As an entrepreneur, the ability to clearly articulate what it is your business does in layman’s terms is a critical skill every entrepreneur needs in their toolbox. While some might say the ultimate expression of this is the investor pitch, I would say that as an entrepreneur, you are always pitching your business. Every sales call, networking introduction, employee interview, and really any first-contact communication is a type of pitch. If you can do those things well, you can probably pitch well, and conversely, if you improve your pitch, you probably improve your ability to communicate about your business in those other scenarios.
Coincidentally, Bunker Labs has joined forces with USAA to support their 100th Anniversary Pitch Contest, which is already accepting applications in Washington DC through April 4th! So there’s never been a better time to review your current pitch.
We Can Help!
So, what we’ve done here at Bunker is build a series of articles to get you up to speed and ready to hone and give that pitch. Be sure to check back in with us over the next year, as we’ll be releasing the following articles:
- Pitching 101: The Pitch Lengths and Vocabulary
- Pitching 102: What Goes in the Pitch?
- Pitching 103: The Leave Behinds
Extra Credit: USAA 100th Anniversary pitching competition Pitching Coach Chris Carlson offers some pro-tips!
For more advice on pitching and building that all-important pitch deck, check in with the Transition Podcast Episode 31, where host Mike Steadman interviews William Lutz on the subject.
What Goes in the Pitch?
Your pitch communicates two ideas about your business as clearly and concisely as possible. First, you need to clearly explain what problem your company solves and how you do it. Second, and more importantly, you need to make the audience emotionally invest in the idea you’ll be successful and profitable with your approach to doing that.
Everything in your pitch—every slide, every sentence, every choice—should be serving one of those communication goals.
Usually, this is done by telling a story in three parts. Part one illustrates the value proposition of your product or service, another way to say that is that you show what problem you’re solving for the audience. Part two shows the size of the market willing to spend money on your product or service. And finally, part three convinces the audience your business will succeed by capturing and servicing that market.
There is no one correct way to organization a pitch, but this general organization is a collection of best practices you can use for your quick pitch or your full pitch. You can dig into more details with the full pitch, with each topic getting one or more slides. Your quick pitch, on the other hand, might cover multiple topics presented below on a single slide, glossing over some elements to keep the pitch length down. For more on pitch lengths, reference Pitching 101.
We are going to get into the weeds a little bit, here. A lot of that content is to create a resource for folks looking for advice that speaks to some of that minutiae. That shouldn’t be taken to mean that every topic listed here is equal in weight and importance. The most important thing is connecting with your audience, and making it clear what your business does, and how that alleviates the end-users’ pain-point. Beyond that, how important each bit is to your businesses’ pitch specifically might vary widely depending on what stage you’re in, what sector you’re in, and 100 other factors.
Part One: The Value Proposition
Our main goal in this first part is to communicate the pain-point or problem your company solves for end users. The problem needs to be something specific people can empathize with and understand—a point of agreement. You want to create an emotional connection with the audience. And your solution must draw a straight line from your product or service to this problem.
Potential investors don’t want to be kept in suspense. When you begin your pitch, the first few sentences out of your mouth should state who you are and what it is your company does in the most plain-spoken, direct language you can muster. You should also try and connect them emotionally to your problem. Often, this introduction has a lot of overlap with your elevator pitch.
This is not the time to explain how your business does it, or to overly focus on what separates your product or service from the competition. This isn’t the moment for your business venture origin story, or your personal life story. Your only goal with the introduction is to deliver your name and title, and then explain the end-users’ relevant pain-point, and what product or service you provide to relieve that pain. The goal here is to give the audience a context for the rest of the pitch, get them nodding their head yes, and start to form an emotional connection to the problem you’re solving.
For instance, if your business was Facebook, your pitch introduction might look something like:
“Hello, I’m Mark Zuckerberg, CEO of Facebook. Do you ever feel like in the bustle of modern living, you’ve lost touch with old friends and distant family? Facebook is a social media platform that allows people to stay connected to loved ones by sharing messages, pictures, and videos across multiple platforms via the internet.”
Notice how we stay focused on the end-user. We haven’t even hinted at the business model, partners, or any of the things that make Facebook work. We just described the end-user problem or pain point, and the product, service, or experience we want them to have with us to fix it. Introductions are to transition the audience focus onto you and give them the basic idea of what your business is on the end-user facing side, not showing how the sausage gets made. There’s plenty of time for that later. But before we can get into the weeds, we need to make this part as absolutely clear and simple as possible. If you can do that, the audience has a much easier time following along later, when you are telling a story or digging into the nuts and bolts of your business plan.
