Perfecting Your Pitch

“How can you tell an entrepreneur is pitching?

Their lips are moving….”

Introduction

The Investor Pitch is an essential part of the “Pitch Pyramid” that each entrepreneur must master in order to succinctly articulate their vision to any key stakeholder audience and earn the right to continue a dialog with them. It will form the foundation for your Customer, Partner and Supplier pitch. Done properly it will also help align your management and staff and create balance within your organization across Business, Marketing and Technology domains.

Regardless of the type of pitch you deliver (investor, partner, customer or supplier), your ultimate goal is to clearly understand, summarize and articulate “what’s in it for them” or in the case of a

Tag Line

Elevator Pitch

Customer/Partner/Supplier Pitch

Investor Pitch

Business Plan

potential supplier, “what can they help you with”. In either case, preparation and homework are keys to your pitch success.

Your intended audience is swimming in market speak and is likely inundated with sales calls, proposals and marketing information. Your goal is to cut through this “static” and be memorable. Clarity and brevity will help you accomplish this goal. The components of the pitch pyramid should tell the same story but at different levels of detail. Each level is designed to accommodate specific opportunities to pitch your wares.

Components of the pyramid:

Tag Line/Mantra 2 second answer to the question “what do you do” or “core purpose”

Elevator Pitch 30 second summary of what your company sells, your target customer group, why they buy it (your essential value proposition),why choose your product and your ask – Investment $, next meeting, assistance request etc based on audience type

Investor/ 8 – 12 minute slide presentation explaining “what’s in it forCustomer/ for them” and targeted specifically at your current audiencePartner Pitch

Business Plan maximum 20 page document providing more details on Investor pitch

Underlying this is your operating plan.

Targeting the Pitch

“The pitch is not about what you want to say…. It’s about what your audience wants to hear.”

When given the opportunity to pitch, it is imperative that you identify what group your audience belongs to so you can tailor your pitch accordingly.

Each stakeholder group will expect to hear your pitch targeted to their specific needs.

For example, if you are talking to a customer, find out what internal stakeholder group they belong to:

Buyer: The one who makes the final buying decision and “signs the check”

Essential Question - What’s my ROI if I buy your product?

User: The group that will actually use your product on a day to day basis

Essential Question - How will your product improve my ability to impress my boss?

Tech: The group charged with care and feeding of your product

Essential Question - What will I need to unsure the product is stable, secure and available

Channel Partners will want to know how your product will help them differentiate themselves from their competition and how much additional revenue they can generate and at what cost.

Supplier Partners will want to know enough about your company to quickly assess if and how they can help you achieve your specific objectives. You should know what type of help different types of suppliers can offer your company how you can best leverage their assistance.

Investors want to know the risk profile of the company they are investing in, what kind of return their investment will generate and what the payout time frame is.

All want to know that you are a stable, trustworthy partner to work with over the long term. Nailing your investor pitch is the foundation for selling this long term vision of a good partner to deal with.

The following outlines the standard investor pitch template used at Alberta Deal Generator – one of the most active Angel Investment Groups in Canada. It has been battle tested and proven to work very effectively in any jurisdiction in North America.

This template lays out the ESSENTIAL 12 questions every startup MUST answer in order to have a complete understanding of their Business Model. This template forms the foundation for all subsequent targeted pitches including the Customer pitch, Partner pitch and Supplier pitch

We offer this overview for your review and files. During the bootcamp we will drill down into the key questions at the foundation of the customer, partner and supplier pitch and offer some

templates for elevator pitch development. You must however understand your business model (12 questions) before you can summarize it into quick pitch format.

The 12 Key Questions1. What business are you in?2. Do you understand your customer’s problem?3. Do you have the answer?4. Is the market attractive (big & growing)?5. What are the alternatives & why pick you?6. What sets you apart & is this sustainable?7. Can you find and get customers?8. How will you make money flow to you?9. When will there be a profit?10. What is your plan to execute & grow?11. Can you execute?12. Who’s help do you need & how much?

