When you present your solution, the listener will inevitably connect the one they imagined to the one you want to make a reality. Those who pictured simple solutions will be amazed at what you have come up with, and want to get behind it. The more imaginative members of your audience will start suggesting additional features that they envisioned during step three because they are excited about your idea and want to make it a better, more grand solution.
Either way this is great news: after all, they are not saying”‘no.” However, this is also where things can get tricky. You must be open and excited about their ideas, and you can even suggest a few more of your own or numerous other applications you have envisioned, but finish by stressing the importance of starting with a minimum viable product, then working on these ideas as part of a phase two launch. I know that telling an investor you might not implement their ideas straight away may seem illogical—after all, if they are adding to the idea they clearly want to fund it—however, trust me when I say they will respect you for doing this and as a result, perceive you as a safer investment decision.
Chapter 5: Time to Tell the Truth
The scariest thing an investor can hear is that you have no competition. While sometimes this can be the case, it tends to stimulate concern as to why not. After all, if there is no one in the market space, perhaps there is no market for the product or service you are pitching. More often than not, however, it signals to the listener that the person pitching is either lying or has not done their homework, leading them to worry about who your competitors could be and whether your product or service could obtain market advantage over them. Either way, this frequently results in their passing on your investment opportunity. Discuss any potential competition openly, as well as the risks and how you will differentiate to obtain competitive advantage.
Chapter 6: Transition to the Ask
Now is the time for you to convey what it will take to get your idea out into the market. You want your potential investors, co-founders, and team members to see that you need their help but also that you’ve got a firm grasp of the numbers, and that you didn’t just pluck one out of thin air. To achieve this, you will need a high level breakdown of how the investment capital will be distributed, and how long you anticipate it lasting.
Chapter 7: The Opportunity and My Team
You have just asked for a lot of money, so make sure your audience understands why they should spend it. Now is the time to remind them of exactly how many individuals who are just like the one you discussed in the first chapter exist, and any research you have to support the potential market opportunity for a product that fixes or minimizes their problem. Next, you want to highlight why you are the perfect team/person to bring this solution to the masses. To achieve this, you will want to highlight your experience and credentials, as well as emphasize why these will give you a superior chance of success.
Finally, it is important to demonstrate that you understand what it takes to get an idea such as this off the ground, and excite the listener by showing that you already have runs on the board. To do this you should “open the hood” so to speak, and show them everything: your marketing strategy, early excitement and press, current customer acquisitions, current financials, projections, valuation expectations and finally, exit plan strategy.
While you do want to include a lot of information, this is not the time to get long-winded and/or vague. I have seen too many pitches fail in this final chapter by slipping into boring and pointless jargon. Be concise. Convey what needs to be communicated, but before you add anything to this section ask yourself these three questions:
- What is the message I’m trying to convey?
- Do I really need to include this? (and if yes):
- Can I say it in simpler terms or words?
Pitching an idea is really an act of transitioning the listener through a series of emotional steps. If they don’t emotionally connect with your dream, then your idea will fall on deaf ears. Once you master the seven chapters of pitching new ideas through a story, you’ll secure enthusiastic investors for every new business endeavor. That said, let’s take a second to see what you can do wrong:
The Top Three Pitching Mistakes
Number One Pitching Mistake – Asking for Too Much:
I know this will sound crazy to you, but a bigger number actually isn’t better. Many startups have failed not due to the idea being bad, but because they’ve taken too much money and now have higher deliverables. It is important to ask for the money you need, and to allow breathing room in case something goes wrong or is delayed. That said, when deciding on a figure remember that the number you decide will greatly impact your second round evaluation requirement, so don’t ask for more than you truly feel you need.
Number Two Pitching Mistake – Inflated Valuations and Projections:
Whether it is over-excitement in your idea or fear of not making an impression, it is tempting to inflate valuations and projections. Remember, venture capital investors hear thousands of pitches every day, so if anyone can smell a rat, they can. Instead of attempting to excite with outrageous numbers, show them well thought-out and researched projections that will allow them to see you as a savvy entrepreneur.
Number Three Pitching Mistake – Poorly Prepared Deck:
Many people go into a meeting seeking venture capital with a poorly thought-out, non-emotive deck. The best decks have:
- Just enough slides (around twenty for a sixty minute presentation)
- Short and concise wording rather than long paragraphs
- Images that engage emotions, rather than images for the sake of images
Your slide deck is just as important as your idea itself. If it’s not well planned and carefully curated, at best potential investors will not engage with your idea, at worst they will see you as lax in your approach. Either way, they will probably decide to pass.
Get the Help of an Expert
For many, obtaining venture capital is a way out of a 9-5 job that they hate, or a chance to go after a dream they have had for years. Why leave something that is so important to chance? Speak to “The Rapid Growth Guy“ himself and see how he can help you better your chances of success.
“It’s true, his enthusiasm is wildly contagious! We’ve found his valuable feedback immediately helpful to get us through several sticking points in our presentations. His business acumen spans across all aspects of business needs. It’s refreshing to get real-world actionable advice in a straightforward, easy-to-understand and implement kind of way. Thanks Matt!” – Amy Looper – OneSeventeen Media, Inc.