Beth Fynbo is a Bunker Labs program alumni and recently pitch to the sharks on Shark Tank. Watch her clear and concise pitch with value proposition front and center.
The Problem/Pain Point
With the introduction out of the way, we can get into the meat of the pitch. In keeping with our end-user-focused approach, one of the first things we want to do is outline the problem your company solves. How you frame the problem is of vital importance. We want our framing to generate empathy in the audience for people living with the pain of that problem.
You know how when you watch an infomercial, and they have that sort of laughable moment where they show a bunch of adults trying to do seemingly simple tasks that end in exaggerated disaster? They’re trying to create empathy in us for people living the problem they solve. They aren’t always doing that particularly well, but they are doing it well enough to buy that ad time!
You want to create a less-comedic version of that. You usually want to start with an “Imagine you’re a….” statement. The person you want to create empathy for is our ideal customer/end user (more on them later), and for the pain they have that your business alleviates.
For instance, in keeping with our Facebook example, their problem statement might have looked something like: “Imagine you’re a 20-something going to school full time, working part time, and trying to balance a growing social life with homework and other new responsibilities now that you live on your own. During the day, you miss calls from your parents and grandparents because you’re at school. At night, when you finally lay down in bed after a part time job and homework, you wonder how your childhood friend that went to college out of state is doing. You wish you had more time to keep up with everyone, but you’re just really busy right now.”
That’s the problem statement. Instead of starting with an “imagine” statement, you might start with a specific person, so “Suzy is a 22-year-old college student…”. Or, you might incorporate your personal story into the problem statement “When I was a 22-year-old college student…”. All these variations serve to emotionally hook your audience to empathize with a problem real people (or even they themselves!) have. Avoid “Have you ever….” type statements, though. While these can be great for bulk sales and marketing, in a pitch, if your audience answers “no” to your question, odds are you’ve immediately lost them.
Pro Tip!: Drop a Quick Survey Slide!
You might also drop a few numbers during this moment, if you can do so quickly. If Facebook had a respectable survey of college students that showed a high percentage felt bad for losing contact with family while at school, or felt like they don’t have enough free time to keep up with social obligations, for instance, they might quote that to reinforce this specific story they’re telling. Don’t spend too much time on this sort of thing, though. It hints at the size of your potential market, which is something we can talk about later in much greater detail. But sometimes, just a tease of how widespread the problem is can be useful while pitching the problem.
Your Solution, and Product
Once your audience is sensitive to the pain point, it’s time to present your solution, which will then naturally segue into how your product facilitates that solution. Solutions usually begin with “What if there was a…” statements. Keeping with our Facebook example:
“What if there was a way to update your entire family and all your friends on how you’re doing with a single text or photo album, or check on that high school friend and see how they’re doing all in one place you can access from your bedroom, during your train ride, or while you scarf down lunch in the cafeteria?”
Notice that we still haven’t introduced our product here. We’ve introduced our problem, which is, “I don’t have enough time to keep up with all these social relationships while I’m a busy working college student”. And we’ve introduced our solution to that problem, which is to create a way for both sides to access messages and pictures at their own convenience, avoiding the immediate and one-on-one nature of a phone call.
With our solution defined, it’s time to present your company’s approach toward creating or facilitating that solution, also known as your product. Your product or service is your implementation of that more general solution you just outlined. This starts with some version of “With our product/service, you can…”. You then explain how your product or service alleviates the pain of the problem for the end user. This sometimes involves a product demo, but doesn’t have to.
Pro Tip!: Avoid Live Product Demos
Now, it’s tempting to do a live demo of your product at this point, but resist that, particularly in the early stages. Live demos have a habit of going catastrophically wrong, even for companies with functionally infinite presentation budgets. There might be a technology problem, a mechanical problem, or you might be nervous and unable to operate your own product. The best thing to do is have a demo video where everything goes perfectly, and play that video. The demo should showcase how the product sidesteps or overcomes to the problem.
Part Two: Market Research
So, the audience now understands the problem you’re solving and how your product or service solves that problem. Part two is all about showing who you solve that problem for, and how they’re currently addressing the problem (aka, the competition). Your main goal in part two is to show the audience you are a professional, and you have done the work researching and understanding the market you’re entering. You want to show that you have an awareness of the fight and challenges facing your business.
Not sure how to approach market research? To learn some of the basics, check out How-to do Early-Stage Market Research.
Your Target Customer and Market
When we told the story of the problem we’re trying to fix, we created an ideal customer to suffer from the problem in a way that our product would solve. The ideal customer has your problem, knows they have it, and has the available money to address the problem with your specific solution. Further, their current solutions don’t adequately address the problem. Ideally, several of these ideal customers meet in community (or virtual) spaces where you can reach them with sales or marketing efforts.
