Pittsburgh Ventures

In the past week, I attended two events where I had to evaluate startup pitches delivered to investors:  a boot camp for the upcoming 3RVF conference in Pittsburgh, and the interim demo day at AlphaLab.  Both events were dry-run practice sessions so that presenting companies could be more polished when they were actually on the big stage.

At both events, and at sessions like them that I have attended in the past, I have been rather surprised that the entrepreneurs haven’t been more prepared to understand just what the investment audience is looking to hear.   There are loads of things to talk about – technical details of the product, how you decided to start this company, how many high-powered advisers you have, and so on – but I believe there are seven non-negotiable elements that every startup pitch that must include to satisfy the most basic questions an investor will have.

1) Product/Service – what are you selling?  This usually includes one or two slides about your actual product(s), and should include a demo, if possible.

2)  Market – how big is the universe of potential customers you are selling into?  Different types of investors look for different market size thresholds, and there are many different ways to calculate the market you are selling into, but this should be a huge number to get the interest of most investors.

3) Team – who are you?  Why is this team the one that can score the win?

4) Economics – how are you going to make money?  Specifics are a plus, but even just a critical discussion about how money is made in the existing industry today, and how you may eventually tap into that flow, can give a sense of future monetization.

5) Industry – who are you competing against?  How do you differentiate against your competition?  How do you protect or sustain that differentiation?

6) Exit - you likely told us how you got into this business, now how are you going to get out?  Investors need to know that you are in for the long-haul, but also want to be assured that when you build value, you can realize liquidity on that value somehow.

7) Deal – what is “the ask”, and how are you going to use any money you raise?

I have ranked these in approximate order of importance for the pitch – in reality, some elements are more important to an investor as the deal nears a close, and some (like Team) are much more important to the eventual success or failure of the startup.

If any of these elements are missing when I first hear a pitch, it is like hearing Beethoven’s Fifth Symphony without the final “DA” in “Ta-Ta-Ta DA” of the opening movement; not a good start.

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