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Sweat, blood and slides: how a startup pitch works

Usually it’s not enough for a startup to find a promising idea and put together a quality product. The pitch session decides a lot - the presentation of the project to investors. Let's talk about what pitches are, what famous investors, entrepreneurs and the team of our accelerator StartupDrive advise to pay attention to when preparing them, and where did the term “pitch” come from in the business culture. 

We prepared this material before the start of the virus situation, we wanted to share knowledge about offline pitches, but we want to note that many statements are relevant for protection online. And besides, when everything calms down, many of us will need new knowledge. 
 

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From baseball to reality shows


In the modern business vocabulary, the word “pitch” came from sports . In baseball, it means giving a defensive team. The task of the pitcher is to throw the ball in such a way that the opponent misses, and the team-mate caught him without any problems. Due to the fact that players cannot talk, each pitch is a communication puzzle.
 
The success of the advertising “feed” also depends on the communicative abilities of the seller - and the desire of the buyer to meet him. Therefore, in the 40s of the last century, they began to describe this baseball metaphortrade presentations. At that time, there was a boom in direct sales in the United States — middle-class housewives everywhere became distributors of Tupperware and Avon — their earnings directly depended on their personal ability to talk about the product and “hook it up”. So the word took root in American culture.
 
In the second half of the 20th century, many companies began using pitches to select promising ideas. This practice is especially well established in the entertainment industry, where supply sharply exceeds demand. Media companies can now just wait until they get interesting material for the film or series. Previously, in order to embody the idea of ​​a new show, it was necessary to arrange a personal meeting with an influential person. But over time, this process was put on stream, and festivals began, where a panel of experts and media managers evaluates hundreds of ideas per session. By the way, this term is also used in Russia in the film industry in Russia - to receive state support, film creators must go through a pitching at the Film Fund!
 
In the 80s and 90s, the term “pitch” began to be used in our usual meaning - “presentation of a technological startup with the aim of obtaining investments”. At this time, home computers and their components became affordable enough so that amateurs could develop IT products literally without leaving home. As computer technology became more popular, more and more ideas entered the market. And the new category of investors interested in such investments was just glad to hear them. So, almost simultaneously with the emergence of modern startup culture, the culture of pitching in IT was born.
 
Today, the life cycle of an average startup is built around various pitches. In order to get into the accelerator, it is necessary to "sell" the idea to those who conduct the set. In order to get the first round of investment, you need to present the project to business angels. And so - until the moment when such investments cease to be necessary. The concept of "business pitching" has even penetrated popular culture thanks to reality shows like Shark Tank and Dragon's Den, whose presenters select the best business ideas proposed by ordinary people.
 

What are pitches


The most primitive form of pitching can be called “ napkin pitch ”, literally pitch on a napkin. The idea is that over a cup of coffee, using only improvised means - a pen and a napkin - explain to the investor the essence of the project. Despite its simplicity, the napkin pitch concept is actively used by modern theorists and practitioners of design thinking. So, Gene Lidtka, professor at the Darden School of Business (University of Virginia), suggests dividing the napkin into four quadrants during the pitch. In the upper left corner is a general description of the proposed concept. The upper right corner explains what needs it meets. The remaining two fields occupy a description of the technical resources necessary for the implementation and the proposed method of project monetization.
 
You should not expect overwhelming success and instant investment from such a pitch - the authors of the modern concept of four quadrants themselves emphasize: the format is good primarily to explain the essence of the idea to an outside person (mentor or expert) as much as possible - and get a valuable feedback from him. In addition, such pitches - if they are conducted within the team - help stimulate the process of generating new ideas, consider alternative solutions and answer the question “What if ...?”.
 
Another popular pitch format is elevator pitch, pitch in the elevator. The legend saysthat in the golden age of Hollywood, screenwriters chased after the producers, and shared ideas where they managed to meet - even if this meeting took place in an elevator. The concept of “elevator pitch” involves the preparation of effective speech, which does not require visual accompaniment and takes less than a minute.
 
Such a presentation should not contain narrowly professional slang, descriptions of complex concepts or frankly controversial statements, so that it would be easier for an untrained listener to understand your proposal - and remember its essence. In modern realities, the concept of elevator pitch is, for example, a short self-presentation at a business event - when it is important to tell the audience or interlocutor who you are and what you do, leave a good impression about yourself and not spend too much “airtime”.
 
Most modern pitches are full-fledged presentations. Slides for them are called “pitch deck” - the word deck (card deck) in this context has been used since the time of cardboard posters and slides for slide projectors, which caused associations with a deck of cards. Preparation of slides and, in fact, performances is a whole art. “Theory” is analyzed in the framework of open courses on entrepreneurship (for example, in courses at the University of Maryland and the Paris Polytechnic School, pitching is placed in a separate subsection). Practice in conditions close to real, offer business incubators and accelerators - not to mention a variety of services and trainings designed to enhance the skills of public speaking and pitch deck preparation.
 
If napkin pitch and elevator pitch allow you not to miss the moment and talk about the project “between things,” then the “classic” pitch is a planned performance in front of a well-prepared audience: investors, experts, business accelerator employees, and representatives of large businesses. Pitches of this format are usually divided into short (lasting from 3 to 7 minutes) and long. Short pitches are resorted to during various “mass reviews” of startups - at conferences, hackathons and demo days (the day of final performances as part of the “release” from the accelerator). A “large” presentation may be required for a personal meeting of the project with the fund or investor - but even in this case it is usually advised to devote no more than 20 minutes to the pitch : the rest of the time will be required for communication and answers to questions.
 

