Tips on Crafting a Top-Notch Startup Pitch

This was originally published in Factory Berlin’s Magazine

Being able to pitch an idea to strangers is a necessary skill across many industries. For entrepreneurs and startups, though, pitching your business in a compelling manner is especially important because it can be a stepping stone to landing potential investors, partners and supporters.

So what are the ingredients to crafting a credible, persuasive and outstanding pitch? From creating the pitch deck to delivering your presentation, we spoke to two experts in this realm for their insights on the topic.

Know Your Audience

Before you even begin to craft your pitch, it’s important to consider your target audience, said Anders Lykke, VP of Sales at Priori Data, a mobile app data and analytics provider based in Berlin. A core part of his role is to pitch Priori Data to potential clients and partners as well as to spread the word about the product at conferences and events.

“It always depends on what you’re trying to achieve with the pitch,” explained Lykke, “Are you trying to create general excitement about the product and your company? Or do you want to lay the foundation for a particular conversation?”

To gauge your audience, he suggested asking yourself these questions: Will you be presenting in front of a diverse group of entrepreneurs at a conference? Or a crowd of mobile industry professionals? Will you be at a local community event? Or pitching to investors in a boardroom?

Once you have these parameters down, it’ll be easier to cater your pitch, in terms of length and structure, accordingly.

Succinctly Describe the Problem and How You’re Trying to Solve it

One of the most important goals of a pitch is to convince people – in a short amount of time – why you and your company are relevant, aka why they should care. It’s probably best to incorporate this aspect at the beginning of your pitch presentation, so people know what they’re getting into right off the bat.

Again, keep in mind when explaining the problem that how broad or specific you delve into it should be dependent on who you’re talking to.

There are a number of ways to go about structuring your pitch, but what works for Lykke is painting a picture of the problem scenario at the very start. “Once I’ve outlined the pain point clearly, I talk about the potential impacts of the problem, provide context with market data and then go on to paint a picture of how we’ll solve it,” he added.

Back Up Your Points with Data

Establishing credibility during a pitch is crucial. But, how do you do that? “Avoid general statements and use numbers as often as possible,” said Candy Behunin, who heads marketing at Unicorn Pitch, a pitch deck design service for startups.

Lykke shared a similar opinion and stressed that it’s also critical to use data from various reliable sources to help people understand the problem you’re tackling as well as the impact the solution might have.

Create a Professional Pitch Deck

The pitch deck is often an important element accompanying your pitch. “Picture it as a sales document that needs to speak for your company,” explained Behunin, “Sometimes, investment decisions will be made with you not being present and with people whom you have not had a chance to speak to. All they see is what their partner has told them – and your pitch deck.”

So make sure your deck factually correct and highlights only the most critical pieces of information.

When creating a deck targeted to investors, the Unicorn Pitch team suggested including information about the opportunity, market, technology/product, KPIs, business model metrics, team, why you/how can you defend this great opportunity as well as the status of funding.

Seasoned German entrepreneur and investor Felix Haas, who also backs Unicorn Pitch, added: “As an investor, what immediately catches my eye in a pitch deck is seeing that there are great co-investors who are already committed. A big turn off for me is when founders come in with an unprofessional-looking presentation.

If the slides are for a pitch to a more general audience, go for a streamlined deck that focuses more on a compelling story. 

Take a Deep Breath

Getting nervous before a pitch is not uncommon – even for people who have done it a hundred times. Priori Data’s Lykke, who also has a lot of experience in the realms of acting and stand-up comedy, said a good way to combat stage fright is to tap into your “inner peace zone” for a couple of seconds.

“Generally, a couple of deep breaths goes a long way to calm yourself down before you go on stage,” he added.

Be Yourself

Some people thrive on stage, while others recoil at the thought of it. And yet, there are successful entrepreneurs that come from both categories. It’s not necessarily a matter of either/or. Of course, for some people it’ll require more practice but regardless of which group you fall into, being authentic plays a big role when delivering a compelling pitch, said Lykke.

“When carrying yourself on stage, it’s incredibly important to present in a way that is in sync with who you are as a person – don’t try to play role of someone you’re not,” he said adamantly, “It doesn’t matter if you’re introverted or extroverted, it’s about owning yourself and finding a way to present the pitch that aligns with your personality. Everyone knows it can be difficult to pitch on stage, but by simply being genuine, you can build a great level of empathy in the audience.”

