This piece is meant to be a guideline to help you strategize your next pitch and is based on my personal observations and experience.
A pitch to a VC can be broken down to 3 stages: before the pitch, during the pitch, and after the pitch.
1. Before the pitch
Do your due diligence
Like preparing for an interview, you should do your research on the VC you are meeting. Not all VCs are the same, here is roughly a breakdown to the different type of VCs out there:
- Early stage vs. late stage
- Different investment stages (seed / series A / series B / series C ++)
- Investment amount (ticket size is also tied with the stage, generally the higher the funding stage the larger the ticket size.)
- Sector agnostic vs. specific industries
- General VC vs. Corporate VC
Different investors will look for different investments, it is important to recognise these differences and aim for the investor that best suits you and the business. Similarly, the benefits will also differ between investors. There those who are able to help operationally, while some can provide synergistic capabilities or networks that is otherwise not easily obtained. So you really have to ask yourself “What kind of investor do I want?” and filter accordingly.
In addition to researching the VC, you could also research the specific individual that you will be talking to (eg. what is their background, what other investment they've made, etc). Ultimately many VCs have diverse teams and the specific investor you are talking to will shape your discussion.
Prepare a pitch deck
There is no strict format you have to follow, but there are some information that all pitch decks should have. For a comprehensive guide on how to make a pitch deck, I would recommend taking a look at Alejandro Cermades’s post on “How to Create a Pitch Deck”. If you want an even deeper guide, I would recommend taking a look at Mark Suster’s extensive guide on “How to Create a Pitch Deck VCs Will Love”.
Don’t forget to include relevant information, the goal is to save time so that you don’t need to exchange emails back and forth. If you’ve done your job of filtering the VC that fits you, you want to excite them with your progress by showing your key metrics. Examples of key metrics may include revenue, user growth, monthly active users, retention rate, GMV, or any other KPIs that your startup might have. Sometimes the absolute number doesn’t matter, what matters most is to see the growth.
One of the common oversights I see in many pitch decks is the lack of a relevant market sizing slide and a lack of a fundraising slide. It is crucial that you show the VC you know your market, regardless of your current stage. Provide sources to your numbers and highlight assumptions, make sure that the Total Addressable Market Size (TAM) is valid. Include a fundraising slide where you include all the details on your fundraising proposals. This can include raising amount, valuation, timeline, use of funds and milestones to achieve. It is always a great idea to cross check with advisors and other founders to see if the raising amount or valuation makes sense.
Before you present just remember that most early stage VCs don’t sign NDAs. If you have sensitive and confidential data that you cannot share, it is best to leave it out. We will always treat confidential information cautiously, our reputation depends on it.
Finding a VC
It’s best to get an introduction to a VC from a source they know - you can do this by reaching out to your network and asking if they know of any investors that you can be introduced to. Your networks are deeper than you think, so grab a coffee with an old friend and see where it leads you.
Cold emailing could work too. Be sure to go to their website and follow the specific instructions, sometimes your email can get lost if you don’t follow their instructions. Don’t write a lengthy email (in general), long emails get skimmed and people only look for the main points anyway. When you reach out through a cold email, don’t forget to send a pitchdeck so the VC can quickly determine their fit as an investor. Don’t be upset if they don’t respond, most likely you either don’t fit their investment criteria or they are backlogged with other deals. Just don’t forget to drop a follow-up note if they don’t respond.
You can also find investors by going to events. Often VCs will host talks, seminars, or networking events. Use these events as an excuse to meet them. Be sure to know who to contact, some managing directors don’t manage the deal flow or are just too busy with requests. The best bet is to target the analysts / associates / principals, these are the people who are most likely to be willing to meet and present the deal to the key decision makers.
Know when to fundraise
You should start fundraising early and factor in about 6 months for the end-to-end process, sometimes more. Plan your runway accordingly. This is a crucial point in the fundraising strategy, else the company might run out of money and you might have to shut it down.
2. During the pitch
As a prelude to the meeting, send the pitch deck in advance this will allow the investor to be prepared for the pitch so that the discussion will be more valuable. Be sure to be punctual, respectful, and professional (this also applies to your emails and calls prior to the pitch). You need to be comfortable in delivering the pitch so be sure to practice, be confident, and be enthusiastic.
Technical difficulties can happen at the most inconvenient of times, be sure to prepare multiple avenues to access your pitch or other supplementary materials (eg. A demo or video).
Keep your pitch short and to the point. A good mental note: If you have been talking for more than 5 mins straight on the one topic, it's time to move on. You likely have 30-60 min for your pitch and Q&A before the investor moves on to a different meeting. You may want to leave as much time as possible for questions. Focus on the main points, don’t leave a build up, and keep the drama constant; you want to constantly show great slides.
Be sure to have structure in your pitch deck and the pitch. Like any good presentation, your pitch should have a good flow. It is important to not go into “speech mode”, occasionally the VC might interrupt with questions. You have to be flexible and coordinate accordingly.
It is also important to explain your product clearly, so be sure to provide supplementary material to help VCs understand the product. If a picture is worth a thousand words, a demo is worth a thousand pictures.
Don’t forget to go into the specifics of your fundraising, this is why you are meeting them after all. Don’t be shy when talking about what you want and be sure to communicate your timeline and fundraising amount.
3. After the pitch
It is always nice to follow up after the presentation with a “thank you” email. Don’t forget that you can always follow up with any missed points or more information. You can also send a follow-up note if the VC is slow to respond.
Fundraising is all about relationship building, keep the VCs updated on your progress. A “pass” on a round doesn’t mean that they passed on the next rounds. Show the improvements on your main metrics and show them how you have improved. Nothing makes a VC happier than proving them wrong.
If you are considering on taking a VC’s investment it might be beneficial to do reference checks on them. You will be working with them for years, it's worth to get to know them.
Ask your network if they have had an experience with the VC and also ask how the experience was. You can also do reference checks by reaching out to the startup founders in their portfolio. Join events and find out if people have met them.
As you can see, a majority of the work you put in is in the build up to the pitch. By spending the time to do your research and prepare, you save up time by filtering the VCs you don’t need to meet and reduce the amount of unnecessary follow up conversations. Make sure you practice your pitch and keep a good flow. Make your pitch short, concise, and to the point. If needed, you can always follow up with the VC and be sure to update your favorite investors. Fundraising takes time - things happen. Don’t dwell on something that is constraining you because at the end of the day, your most valuable currency is your time.