Pitch 101: tips for a startup


Typically, a “classic” pitch covers the following topics :

  • a story about the problem and its solution, which the project offers;
  • data on the market the startup is entering;
  • project business model;
  • unique technologies and developments of the company;
  • competitor analysis;
  • plans for customer acquisition, marketing and product distribution;
  • story about the team;
  • required funding and investment spending plans.

Dave McClure, co-founder of the venture fund and accelerator 500 Startups, advises opening a similar presentation with elevator pitch - first briefly explain the essence of the project to investors, and only then move on to the details. He speaks about this in his lecture on the intricacies of preparing the pitch ( according to his colleague, Startupbootcamp mentor Alexander Jarvis, the record has not lost its relevance despite the fact that it was made in 2009).


 
Most likely, investors will want to learn more about the founders, their technical background. And also about how long they know each other, how the shares in the company are distributed between them and how much time they devote to the project (especially if one of them works in the startup part-time).
 
In addition, investors highly appreciate the competitive advantages - therefore, everything that can be attributed to them (the expertise of employees, the successful business experience of the founders, their own development and know-how) deserves special attention during the presentation.
 
Mike Raab from Sinai Ventures recommends focusing your speech on why you are interested in supporting these particular investors. As a rule, the reason is that the fund or business angel already has experience working with similar companies and expertise in your market. Therefore, it will be useful to show your similarities and differences from companies that already exist in the investor's portfolio.
 
Business Angel Brian Cohen, the honorary chairman of New York Angels, advises focusing on financial specifics, in particular, on the story of product monetization. Dave McClure notes - if a company has several channels of monetization, it’s better to talk in detail only about one of them. In the conditions of limited time, the attempt to “cover everything” may look like you are rushing about and cannot choose the most effective way to earn money (you can talk about the rest in the framework of the question and answer section).
 

How many slides to prepare


 For pitch companies, as a rule, prepare about 20 slides - this is the conclusion reached by researchers from DocSend. In 2015, she, together with the Harvard Business School, analyzed 200 project presentations that managed to attract investments worth a total of $ 360 million. DocSend also calculated how much time, on average, investors study a particular slide - the top 3 most popular ones included slides financial performance, team and competitors.
 
On the issue of the optimal number of slides, statistics and expert opinions differ. Both Dave McClure and the well-known business guru Guy Kawasaki are advised to make the presentation half as long and limit themselves to 10 slides (Kawasaki even has a 10/20/30 rule- 10 slides, 20 minutes for a presentation, 30 points - the minimum font size for presentation).
 
Former Apple CEO Jean-Louis Gasset recommends taking an even more radical approach. In his opinion, all that is needed for a successful presentation is three slides. The first describes the expertise of the team, the second talks about how the product will change the lives of users, and the third reveals the issues of monetization. According to Gasse, this information is enough for investors to understand whether your product is of interest to them. If there is interest, questions will follow a short presentation. If not, you will say goodbye without leaving a bad aftertaste, characteristic of long and tedious performances.
 
 

Add what is important to us


Regardless of whether you are sending a presentation to an investor or preparing a face-to-face presentation, it is important that the reader / listener has a single picture. This effect can be achieved if you prepare a pitch as a story in which each thought is connected with the previous one as the details of the puzzle.
 
In our StartupDrive accelerator, we produced the following slide sequence, which allows you to turn the pitch into a complete story:

  • Client and his problem. Often, a startup focuses on the problem that it wants to solve, but forgets about the client - the same person who is faced with this problem. Knowing your client and understanding why he has a problem gives a startup an extra 10 points.
  • — , . — , , , , . ( ), AppStore — «».
  • — , , -. 3-5 , «» . - , , — , .
  • - — , , , unfair advantage . — , .
  • — , . , , , ; , , , . , , .
  • A sentence is any clear and well-formulated sentence for an audience listening to a pitch or reading a pitch deck. For foundations and business angels - a request for a certain amount of investment, for accelerators - startup ideas that he expects to receive from an accelerator, for corporations - the parameters of a possible pilot.
 
 
 
Regardless of where and in front of whom you are speaking, how long your presentation is, experts point out one thing: the best thing about pitching is not the story itself, but the discussion that arises after it. Your ability to carefully listen to the interlocutor and answer questions will have no less impact on the outcome of the meeting.
Like baseball, in the pitch business, this is just the beginning of the game.


 

Accelerator StartupDrive


In the second accelerator program, the selection consisted of several stages.

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  • — 40 . , , : , , . , « » , .

As a result , 9 startups reached the final of the program . Every month, the company held a large demo day for startups. So we look at intermediate results, discuss which hypotheses should be changed. And by the end of the program, they were able to understand exactly which solution was the most promising. 

By the time of the adoption of measures to combat the spread of COVID-19, we quickly reoriented and stopped holding face-to-face meetings - replaced with online traction meetings, bought paid services for the ability to connect participants in large numbers. 

The final demo day and pitching as part of the Israeli startups contest are also held online. Want to see how the online demo goes, click here . We start on May 27 at 14:00.

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