Insights from my conversations with 20+ VC’s – PART 1

Embarking on a fundraising journey demands more than just a stellar idea—it requires the finesse to articulate your vision effectively. In this 5-part series, gleaned from insightful discussions with over 20 VCs, I unravel key insights to bolster your fundraising success. Assuming your venture boasts commendable traction and operates in a promising market, let’s delve into the crucial components of a winning pitch for early-stage businesses.

So what is a winning pitch?

A winning pitch is one where the investor actually understands what you are trying to build! 

It sounds so simple, yet why do so many founders struggle to communicate this? 

At its essence, a winning pitch transcends the allure of a billion-dollar market opportunity. Founders often stumble when they kick off with grand market projections, misjudging what truly captivates investors. The paramount concern for any investor is not the vastness of the market but rather an intimate understanding of who you are.

Startups don’t falter due to their inability to reach a $100 billion market; they stumble when founders lack the wherewithal to navigate that market or bring their product to fruition. Investors, in their initial assessment, are deciphering two pivotal aspects: Who is the individual standing before them, and what is the vision they’re labouring to manifest?

So let’s break this down a little more: 

  1. Who is this person?

One investor recommends ‘Picture your introduction as a coat hanger—start with the basics before adding layers’. So for example, address

  • Who are you (are you are technical or a business founder)
  • Outline your journey (MVP to revenue generation)
  • Sketch your backstory (key accomplishments)
  • Why are you building this product/company? (unravel the motivation propelling your venture) 

So before you start talking about the size of the opportunity and jump into the pitch deck, help them understand who you are, which will help explain why you are the right person to back to attack this problem and build this business. 

  1. What are they trying to build?

In simple terms, start by explaining what you are building and who you are building it for.  You may need to explain the space if it requires quite a bit of specialist knowledge. ‘Sometimes a founder is so keen to convey their knowledge of the market and their business, that they forget or are unable to clearly describe the proposition in a very simple and articulate way’.  

So Before venturing into the pitch deck, ensure clarity on your product or service. Founders occasionally immerse themselves in showcasing their market acumen, inadvertently sidelining a clear articulation of their proposition. Take the time to ensure that investors grasp your offering; it’s pivotal to retain their attention and set a solid foundation for the ensuing pitch.

It is also worth taking a minute to elucidate the rationale behind your chosen approach, market, and product. Disclose alternatives you discarded, demonstrating a profound understanding of the challenges and viable solutions. This not only portrays a robust comprehension of your domain but also hints at your strategic prowess.

Try and get across the core parts of these 2 questions within the first 5-7 mins of the meeting, before launching into your pitch deck. 

Craft a compelling narrative

During the early stages, the actual idea is less important if you’re a pre-seed/seed company – depending on the amount of capital you are looking to raise. Investors are not often equipped to judge the idea (unless they are a specialist in a particular market).   They are judging you more on ‘have you done the work in understanding the space deeply’?.  What they are very well equipped to do is to judge your understanding of the idea.

The reason why this is important is because investors know that ideas can change. Startups change or pivot markets or change the products based on what is working and is not working.  If you have deep domain knowledge and experience and shown you have thought through all eventualities, then the investor feels more confident that the founder is probably better equipped to tackle the challenges of finding product-market fit and scaling a company.

In conclusion, you must craft a compelling narrative! Your ability to tell a compelling story is crucial. Develop a narrative that goes beyond numbers and resonates emotionally. VCs invest in people as much as they do in ideas. Connect with your audience by sharing your vision, passion, and the problem your startup aims to solve.

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