Agony Lance's guide to pitching Lance Wiggs has been focusing on raising money and investing through the Punakaiki Fund, and helping companies become investable via NZTE's Better By Capital programme. He's got the answers to burning questions about pitching, like whether you should pitch at all and how be good at it.
Should I pitch?
I’ve been asked to pitch in front of a group of angels - should I?
Before you think about pitching, make sure that your business is investable, which ideally means you have good understanding of your end users, great products and services that they love, a growing number of paying customers, a strong team, even (shock horror) profits. If you don’t have any paying customers, then forget the pitch and go and get some.
Seriously, it’s not worth good investors’ time thinking about an “idea” company – come back with something tangible. You don’t even have to have any real products – just sales. Read Eric Ries’s Lean Start-up or Bill Aulet’s Disciplined Entrepreneurship for more.
Now it’s time to ask yourself if you actually need to raise money at all. If you are able to get by without extra funds, you can save yourself a whole lot of time and pain, and of course retain ownership. You want to be disciplined about control of the process, as raising money will take months. Think about the sort of investor you want, and target them, making sure you tailor your approach accordingly.
Do your own homework on the angels or other investors you’ve been invited to pitch to. What’s their track record of investment like? How have other companies found the experience? What sort of questions get asked? And to reiterate, the best sources of funds are your own customers.
How do I pitch?
Help! I’m pitching in front of 80 investors in two weeks!
Start with the story. Focus on tangible things, with relatively little time spent on how vast the market or opportunity is. The right investor will immediately understand the overall potential and want to know whether you and your company are the right folks to deliver it.
So talk about how you identified an end-user need, the niche you are going after and how your product and product development process delivers to the end user needs. Show how you sell, how you will keep selling and what the revenues curve look like in the past (mainly) and the future.
Be sure to demonstrate how the company keeps it simple, focusing on doing a few things very well. It’s best to hint to investors that you don’t even really need to raise money, but that their investment would help accelerate growth and realise huge potential. And it helps if you know exactly what you will spend the first part of the investment on, down to names of the next staff you will hire.
Show you have the ability to keep growing and leading the company, expanding the team locally and abroad. Once the investors believe your story you can ask for their dollars, but a good investor should be asking you, so this last bit is optional in my opinion. The rest of the pitch should be the same message that you give to staff, to customers, to friends and the public. So it’s worth getting the story right.
Regardless of how you structure a pitch – and structure it as your audience expects – think about three things. One, make it a good story. I recommend practising the pitch out loud, time and time again. As you practice, write down what works and what does not work, and use that to assemble a draft presentation. That’s right, say the speech before you do the slides.
Two, get the slides factually correct and pretty enough, but pass them across to a professional (that means paid) designer, and leave the expert alone with a good brief to deliver the goods.
And three (you know this already) practise the whole thing again, preferably in front of a crowd.
Should government help?
The budget gave a tax kickback for early stage companies doing R&D. What else should the Government do? Let’s keep it to three things.
First, I’d like to see the Venture Investment Fund maturing into a fund of funds that invests on the same commercial basis as other investors, and removing their restrictive covenants to allow funds to run faster.
Second, let’s remove the roadblocks being placed in the way of setting up bank accounts and signing up investors, caused by laws imposed on us from offshore (such as the Anti Money Laundering legislation). We should trust each other for almost all transactions, and throw the book (and jail) at promotors who rip people off. And while I'm on this, it's time the Government got RealMe, their online identity verification service ,working and free to use.
Finally, let's see consistent and audited reporting, by programme, on the impact of government investment, using effective metrics, like amount of tax paid and number of people employed. An early investment in Xero was arguably worth a lot more to Xero than a larger yet later one, for example. Once the various programmes are measured correctly, then it becomes obvious that the good ones get enlarged, and the poor ones reduced.