How to improve your pitch and hurdle a higher bar among VCs
TechStars’ Seattle Demo Day, where 10 start-ups pitch to a group of investors after three months of intense mentorship, Tice says that while watching “it quickly became clear that the bar for landing venture capital is high now.”
More specifically, she says, start-ups can’t approach investors with “a vague idea, a prototype, and statistics about market potential.” Tice presents a few positive elements the TechStar presentations had in common:
It’s getting nearly impossible, Tice contends, to obtain funding from investors while you’re still in the market research phase. By contrast, every company at TechStar provided “solid proof” that they satisfied a real customer need: either they already had clients or at the least had expressions of interest, typically from mid- to larger-sized customers with recognizable names.
Tice notes how each presentation also offered a specific customer example that described the customer’s problem and how the start-up’s product solved it. Investors are more easily convinced of your company’s value if they see a real client find value in it.
Solving a major pain
If possible, show that your product targets a problem that is so far unsolved. Just offering a new solution to an issue many competitors are tackling already “isn’t as much of an obvious home run,” Tice says.
Name-dropping is always welcome. The resumes of the founders presenting at TechStars were sprinkled with past experiences at major tech companies like Google and Apple, and degrees from top colleges including Harvard, Duke and Carnegie-Mellon.
Some money already
Almost every company provided investors with some guaranteed confidence by pointing out that others had already agreed to invest. Getting just one angel on board before your big pitch will make investors more comfortable getting involved, Tice explains.
Investors are typically pleased to see that other investors who have spent time with a given start-up as mentors are putting their own money in, Tice notes.
Know your pitch cold
A presentation that is highly polished and visibly assured has a much better chance at success. Ideally, founders should have their potential investor “looking to the back of the room to see if they were reading off a teleprompter.”