5 Thing VC Investors Wish Founders Knew Before Pitching
Most VC investors see hundreds, if not thousands, of startup decks and pitches each year. In this article, we’ll outline Managing Partner Steve Barsh’s top 5 things investors wish startup founders knew when reaching out, sending a deck, or pitching a VC.
What’s Your Problem?
The first thing Steve wishes you knew is that you should start by talking about the big and urgent problem you’re solving. Why? Because out of the gate, investors like Steve are in triage mode. Time is valuable, and VCs are immediately trying to figure out if this could be something super interesting or not. “The problem you’re solving is your pulse.” Over 50% of startups fail because they’re not solving a big and urgent problem that customers care about deeply. If you can’t convince an investor that you are solving something big and important for customers, that means your startup probably does not have a pulse.
How Are you Clever?
Investors are always trying to figure out how you’re clever on more than one axis. If you don’t know what that means, go watch the Dreamit Dose listed on the right. In short, Steve wants to understand what makes your startup uniquely clever, and hopefully in more than one way.
Clever could mean you’ve come up with a new algorithm or a device or formula that’s truly unique (hopefully protected by some form of IP). You could also be clever because you’ve found a way to grow your audience and acquire customers at an order of magnitude lower cost than everyone else. These are just some examples of what clever could look like. Keep this in the back of your mind when you meet with investors: “What can you talk about that will demonstrate that you’re clever, and hopefully in more than one way?”
Who’s Your Competition?
You should know a ton about your competitive landscape and, “which of your core differentiators and benefits are truly most important to your target customers.” So many startups get tripped up when it comes to talking about the competition in detail and why customers will choose their solution. Startups throw up a magic quadrant and get torn apart when they don’t really know what benefits are most crucial to their target customers, which helps VCs frame why you’re going to win.
The VC should not be able to do a simple Google search and come up with a strong competitor that you’re not aware of. Watch the Dose on the right to help optimize how you present your competition slide to investors.
What’s Your Go To Market?
Investors want to see that you have a focused, scaleable, and thoughtful go-to-market strategy. Steve sees so many startups that don’t really know what this even means. When a VC asks about your GTM, many startups answer the question by simply talking high-level about their sales strategy (e.g. direct, online, B2C, B2B). What the VC really wants to understand are, “the key attributes of great early customers or markets you’re going after, why those attributes are important to your strategy, and what markets you’re going after in priority order.”
Remember, as an early-stage founder, you can only split yourself into so many halves - investors want to see you’re calculated and deliberate on how you’re getting to market. Watch the Dose listed here on how to present a killer GTM strategy when you’re in front of investors.
What Are Your Projections?
Most founders aren’t aware that the cards are stacked against them when talking about projections. By default, many VCs won’t believe your revenue and growth projections; they’ll assume you’re “guilty” of revenue projection crimes. How do investors figure this out? VCs start by asking questions that peel back layers of your assumptions to see what’s behind your thinking and forecast. That’s when many startups begin to breakdown and falter. Be ready to answer tough questions about your pipeline, sales processes, conversion rates, how long it takes to close sales, and more. “You need to have solid revenue projections built bottoms up with pressure tested assumptions.”
By Elliot Levy, Healthtech Associate at Dreamit Ventures
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