The 12 Pitch Slides• The Introduction• The Problem• The Solution• The Market• The Competition• The Differentiators• The Approach to Market• The Business + Revenue Model• The Forecast• The Milestones• The Team• The Deal

Notes on how best to answer the 12 questions

The following notes are intended to help you prepare your own answers to your 12 questions based pitch (and business plan). The notes are not a ‘fill in the blanks” exercise. They are intended as general advice to help you guide the development of your own answers. They are offered in addition to the bootcamp materials.

Long narrative is not required at this stage and such narrative should be saved for the Business Plan Version of your 12 questions template (For the business plan version of your template, shoot for no more than 1 – 1.5 pages of narrative to answer each question). For the purposes of this exercise, develop high level bullet points that answer the questions based on your business context.

This template is ideally targeted for startups and early growth stage companies that are more “promise” than historical results oriented. More mature companies will still have to answer these questions but will focus more on traction already received in each of the 12 question.

1. The Introduction – Why should I care what business you are in?

The Introduction should be a very high level summary version of your entire pitch. It’s critical to hooking the attention and interest of the target audience. This will form the basis of your 30 second elevator pitch. A targeted version of this summary should be created for each specific stakeholder group. Each version should answer the question “what’s in it” for the target audience member

a. Introduce yourself - Who are you – establish your personal credibility b. State what your company sells and to whom - keep this SIMPLE and direct – “we

build software for Oil and Gas Producers”c. Describe briefly what pain you are solving in the context of your target audience

i. “For refinery operators tired of paying huge tipping fees to truck their waste offsite”

ii. “For Engineering firms tired of manually processing paperwork”d. Describe briefly what main benefit your product delivers to your target audience

members..i. Customers – “Our product will allow you to make/save $2M per year by

turning your waste gas into a fuel source” ii. Partners – “Our product will allow you add $3M to your bottom line next

year by automating your paper handling processes” (again tailor to your value proposition)

e. Describe your main competitive differentiation – again in terms appropriate for your target audience.

i. Customers – “Unlike our competition (name your key competitors), our patented process offers the highest efficiency lowest cost option”

ii. Partners – Unlike our competition, our solution requires 30% less resources to install, train and maintain”

f. The ASK - what are you asking of your target audience:i. for customers or partners, this may be asking to book for the next meeting to

demo your productii. For Suppliers. this may be a request to help with a particular area you are

having some issues with require an additional component foriii. For investors, how much investment capital are you looking for

AND what you plan to accomplish with the money “with your investment we will dominate the $1.5B blue widget market segment”.

g. Objective - Give them a reason to pay attention and motivate follow-up actionh. KEY SLIDE – HOOK them or LOSE them here!i. Develop this summary last AFTER answering all the questions

1. The Problem - Do you understand your customer’s pain?

j. Explain the pain – who feels the pain – identify the key stakeholders in the value chain that are impacted by the pain.

k. Show a day in the life of the customer/value chain before your productl. Refer to actual position / titles that have the pain. This defines your target customer.m. Show it is market wide – many companies feel the pain and that they are actively

seeking a solution.n. Quantify and qualify the pain - Be specific as to what the pain costs annually and

what department or C*O or type of consumer has the pain and costo. Demonstrate the pain and make it tangible –Use an actual customer story or

scenario to make the pain real.p. Show Traction – Show that there is general recognition of the pain in the target

segment:i. Quote industry specific articles, customer testimonials, industry white papers

etc…q. Set the stage to let them know that you understand there is a big problem that the

market needs solved.r. The greater the pain, the greater the buying motivation and PROFIT potential

s. Show that you are solving a massive problem before you even tell them about the solution

t. Objective: Prove you know the buying motivation

2. The Solution - Do you take the pain away?

a. Identify that you solve this PAINb. Show a day in the life of your customer/value chain after your product is installed –

who is impactedc. Describe WHAT ( NOT HOW) your solution does to make the pain go away

i. Use action words – “eliminate “ errors , “reduce “ the time necessary “increase” efficiency, analyze alternatives