So now we need to explain exactly how many ideal customers exist.
This is where you can get into the total available market, serviceable or addressable market, and the obtainable market. Now, as a startup, your instinct might be to be broad about your ideal customer. You probably see a future where a majority of humans use your product. Resist that urge. You want to create as narrow and specific a definition of ideal customer as possible during your early phase.
Narrowest Possible Ideal Customer Definition
For instance, let’s say you’re Under Armour, a brand that sells clothing to all men and women today. However, they didn’t launch describing their ideal customer as “all men and women aged 12 and up”. Founder Kevin Plank started marketing specifically to college athletic programs along the east coast. As the company grew, Under Armour began marketing to broader demographics, but they started with an incredibly narrow target market.
You might think, why? Why not just market to everyone from the start? He probably could have grown twice as fast! I’m sure there are exceptions that prove the rule, but generally speaking, you gain traction by dominating narrow slices of the market, this traction leads to capital access, which allows you to expand into other markets. The more narrow and specific your ideal customer is, the better your chance to displace the owner of the majority market share among that small demographic with targeted messaging.
There is a lot of competition in the market already, and most investors will laugh you out the room if you begin with a statement to the effect of “if we can only capture 2% of the entire sports apparel market” top-down market analysis. At the launch of your business, you likely don’t have the capital to market to 2% of the entire sports apparel market (or whatever market you might be entering). Plank had a few hundred college sports programs as ideal customers along the east coast he could reach with his car.
Think about that, he had under 1,000 ideal customers when he launched. Granted, each customer was a potential whale. Each sale moved hundreds of units, not just one. Once Under Armour dominated that narrow market, they were able to raise capital and expand into other markets, competing with Nike and Rebok and other sports apparel brands.
To give a few other examples of properly narrowed ideal customers:
- Newlywed couples with a household income over 150k in the state of New Hampshire that attend the annual New Hampshire Bridal Convention
- Male bartenders mixing high volume craft cocktails in the city of Chicago
- Maybe your company targets female retiree gardeners in western Ohio
Having a specific target profession or life milestone as part of the ideal customer is a great way to narrow the focus and messaging on your product. These professions and milestones also probably have social media spaces and support conventions you can target with marketing.
Can You Market Your Ideal Customer?
Finding this extremely narrow definition of your initial ideal customer is important. The next step is making sure you can market to them today. If you can’t, you need someone on the team who is an expert at marketing that precise ideal customer. You don’t need to talk about this side of things in part two, (it’s more of a part three thing), but you do need to consider what demographics you can reach with the team and resources you have today when defining your ideal customer.
You can say your ideal customer is up and coming female pop stars in their 20s attending the People’s Choice Awards, but if you have no way to market to that demographic, your venture is probably doomed to failure.
Figuring this out is important because it shows investors you’ve not only identified your ideal customer, but you’ve built the right team to reach that ideal customer today with your product and service. Under Armour’s ideal customer was in part an effective choice because CEO Kevin Plank himself was a former college athlete. So he had a first-hand understanding of his ideal customer, and he had a network of contacts he could exploit to gain access to market to them. An outsider would have had a very difficult time following Plank’s go-to market strategy.
Your main goal in discussing your competition is to showcase how well you know your market. This creates confidence among investors that you understand it well enough to succeed. There is a temptation to say there is no competition, but resist that. Every product has competition, and if it doesn’t, investors usually take that as a bad sign (assuming it means the market isn’t viable).
Listing competition does you a huge favor, it proves there is a profitable market for what you’re doing. Your competition might be in an entirely different medium, or capture market far beyond your ideal customer, or solve their problem with a different, ineffective approach. That’s okay. The competition is all other products and services people use to alleviate the pain point you’re also addressing, even if they don’t do it particularly well.
Once your competition is named, you want to remind the audience of your niche within the market. This usually gets achieved with a chart or diagram. XY Competition Diagrams, Petal Diagrams, and Competition Matrices are all popular styles of chart to show that you see the market and have selected a specific niche within the market that you can cater toward. You might also mention your competitive edge or unfair advantage here, particularly if it fits into your diagram, though there will be time to more fully explore your edge in the next section.
Part Three: Your Plan and How It’s Going
Now your audience knows the problem you’re solving and how, and who you’re solving it for. The final step is to show them how you’re going to make solving that problem profitable, and explain how that’s going, and what you need to make it work (or work better).
You and Your Story Until Now
Now we’re nearing the end of the pitch. All that’s left is to talk about what you’ve done so far and where you project things going. Which order you cover the next few things isn’t so important, shuffle them around in whatever way best tells your story.
