PITCHING TO SOFTWARE INVESTORS – ARE YOU ASKING THE RIGHT QUESTIONS?
Pitching to investors does not follow a set of rules. That being said, there are some questions you may want to address as you and your team are practicing your dry runs in front of the mirror. Listening to investors as well as experienced entrepreneurs, we took a close look at 8 opportunities that could make or break your pitch. Handle with Care:
Who is your audience? Know that investors come with preconceived notions about what interests them. Reading about whom you are pitching to and in what they have invested in the past is a good indicator of what might peak their interest in the future. For example, some investors only want to invest in the early stage and if you’ve already raised over a certain amount of capital they will not interested. Learning about investment strategy will help make your pitch better. The other side of knowing who your audience is relates to the audience for your product. No software product is for everyone; if you can narrow down to a realistic audience you’ll be able to grab investors interests. And if you can plug in a word as to why you’ll be the preferred choice against your competition, even better.
What is the problem you are solving? Explain what you're doing simply and don’t fall back on buzzwords. Start with the problem not the solution. You should be able to state the problem in 3-5 sentences. If you can’t do that, you will likely lose your audience. Then go into the solution for an equal time. The best thing is to get the investor engaged as soon as possible in the conversation. According to Fred Wilson, co-founder of Union Square Ventures, a New York City-based venture capital firm, if you have 15-20 slides but only get through 1 because you got a conversation going “ it’s a good thing.”
Are you on the same page? Make sure you and the people you are pitching to are one the same page as far as language. You might want to avoid using acronyms (Like CRM, SAS, etc).
Do you have an “A” Team? Beyond the big idea you are pitching, you want investors to connect to the potential of the team. Investors look for the people behind the idea and ask themselves how credible are they? Does your team have individuals who are experts in their roles? Some other points that make an “A Team” are experience, adaptability and mutual respect.
Do you know your numbers? The numbers game is important but you have to know how to play it. Certain measures are stronger than others. In a product that is viral, investors may expect strong large numbers up front. In other industries, engagement numbers are more important. Do you know what the numbers game is in your industry and who is good at it? In cases of software investment, early success in key measures such as user growth, engagement, and retention or revenue could be critical to winning investor interest.
Can you show instead of tell? If you can show how your product works live in front of a room instead of using slides, investors will understand what you are doing faster and you will be able to create an actual interaction instead of a one-way street type presentation. Other options you may want to think about include asking the investors whether you can sit next to them instead of presenting, so you set the context as an opportunity to explore collaboration.
How do you make a sale? Can you go through your sales funnel and determine how much it costs you to make a sale through each of your marketing channels? If you can get investors on board on how to increase conversions at different stages as well as demonstrate that your business is scalable, you are on the right track.
Why now? They say that Timing is everything. Many investors will pass on a good product if they believe the market isn’t ready for it. Can you answer the question “Why now?” in a convincing way?
If you do get passed on, it’s a good idea to reach out to the investors you pitched to and ask why. Many will be honest with you about the particular point that made them make the decision. Sometimes no means ‘not now.’ Following up could lead to investment later.
Why We Pass Quickly On Things/Brad Feld
Fred Wilson Interview at Startup School NY 2014/ Fred Wilson