Making a pitch to a venture capitalist (VC) is a high risk/high reward proposition. Success can mean turning a dream into reality. But failure means losing an opportunity and potentially souring an influential financer and their circle on your startup. To make the process slightly less fraught, here are five tips on how to make a successful elevator pitch.
Keep it Tight
It’s important to keep in mind above all else, an elevator pitch needs to be succinct. Founders may feel the need to inundate a VC with information about their product, current supply chain, long-term roadmap, or the size of the investment they’re interested in.
While investors will inevitably want this information, those disclosures shouldn’t be made during an elevator pitch. There, the focus needs to be on your product or service, its uniqueness, and how it satisfies an existing need. Consequently, your entire pitch should last around 60 seconds.
Show, Don’t Tell
Veteran investor Sean Wise has an excellent tip for anyone looking to make a successful elevator pitch; show, don’t tell. Wise’s insight is derived from listening to thousands of brief pitches and noticing how many founders say their startups are great without explaining why. Everyone who starts a new company thinks it has amazing potential, so don’t waste time telling a VC something they already know.
Instead, do as Wise suggests and include hard information in your pitch. Vague statements like, “Our sales were great in November,” are far less useful than “In November, we moved 50,000 units.”
Think Like a VC
While it’s crucial to prepare a tight and data-rich elevator pitch, you should also be ready to answer investor questions. To anticipate these questions, try to think like a VC. Consider what kind of questions they would want to be answered before throwing their money behind a new venture.
Have succinct responses ready for questions about cash-flow, production expenses, customer retention, opportunity costs, and competing services. One “I’m actually not sure” is all it takes to convince a VC to pass on your startup.
Analogies are Your Friend
Whatever industry you’re hoping to break into with your startup, you should be prepared for investors not to understand how your product works. In general, people love novelty, but only if it exists in a context they can understand. If you get too technical or baroque, you’ll lose the VC’s attention.
So, avoid that pitfall by using helpful analogies. In the simplest terms, compare your product’s function to something distinct and memorable. Field test your analogies on friends and family to figure out which one works best.
Don’t Try to Close
Lastly, its mission critical to keep in mind an elevator pitch isn’t a car sale. Your goal isn’t closing the deal before the doors open, it’s getting a commitment to a second, longer meeting. Your focus needs to be on fostering engagement and casting yourself—and by extension your brand—in the best possible light.
Once you’ve made your case, answered any questions, and created interest, you need to conclude by making plans for a follow-up meeting. A VC is only going to cut a check after several in-depth meetings and a due diligence period.