Leave the Audience Wanting More

When pitching, the last impression is equally – if not more – important than the first impression. On this train of thought, Lykke said, “When pitching a business, you have to leave the audience energized and excited… And people get energized and excited about great ideas.”

This was originally published in Factory Berlin’s Magazine.

What to Know About Raising Seed Funding

This was originally published in Factory Berlin’s Magazine.

So you have an idea and now you need some financial support to get the ball rolling. At this point, seed capital can be helpful. Although the seed round is usually smaller and can come from many funding options (friends, family, incubators, angels, VCs), it’s important to be strategic, because it builds the foundation for later rounds of funding.

Since there’s no formula for how to do this and navigating this process can be overwhelming for budding entrepreneurs, we spoke to two seasoned VCs about some key things a fledgling entrepreneur needs to know when raising seed financing from a venture capital firm.

Consider Timing and the Amount

A common question among new founders is: When is a good time to raise a seed round? When a startup thinks they’re “onto something”, the time could be ripe to examine options for seed financing, said Florian Heinemann, founding partner of Project A Ventures, an early-stage investor and VC focusing on e-commerce, marketplaces and SaaS.

“When they see the first signs of their idea potentially develop relevance, then it makes sense to think about whether this development could be accelerated by some additional funding to sharpen the business model, and pre-finance the development of an initial configuration,” he added.

As for the amount, seed capital can range from €100,000 to €1 million. “I always find it difficult to tell anyone there’s an absolute amount that is correct”, explained Gabriel Matuschka, partner at Fly Ventures, a VC firm making seed and pre-Series A investments in the areas of machine learning, marketplaces and SaaS across Europe. “It’s a case-by-case and company-by-company thing. It really depends on the type of company and what you can do.”

Typically though, the goal should be to raise enough to hit the next defined milestone with a bit of a buffer.

“The seed round should be a step towards raising a Series A, so founders have to ask themselves what elements of their business they want to have proven by raising the Series A,” said Heinemann.

“Often, this involves demonstrating first commercial traction, some understanding of profitability on a per customer level, and first scaling of the organization. Ideally the money should give them a runway of 15-18 months.”

Be Clear and Concise About Your Story

“At the seed stage, it’s not so much about metrics as it is about clarity and purpose. Investors want to know, ‘Who are these people and what are they doing?’” said Matsuschka, who has worked on both sides of the table – as an entrepreneur and investor.

Being able to describe your idea and talk about your team in a compelling manner is more important than showing metrics at this stage.

Founders should know how to talk about their team, their product, the market, their story, their customers, the pace of product development, etc. in a very easy-to-understand and concise way.

Educate Yourself on the Process

For entrepreneurs, the sheer amount of information at our fingertips can be both a blessing and a curse. When looking for resources on raising seed capital, Matuschka suggested looking at Seedsummit to get a grasp of core terms in venture, as well as getting an idea of the kinds of term sheets people use for UK or German deals.

“If someone asks for 30 percent of the company, that’s probably wrong, if someone asks for more, that’s very wrong. If someone asks for 2.5 percent and gives you a million, the likelihood of them being a crook or not knowing what they’re doing is very high. There are certain ranges that are okay in terms of valuation, but the cool thing is that most of these things are already in the public domain today,” he added.

Heinemann advised that entrepreneurs should educate themselves on the concept of vesting, cliff and liquidation preferences. When in doubt, consult experts.

Don’t Forget About Speed

It’s not uncommon that startups go through a number of rounds of funding in their lifetime, so try to be as efficient as you can when going through this phase.

“Speed is a critical element at the seed stage. A typical company in this stage is so small that this round occupies or distracts oftentimes many or all of the founders,” explained Matuschka. “Trying to get done with it sooner than later is an important element.”

Find the Right Entrepreneur-Investor Fit

Regardless of how many investors participate in the seed round, it’s crucial to think about the reputation of your investors and whether they’re a good fit for your vision.

“There are great investors that are probably just not great investors for you,” said Matushka. “Getting a sense of who the right person is for you because they understand your space and they’ve done something there is key.” Additionally, Heinemann said that it’s important to be aware of the likelihood of participating investors to do or support follow-up rounds.

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