First Rule: It's Not About Your Invention
Over the last couple of weeks, I've been invited to judge the pitches of a host early stage cleantech companies. I love getting to participate in these events because of the pastiche of promising ideas which continue to pour out of engineers and entrepreneurs in the sector, and also because of the knowledge I get to absorb from the savvy finance people who are sitting next to me and offering their perspectives on the companies' potential.
Typically, when an early stage cleantech CEO is pitching angel investors or a VC, they'll be given 10 minutes to make their best case, 15 at the max, with a few questions after. Knowing how to maximize your story within this timeframe is key to getting a second meeting. That's when the numbers start to matter. But to get to that second meeting, you first need to share a story that connects with your audience.
Here are a few tips to help keep their interest.
What's The Problem?
If you can't identify a compelling problem, you likely don't have a business. You do not get to pass Go, and you do not get to collect $200. All of the great science and engineering in the world won't change that equation.
Let me use blockchain as an example. Bitcoin is the hot topic in 2018, and it seems like everyone is jumping on the bandwagon, but you can't just waive the word around like a flag and hope to generate investment in your blockchain scheme. Investors might think it's cool technology, but before they give a startup a single dollar, they want to know why this is going to make a difference in people's lives. Beyond the tin-foil hat wearing brigade, why will a large market of people suddenly reject their paper currency used for (in some cases) hundreds of years? What's the motivation for change unless you believe the entire world economy is going to collapse?
What Do You Do To Make Money?
One of the mistakes I see early stage companies make repeatedly is to assume their audience can connect the dots between the invention and the business. You need to be able to explain concisely in one sentence what your company will do to make money. If that 30-second explanation doesn't fit within your original ten-minute presentation, you need to take something else out because this is the glue that holds the other pieces together.
What's Your Market?
To a large extent, all pitches are about change. You have to make the case something is already changing and/or will adapt to inevitable societal evolution. That's your target market, and you need to be able to quantify it and what percentage of your target market will adopt your solution.
What's Your Unique Advantage
If your market already has an incumbent, you have to be able to describe your competitive advantage succinctly, whether that be IP, changing technology, changing consumer tastes, lower costs of production, higher efficiency, better utilization of materials, etc.
While market research might not be in the budget at this stage of the company, finding third-party, independent and credible validators is essential.
Tell Them, Tell Them Again, And Remind Them What You Told Them
In a ten-minute span, the average human brain can only absorb a finite amount of information so as you are crafting your presentation decide in advance what the two or three takeaways from your presentation should be, then emphasize and reemphasize those points. Even if those points fall flat with investors at the time of your first pitch, you will have left an impression for future encounters when you won't have to explain your concept all over again.
The Fewer Slides The Better
People absorb much less information when you distract their attention. Making investors read your slides during an oral presentation means one of those sensory inputs is going to be drowned out. A PowerPoint slide is supposed to enhance what you are saying, not compete with it.
If you garner interest from the first ten minutes, your audience will have questions. That's when you show them the slides with the bullet points which are focused on just a sliver of the original conversation. You can make them in anticipation of those questions, but don't add them to your main narrative.
Investors Are Your Friends
I saved this one for last, but when you walk into a conference room to pitch your wares, you have to have the right mindset about the people in the room with you. Angel investors and VC's in the cleantech sector want to see you succeed because they are altruists by nature. If all they cared about were the ROI, they wouldn't be investing their funds in cleantech.
They aren't the enemy. Sometimes, their desire to help you requires them to tear you down first, but the desire to help is genuine. The advice they give you will make your case stronger in the long run so let their words bake into your consciousness, and don't argue with them. Taking criticism is hard, especially when it's your baby, but these folks are doing it because they want you to be able to make a business case they can invest in eventually.
This list is not meant to be comprehensive, just an unscientific list of some of the major miscues I see young companies make on a regular basis. If you need some help telling your story for investors, please feel free to contact me for a free 30-minute consult.