Startups have to pitch: tell investors, customers, and others just enough about the company to get them excited to learn more. This is not a natural skill for many founders. Stripe Atlas has helped a few thousand companies get started and assisted dozens with refining their pitches. With Y Combinator’s deadline for their Winter 2018 class coming up soon, we distilled these lessons into a comprehensive guide for early stage companies on pitching investors. We’ve summarized that guide below:
Know your audience
Reviewers at top accelerators and early-stage VC firms see hundreds of pitches every day, generally only for about two minutes each. You want to pack as much signal into those two minutes as possible and make the reviewer think you’re exceptional.
Sell yourself and your team
Many businesses are not impressive in the early stages. Reviewers will use you as a proxy for whether you will plausibly create a massive business given the opportunity.
Include the hardest or most impressive thing you’ve ever done, job-related or not. Suggest you are no stranger to hard work over long timescales. Balance that with evidence you can move quickly. Successful startup founders cover a lot of ground in any two-week period.
Don’t sell yourself short! Pitch with restrained, professional confidence, mostly about your successes. Failure is only as relevant as the insight you drew from that experimental result.
Startups, like bands, break up frequently. Explain how the team knows each other; close relationships mitigate the risk. Explain how your skills complement each other. If your team is overweight in one area and underweight in others, explain your plan for filling or fixing the gaps.
Communicate concrete details
Concisely describe exactly what you are building and who should use it. Reviewers think that if you can’t describe it, you can’t successfully do it.
Be particularly explicit about what the end-user experience looks like. Let your reviewer envision themselves using the product.
Clarity is particularly important when you’re tackling recently popular ideas. You want to quickly demonstrate that you’re not just another founder chasing the fad.
When you’re talking about your product, you want to describe exactly what you have now and what is single-digit weeks away. Include longer-term aspirations when talking about your market.
Target an attractive market
Investors can’t merely invest in good businesses; they have to target businesses that will grow to be ginormous. Your market needs to support this. Some markets are obviously billion dollar markets without elaboration. If yours isn’t, include well-sourced statistics, a napkin-math calculation, or an argument as to why winning this niche unlocks an adjacent, bigger market.
Many investors want to invest in companies which will dominate their markets. How are you going to displace current players? How will your product or go-to-market strategy build a moat against someone doing this to you?
Share unique insight
Running a startup means you are going to spend several years learning every nook and cranny of a problem space. Make it obvious to your reviewer that you’ve already started this work.
Your reviewer is smart but likely not an expert in your space. Reading your pitch should teach them things. A novel insight is a reason to remember you.
How is your take on this space unique? Acknowledge your competitors–if you don’t have any, that suggests that an unattractive market or gaps in your research. Explain how you’re different from competitors and how this helps you win.
Look like a good startup, not a little big company
Investors understand that they’re looking at acorns, not trees. You don’t have to show profitability now; investors aren’t focused on it at this stage. You are selling growth, growth, and growth.
You have very limited bandwidth. Focus it on the things you are great at. Go into depth about evidence which suggest the business is working; don’t optimize for breadth over areas that are still mediocre.
Know your numbers and what they mean
There are three hurdles regarding your metrics: do you know what you should be tracking? Are you actually tracking it? Are the numbers you have exceptionally good relative to the amount of time you have been working?
You should know the common metrics which startups in your industry or with the same business model are judged by. Andreessen-Horowitz describes some common ones in this blog post.If you don’t have reliable numbers yet, you should at least demonstrate understanding of the metrics to convey that you will make data-driven decisions in the future.
Your reviewer will read literally thousands of data points today. No one can remember that many arbitrary numbers. Highlight data points which suggests that there is a nugget of something really working.
The longer you’ve been working, the higher the bar is. Truthfully help reviewers see your project in the best possible light: if you have been interested in a project for a while but have gone full-time / pivoted more recently, date your startup to that more recent milestone rather than the earliest shower thoughts about it.
Ship compelling prototypes quickly
You need to make the reviewer’s first few minutes with your software absolutely sing.
This is not a training session. You don’t have to explain how to use every feature of the software. Instead, immediately show the most impressive interaction or output of your application.
Some companies can’t reasonably demonstrate a prototype. If you have a physical product, consider video or photos of it. If you are too early stage to have functioning software, mockups will at least let you show that you have good design and product sense.
Keep going regardless
Many companies which go on to substantial success are passed on by investors, often multiple times. This isn’t necessarily a reflection on the company or founders. If your pitch doesn’t succeed this time, continue executing on the plan for your business.
You will have other chances to pitch investors. Dust yourself off, improve yourself, your company, and your pitch for the next opportunity — and try again.
Read more: Forbes