Most people think of pitches as presentations required to raise money from investors, but pitching is not limited to that. It is the first step in creating a startup: a top-notch pitch helps find co-founders, hire employees, and, if slightly adjusted, also acquire the first customers. Unfortunately, chances to improve a pitch are rare: when you pitch, you usually get feedback on the idea, not on the presentation. The best option is to review other startup pitches before working on your presentation.
In the case of early-stage startups, the best pitches are the simplest. According to Pi Campus CEO Marco Trombetti, an investor requires 5 key elements, that are necessary and sufficient to decide whether to invest or not. Here are what investors look for in early-stage startup pitches:
1. Perceived Problem
The problem people perceive and your startup solves. “Perceive” is the keyword here: in order to create empathy with investors, you have to make them aware of an existing pain lots of people or companies perceive to the point that they are willing to solve it and are already spending time or money upon it.
2. Original Solution
Based on the problem described in point n.1, you have to tell investors which solutions people or companies have adopted to solve the problem and why yours is incrementally better and possibly state-of-the-art.
If your potential users are not doing anything to alleviate their pain, you didn’t spot a perceived pain: go back and redefine it.
3. Total Addressable Market
It’s as easy as that: the number of people or companies using the existing solutions multiplied per the annual price of your solution. Don’t trust market research: they usually underestimate or overestimate markets, especially those not yet established.
If your TAM is not at least one billion dollars, VCs likely won’t be interested, because of how their business works.
4. Traction
You must show how fast are you growing over time, with data from your last weeks’ activity. Desideratum: show week-on-week revenues grow rate of 6.7% or above in the last 12 weeks, because at this pace, starting with 1 dollar of revenue in week #1, it will take your startup 5 years to reach $1 billion revenue per year. Wannabe customers, users, letters of intent, and any other sign of progress can be used here instead of revenues to prove incremental and continuous growth.
5. Team
Provide some reference to convince investors that your team understands the perceived problem and has the capabilities to solve it better than anyone else. Show this is the perfect time to solve the problem and your team is magically composed of people that together in this time are the best to do that.
Assembling a pitch that works following these rules is like a puzzle: you need every single piece to be in the right place to get the overall vision. Here’s a template of the 5 slides: pitch co-founders and friends and ask them to review your presentation against the 5 key elements described above. If you pass the test, fill in our form to get funded.