d. Describe your key Value Proposition - HOW MUCH MONEY Your solution delivers to customer ( at all impacted stakeholder levels) –

i. “Our product will save an average customer $1M a year” – KEY STATEMENT / Use your scenario identified in the Pain slide to show success

e. Show Traction - If you have customers already, describe who they are and how much their life shaver improved

i. Be prepared to provide contact info. to verify your statementsii. If you have Partners already, describe who they are and what benefits they

are generating with your productiii. Be prepared to provide contact info to verify your statements

f. Objective: Prove you solve the pain and provide compelling reasons why your customers will buy your solution from you TODAY – Show you have real customers paying you to solve their pain (Customer Traction) and/or partners that are getting more customers and are making more money with your product

g. DON’T i. Give detailed technical termsii. Use JARGON or Technical terms

iii. Get caught up on HOW you solve the PAINiv. Disclose any secrets at this stage

3. The Market - Is the market attractive (big and growing)?

a. Show the big picture first , the BHAG – Big Hairy Audacious Goal –

i. How big is the ultimate market - $ spent (industry target) and # customers (consumer target)

ii. How fast is it growing – CAGR iii. What are trends – How is recession impacting marketiv. Validate estimates – show 3rd party sourcesv. Example: “According to the Gartner Group, our global market is $3B, growing

at 50% CAGR” – b. Decompose your BHAG – segment global market down to the actionable market

segment that you will target tomorrow. Show that your figures are realistic.i. Canadian market size – 500 companies spending $500M addressing this painii. Alberta Market size - 100 companies spending $50M – addressing pain

iii. Calgary segment comprised of 20 Oil and Gas Companies spending $10M addressing the pain

c. Show that you know who your customer is, quantified - Dollars and units.d. Many startups are woefully lacking in an understanding of their market – don’t make

this mistake, it is fatal!e. If you try to serve all the segments you will starve, focus on one and describe your

rational for picking your first target segment, next target segment and the next etc…f. Don’t

i. Confuse INDUSTRY size with Market sizeii. Chase multiple markets or segments at once

iii. Startups have limited resources… focus them on dominating one underserved market / segment

iv. Get overly complex with segmentation at this stageg. Objective – Show you know the market and that it’s big enough to make lots Of $$$$

4. The Competition - Who else is doing it and why will customers choose YOU today.

a. Name your direct competitionb. Explain your KEY differentiation (s) against them all c. If they have an advantage, show how you will overcome itd. Show you understand and respect your competition with comparative strengths and

weaknessese. Use tables and or value matrixf. Be thorough

g. Don’ti. Say we have No Competition

1. means either: a) there isn’t a market; b) you are naïve / haven’t done your research

ii. Identify your only competitor is a giant (Microsoft or goggle)1. Means you are chasing the wrong segment or

your strategy is incorrecth. Objective : Drive home the advantages you have over the competition today

5.

6. The Differentiators – what sets you apart - is your product difficult to copy or re-create?

a. Describe your technology (high level only)b. Describe briefly what you have built

i. Software, Hardware, internet based, Services etc.. ii. Avoid One-trick Pony syndrome

1. If it’s a product, do you have the means to enhance and expand the product or build new products? -

2. If it’s a platform what level of changes do you need to target another market or segment?

c. Is it scalable enough to handle a global market without redesigning?i. When it scales up are your margins improving?

d. How will you stay ahead of the competition?i. Do you have an exclusive license?ii. Become the dominant supplier in your niche?

iii. Regularly reassess completive environment?iv. Develop Advisory Board to maintain connection with customers?

e. Have third party Partners come on board with your product i. IE Does Rogers sell it, Is TELUS part of your solution?ii. Why did they partner with you and will they NOT partner with your

competition?f. Is your “secret sauce” (unique product, process, algorithm etc.) legally protected and

how…. Patents, Copyright, Trade Secret etc.g. Don’t

i. GET INTO BITS AND BYTESii. Use Subjective Qualifiers to describe your advantages

iii. “Better, cool, clever” cannot be measured…iv. Rely on a single protective mechanism

h. Objective: Show your product has a proprietary, sustainable advantage against future competition and how it creates barriers to others

