How to Startup Part 3: How to Pitch Your Business
Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.
As a startup founder, you are always pitching. Whether you are recruiting candidates for employment, talking to potential customers to drive revenue, presenting to investors (the VCs), or simply explaining to your friends and family why you left your “good job,” you’ll want to master the skill of pitching.
Why Do You Need To Pitch?
Because raising capital is critical in any startup, the ability to quickly tell someone about your company and make them interested enough to learn more or invest is crucial. The name of the game is to always have enough money in the bank to fund the business until the next fundraising event, with the goal of eventually breaking even and then turning a profit. The game is won by raising capital to fund the company with as little dilution as possible.
What To Include
At the seed stage, before there is much product built or performance data to highlight, the most important thing you want to communicate in your pitch deck is that you are the right person at the right time for this company, also known as founder-idea fit (see more on founder-idea fit in Part 1). Keep in mind that there are very few brand new ideas, so you’re not really pitching the novelty of your idea, but you are pitching yourself as the right person to pursue this idea at this time.
When creating a pitch deck, you should follow a clear and standard format. Here is the ideal structure you should try to stick to:
- Problem. Explain the problem that people actually have and want solved. If you have a personal connection to the problem, now is a great time to tell a short story about your experience and why a solution is needed.
- Solution. Explain the current or intended solution for the problem. Speak to why your product or service is unique and hard to replicate.
- Total Addressable Market (“TAM”). Articulate the total possible market size for your product or service and how you can grow into it.
- Traction. Broadly describe how far your company has come such as product development, sales, strategic partner relationships, marketing and intellectual property.
- Team. Show off your winning team with essential information about the founders of the startup. Highlight their individual qualifications, but also how they form a team that works well together and how their diversity of viewpoints, skills and backgrounds makes the team better.
- Fundraising. Include what rounds of funding you’ve received (if any), how much you are looking to raise, and what exactly you want to use the funds for. I generally recommend against including a valuation ask in the pitch deck.
- Appendix. Use this section to address common investor questions and objections. This can be competitive landscapes, financials, comparable companies, etc.
Mistakes To Avoid
In addition to research and rehearsal, proactively think about all the things that can go wrong during a pitch to avoid missing an opportunity. Pitching to investors is difficult to master, but with some practice, you can steer clear of these common mistakes:
- Technical issues. Since a lot of pitches are now virtual, make sure your internet connection is good and your Zoom is up to date. Rehearse flipping through your deck and any additional technical elements before presenting.
- Time management. Don’t go too fast or too slow. Keep your introductions concise, don’t rush through your early slides, and stick to your allotted timeframe.
- Pushing back too hard. When an investor raises an objection, don’t react defensively. Be prepared to handle objections by acknowledging and restating the concern, and then addressing it. Try not to “rat hole” the conversation on any one objection.
- Using videos. Putting a video into your pitch deck can be risky. It can eat away at your time due to audio or video playback issues and disturb the overall flow of your talk.
- Live demos not working properly. While it’s important to showcase your product, a live demo has the opportunity to either make or break your pitch. If you’re going to do one, make sure it’s going to work seamlessly.
- Typos. This one is self-explanatory, but make sure your pitch deck has been viewed multiple times by several people to ensure quality and accuracy.
Wil Chockley, my partner at 75 & Sunny, and I saw almost 500 pitches last year alone. Venture capitalists see hundreds, if not thousands, of pitches each year, so you’ll want to make yours memorable and easy to follow. A pitch that stands out to me from my time as an angel investor is Eliqs, who sent Wil and I custom 75 & Sunny-branded beer within 24 hours of their presentation – demonstrating both their product and excitement about us as an investor. While not every company can send the VCs personalized beer as part of their pitch, Eliqs made this one memorable and is now part of our portfolio. Try to make your startup stand out in the sea of similar pitches.
If you’re interested in knowing what I look for the most when evaluating a pitch, check out my article on angel investing and my interview with PCH Driven Podcast where I speak on what I look for in founders.
Next up to bat in the “How To Startup” series is all about MVP or Minimum Viable Product for startups. Stay tuned.
- How to Name Your Startup - dot.LA ›
- What to Consider When Moving Your Startup Beyond Its Core - dot.LA ›
- How to Fundraise Your Seed Round - dot.LA ›
- 75 and Sunny's Wil Chockley on How to Pitch Your Startup - dot.LA ›
- How and Why To Build An MVP - dot.LA ›
Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.
Image Source: Archer