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Rarely-used Trick can MASSIVELY Improve your Startup Pitch
By Rob Kornblum | Pitch
As a startup coach and angel investor and former VC, I see a lot of investor pitches.
Most of them are OK, a few stand out but many are quite bad.
Where do pitches go wrong?
The ones that are bad, or just so-so, tend to be flat. Often, the founder tells the investor all about the product, with a heavy emphasis on the product features. Most entrepreneurs are quite proud of the products they have developed, so this is their emphasis.
These founders love their features- “Our new whiz bang invention does THIS and THIS and THIS OTHER THING. Isn’t it amazing?”
Well maybe it is and maybe it isn’t.
But investors are not just investing in the PRODUCT. They’re investing in the company. And the company exists in a world of other companies. Those other companies aren’t just competing for investment dollars. Far more importantly, those other companies are competing for mindshare with customers.
(If you are struggling to figure out the basics of creating a pitch deck, there are a ton of great pitch examples and blog posts out there that detail what to include. I suggest you read this first from Garage Ventures.)
One big reason that entrepreneurs focus on product features is because they don’t like to sell. Hell, most people don’t like to sell. Selling feels “gross.” By talking about product features, the founder focuses on what s/he knows. Although it doesn’t work well in a pitch, it feels “safe.”
On the flip side, investors don’t want to feel “sold.” They don’t want you to make wild claims or boasts. That’s a turn off. It feels like being on the receiving end of a telemarketing call.
“OK wait,” you’re thinking. “I don’t want to sell and they don’t want to be sold. But I need to sell them on my company to get their investment dollars. So what exactly should I do?”
The trick is to find a balance, to sell with subtlety. The easiest way to find that balance is to “position” your product and your company, not only in your pitch, but before you even start. Here is how to do that.
Before you even start writing your pitch, start by positioning your product and your company. It will make your pitch WAY better. One of the most effective ways to do this is to use a traditional positioning framework that marketers use.
What is a positioning framework? It’s a tool that marketers like Geoffrey Moore and Seth Godin have used for a few decades to establish a unique spot in the market for a product or service. I know that can sound pretty “academic” so I’ll give you a few examples.
Lexus:
For affluent drivers who seek luxury vehicles of the highest quality and reliability, Lexus constantly pursues the finest materials, the best technologies and the ultimate in quality control to ensure the perfect luxury vehicle experience.
Aveeno:
For women who believe that nature has the power to enhance health and make life beautiful, Aveeno is the brand of skin and hair transformation, that provides naturally healthy skin and hair, so that you feel naturally beautiful. Unlike conventional skin and hair care brands, Aveeno products are selected from nature, proven by rigorous scientific testing, and recommended by professionals. (Source: Gurulocity.com)
When a marketer does this exercise, his/her goal is to establish not just the feature set, but the BENEFITS of the product in the mind of the consumer. For Aveeno, those benefits are “feeling naturally beautiful” and the confidence to choose Aveeno because the products undergo rigorous testing.
When you do your own positioning exercise in preparation for your pitch, your goals will be a little different. Your goals will be to frame these questions:
Why does your company exist?
How do customers FEEL about your product and company?
Where does your company fit? How is it different?
How are you going to win?
A positioning framework can be done in a pretty step-wise fashion.
Here is the actual framework itself, as developed by Geoffrey Moore, author of the world-famous marketing book Crossing the Chasm:
For (target customers)
Who (have the following problem)
Our product is a (describe the product or solution)
That provides (cite the breakthrough capability)
Unlike (the competition),
Our product/solution (describe the key point of competitive differentiation and the benefit)
One really important point of emphasis is that a positioning statement is NOT a tagline. It can help develop a tagline, but a positioning statement is an internal exercise that is informed by customers.
After you create your positioning statement, you want to weave the elements of it into your pitch deck. There are a lot of ways to do that and a good number of pitch deck slides it can impact.
In addition to your product demo (if you have one), these slides are definitely ones where you can incorporate your positioning:
About Us: Consider putting in your positioning statement in its entirety, or a variant of it. I can’t tell you how often it happens that a company is partway through the pitch and all the investors still don’t know what they do. This will solve that issue.
Team: Highlight where your team’s experience fits your unique positioning. How do you know about these customers and their issue? How did you come to your unique solution?
Product Demo: Sure, show the features, but focus on benefits and tell a story about your most common user or customer avatar
Competition: This should be obvious, but position your company as uniquely solving users problems and competitors as having gaps
Competitive Advantage: This should be about how your company solves the pain of your customers. You do it with features, but it produces benefits.
Traction: Show your growth, but focus on why you’re growing. Hint: It’s because of the benefits you provide to customers
Go to Market / Business Model: While this isn’t per se about your benefits, you do want to show that you know your customers and have a good feel for how to acquire them.
You can take it one step further by creating a story about your prospective user or users. What was their life like before your product? How is it better after? Would they be disappointed if your company/ product went away?
Even though you may not have come from the marketing function, you are the chief marketer when it comes to your investor pitch. Your prospect is the investor sitting across the table. Think about his/her decision process for a minute.
Investors care about your product, your market, your management team, and your financial plans. They really want to know how you’re going to win, and win big. Winning requires customers who care deeply about your products.
If you convince investors that you know your customers and that those customers care about your solution, you’ll be well on your way to capturing the funding you need.