7. The Approach to Market - Can you find and get customers?

a. Describe how will you build awareness of your product in the target marketi. Describe Tradeshows attended and resultsii. Describe your Social Media Strategy

iii. Describe other channels you will use to build awarenessb. Explain how your customers will actually get your product– IE. How you will get in

front of your customers in the short term, medium term and long termi. Direct sales, channel partners, value added re-sellers?

c. If you plan on using a value added reseller channel as your main market approach, the reseller become your customers and your pitch should be focused on them…What’s their pain, your solution etc….

d. If you have customers, identify them and describe how they found you.i. Or, if not, identify who will buy the first 5 units of your product.

e. If you have partners, identify them and describe why they partnered with you (or you with them).

i. Or if not, identify who your first target will bef. Don’t

i. Try to sell to everyone – Just the specific buyersii. Don’t say “it will sell itself “ – Kiss of death

iii. Don’t sell technology or features… sell benefits$g. Objective: Show evidence you can build awareness and get customers in your target

market.

8. The Business + Revenue Model - How does money flow from the customer to you?

a. Describe how money flows from customer to you for each channelb. How do you charge?

i. Direct Sales of software,+ maintenance fees, servicesii. Per seat or Per Asset

iii. Subscription basediv. Software as a Service?

c. Is revenue periodic or recurring? – VERY IMPORTANTd. Is it scalable and when it scales up are your margins improving?

e. Describe what your company charges:i. Per sale, per subscription, per user, per customer, per month?

f. What is your target Margin, per channel?g. Be prepared to describe your sales cycle and any sensitivity to annual budgets,

capital budgets, operating budgets?h. Show how the money flows between your customer, your partners and you

i. A picture works well to illustrate $ flow…i. Relate your model to one that is familiar to the audience (like Microsoft, like Hertz) j. Don’t

i. Get overly complexii. Invent a new and unproven business model

iii. If the lawyers have to draft brand new contracts from the ground up…you will have great difficulty in making your plan a reality

k. Objective : Prove your business has a way to make money and you know how it flows

9. The Forecast - How much money will you make – when will there be a profit?

a. Forecast top line revenues, costs and EBITDA over the next 5 yearsi. Or if you have history, show previous 2 years and next 3 years

b. Related revenue numbers with # Units sold or # distributors signed or # customers signed ( depending on your model)

c. Be prepared to explain: Revenue forecast Build bottom up vs. top down (it is okay to guess!) IE how many units do you have to sell per city to achieve forecast? (use a real world scenario if possible)

d. Investor wants to see that the expense side moves proportionally to revenuese. Discuss critical assumptions – what single factor creates the most sensitivity in the

model (beyond your control – costs) - Unit price, sales forecast.f. Show when you expect to be cash flow positive & when any additional financing

(capital input) will be neededg. Don’t

i. Build forecasts only top downii. Say “These are conservative numbers” – remove this phrase from your head!

iii. Be overly optimisticiv. Don’t show runaway margins (big revenue gains with no increase in costs

10.The Milestones – What have you done so far and do you have a growth plan

a. “The best indicator of future performance is past performance” b. Show past progress and that your future is well mapped out.c. What have you and your team done so far?

i. List historical milestone achievements1. Product milestones , Customers/Market, Team members recruited2. Strategic relationships signed, product version released etc….

ii. High level milestones only.d. What will you do in the future or what will you accomplish with my money?

i. Progression – highlight major steps (same granularity as past milestones) to success are mapped out and part of management plan

e. Timeline – see all together (may combine all three); previous rounds of financing; i. Use quarters or years and show progress – are you gaining traction?

f. Every company has different highlights need to identify these…. i. E.g.: Product Development – include patents, Operations (team)ii. Development – may be emphasis on team or process (e.g.: scale)

iii. Market Development and Market validation- number of customers, trial sites, channel partners signed etc)

g. Describe what metrics you will use to measure your success.h. Don’t

i. Get into too much detailii. Overhype…. Your “rosy” projected milestones may come back to haunt you