How deep you go here is going to vary a lot with how much time you have to pitch. That said, your main goal is to clearly explain as simply as possible how it is your business makes money. Where’s the profit? If your business directly sells a product or service, simply showing what the profit margin looks like is enough. Similarly, showing how you monetize ad revenue is also pretty straightforward.
However, some of you might have businesses with more convoluted or complex models, or several different types of revenue. Generally speaking, investors want something they can wrap their head around quickly and easily. So if you have a more complex business model, it’s well worth taking the time to find a simple explanation laymen friends can easily grasp. If you have multiple revenue streams, you might mention them, or show them on a graph, but try to keep the focus on the primary sources of revenue and profit. The more byzantine your business model, the less likely investors are to believe in it. Explaining how you make money should be simple.
You also might touch on your planned exit strategy here, and a timeline for it, be it selling, getting acquired, a merger, going public, franchising, or something else. Yes, plans change and you want to be flexible to take advantage of unexpected opportunities, but declaring your exit plan when you’re launching shows investors it is a consideration.
Go To Market
What is your marketing and sales strategy? Most investors want to see three or more specific channels for sales or marketing. Is there a specific social media community, a local convention, or weekly meet up where your ideal customers congregate that you can access to market or sell? List them specifically.
If your ideal customer is a giant corporation or a government contract, then you’re naturally going to focus on sales. But otherwise, how you’re marketing to your ideal customer is important to show. It’s also important to have someone on your team that has experience with marketing (or sales, if that’s the focus).
How is the product doing when it’s in customers’ hands? What sort of wins do you have right now? This is a great time to talk about positive customer feedback, retention, word of mouth, rave reviews, sales growth, social media trending, and anything else that can demonstrate that your business is on the edge of explosive growth. You want to create a little bit of fear among investors that they might be passing on the next Facebook or Google. Generating this fear of missing out (FOMO) can’t be understated regarding how effective it is. If you have evidence that shows your company is a rocket ship that’s about to take off, show it to the audience.
Who are the key members of your team? Most investors are looking to see who your technical/field expert is to ensure the product or service is good. They want a sales and/or marketing expert to ensure your ideal customer is aware of your product or service. Finally, they want someone who understands leading a start-up and planning an exit strategy. Investors want to know how long you’ve known each other, how many of you are full-time, and what the equity split looks like.
If there are any other super-relevant team members, you can bring them up, but you don’t want to get bogged down in giving bios for people that aren’t relevant to the investor’s decision-making process. For the three positions you should highlight, you want to make obvious their biggest qualifications, prior accomplishments, and current contributions.
For example, “John Smith is our Director of Marketing. He’s been working with us since last year in a part-time capacity, managing social media campaigns that have helped increase pre-order sales for our convention appearances by 42%. John recently retired as Director of Marketing for Greater Chicagoland at Toyota.” That tells an investor everything they need to know in like three sentences without getting bogged down in their resume. Feel free to give team members their own slide that list more qualifications if you like, or a single slide with the three key players.
If it hasn’t already been spelled out in one of the above categories, you want to make it clear what you have over the competition in specific terms. An unfair advantage is a secret weapon that’s difficult or impossible for competition to replicate, like an education, a patent, a nationally-recognized expert, or something else. Your military experience can be an unfair advantage, particularly if you can show you’ve rallied the hyper-supportive Veteran community around you (though this is maybe less relevant if every person pitching that day is a Veteran).
Don’t be vague about this. A vague “we have the best team” can elicit eye-rolls among investors. You also don’t need a list of 10 unfair advantages. Focus on the most critical one or two that are the most difficult for your competition to duplicate. Bonus points if that unfair advantage translates directly to marketing to your ideal customer.
Wrapping it Up: Your Ask and Plans
You’ve made your case for the problem your business solves, who it solves it for, and how you plan to reach that customer and profit. In short, you’ve explained how your business is going to be successful. All that’s left is to make your “ask” of the audience, and let them know what you plan to do if they opt in. Most pitch asks are for investment money. If that’s the case, state an exact amount you’re looking to raise, and explain where that money is going to go specifically.
There should be some sort of milestone you hit with the ask, whether its expanding manufacturing efforts to keep up with growing demand, or expanding marketing efforts to increase demand, or refining the prototype in a way that incorporates customer feedback. The important part is to be clear where you want the investment to take the company, and how taking that step grows your venture. If this investment would mark a change in your business model, this is a good time to mention that.
You’ve finished the pitch! Congrats! Now you can field any questions and drop off your leave-behinds. Want to know more about fielding questions and leave-behinds? Come back for Pitching 103 soon! As you shape up your pitch, sign up to practice it live with the USAA 100th Anniversary Pitch Contest, happening now in cities across the country!