To raise money from investors, startup founders will need to make a pitch. A pitch can be either verbal or written (i.e., a series of PowerPoint slides), and succinctly lays out all the various reasons why an investor should invest money in your company. Unlike a pure marketing pitch (which is likely high on the glitz and glam accept), a VC pitch also addresses financial and market factors that can help investors assess the overall risk/reward profile of your startup company.
One form of VC pitch is the simple elevator pitch. This is a very brief, 30-second or less description of what your company does, why it’s unique and what it offers customers or clients. The term “elevator pitch” refers to a situation in which you might find yourself in the same elevator as a VIP investor. In the time it takes to get into the elevator and then off on the right floor, you need to be able to convince him or her that your company is quite an attractive investment target. That’s why many elevator pitches these days essentially boil down to some form of “We’re the Uber of [fill in the blank]” or “We’re the Netflix of [fill in the blank].”
While elevator pitches might get you an initial meeting with a VIP investor, if you want to close the deal then you will need to create a pitch deck. This is a set of 10-12 slides that outline who you are, what market niche you are looking to dominate, what your competitive advantages are, and what your short- and long-range forecasts for success look like. Most pitch decks in the tech industry are very concise, mostly because investors see tens, if not hundreds, of pitches a month. Very quickly, they need to be able to know if you are going after a big enough market opportunity.
Thus, the starting point for any pitch deck is merely stating the size of the opportunity you are going after. It’s best, of course, if the size of the overall market opportunity is north of $1 billion. That’s why a company like Uber or Lyft is so attractive to investors – they are not just going after a small niche market. Instead, they are going after a massive market like the “global transportation market.”
The next most important part of a pitch deck is describing your unique strengths and abilities so that you can completely dominate whatever market you are in. Most startups make the mistake of assuming that they are entire, 100% unique and that they do not have any natural competitors. If that’s the case, then think in terms of adjacent industries. For example, a company like Airbnb is not just competing with other “couchsurfing” companies; it is also competing with the giants of the hospitality industry (e.g., hotel brands).
The hallmark of a good pitch is making sure that you frame an issue from the vantage point of a potential investor. Why should they care about your company? And why should they risk their money on your company? When you start to ask difficult questions like these, it becomes much easier to come up with a pitch that will win over investors and get you one step closer to raising a round of venture capital.