11.The Team – Can you execute?

a. Show summary of current team responsible for achieving past milestones….i. Point out experience and expertise that make team right for this opportunityii. Describe what position they will fill in the company

b. Show any holes you need filled – We are looking for a CFO, VP Marketing etc.c. Describe your team balance – Business , Marketing and Tech experienced resources

balanced – All the skills you need to grow the businessd. Do you have an Advisory Board or Board of Directors? And if so,

i. Who is on the BOD, BOA?ii. And do they bring: Credibility, Business/domain expertise?

iii. Point out any notable namese. Ask Well positioned advisors to join the board of directors – ideally they can help

with more than just $$$$ f. Remember, they are investing in you – your ability to execute

12.The Deal – Who’s help do you need and how much - are we a match?

This is the ASK… tailor this according to target audience expectations

a. Describe how much money is already invested and from where?i. List past investment amounts and sourceii. Include Personal guarantee details

iii. List any available bank financing, grants, venture loans already awarded or applied for, SRED Grants

b. Specify THE ASK - How much money you are looking for and what % of the company the investment will buy

c. Detail the investment vehicle… Common, convertible debt / participating preferred, venture loan OR state mechanism for investment is negotiable

d. Give a closing date…. Call to actione. Show Use of proceeds - what areas you will spend their money on (Use of proceeds)

– These must support your Milestones from previous slide.f. Discuss Exit Strategy - Research the 2 most popular exit mechanisms used for past

startup companies in your industry.i. What kind of company bought them? ii. What was the transaction total?

iii. What revenue base was the acquired company at etc? iv. Don't guess… DO YOUR HOMEWORK.

g. Don’t i. Overestimate the value of your companyii. Include “Sweat Equity” in your prior investment calculation

Conclusion

“Chance favors the prepared mind”

Pitching is a skill that must be practiced so that when the opportunity to pitch presents itself, you are ready to deliver the goods. Do not underestimate how difficult it is to craft an effective, compelling and engaging multi stakeholder pitch set. Do not understate how important effective pitching will be to your success as an entrepreneur and the success of your product.

Remember that the goal of any pitch is to motivate direct action, typically to get the next meeting to begin the qualification process, discuss stakeholder specific benefits and ultimately close the deal! Once you have mastered this pitch you can much more easily develop your partner and customer versions:

For customer and partner versions, cherry pick the specific sections of your investor pitch that have value for the targeted audience.

For example a specific customer pitch should/could include:

The Pain you are addressing Stated in specific target customer terms Your Solution description Again stated in specific customer terms Your Competitive positioning Why pick you Technology what differentiates you from your competition Go to Market Strategy How you will deliver the product Management Team You are a good stable long term supplier Product Demo Show how your product fulfils their needs The Ask Book the next meeting to begin negotiations

A Partner pitch should/could include:

The Pain you are addressing Stated in specific target customer terms Your Solution description Again stated in specific customer terms Your Competitive positioning Why pick you Your go to market strategy Describe your partnering model Business Model How you will share revenues Technology What differentiates you from your competition Go to Market Strategy How you will deliver the product Management Team You are a good stable long term partner Product Demo Show how your product fulfils their needs The ASK Book meeting to discuss agreement

A Supplier pitch should/could include:

The Pain you are addressing Stated in specific target customer terms Your Solution description Again stated in specific customer terms Market Analysis How big is the market for combined services Your go to market strategy Describe your partnering model Business Model How you will share revenues The Ask Book the nest meeting to discuss agreement

Elevator pitch versions are summaries of the major points in each pitch version targeted to motive the action you wish to achieve.

Recommended reading:

Art of the Start/Reality Check – Guy Kawasaki Crossing the Chasm – Geoffrey MooreStart Up Manual – Steve BlankHow Breakthroughs Happen – Andrew HargadonThe Lean Startup – Eric ReisGood to Great/Great by Choice – Jim Collins

Alex RaczenkoEntrepreneur in ResidenceInnovate Calgary