How to Pitch Your Startup
By Ian O'Bryan and Tim Hsia
As a veteran-founded fund, Context Ventures holds a deep conviction in the ability and resilience of veteran entrepreneurs to lead, adapt, and make decisions in stressful and ambiguous environments. We’ve collected a number of notes over the years based on our meetings with veteran and non veteran founders on how to effectively run a pitch meeting with investors. These tips are intended to help founders with executing a great pitch in order to secure investor interest and raise capital to grow your company.
Overview
Post-introductions, the first few minutes of a chat should sufficiently outline:
Who you are
What you are building
Why you are working on the startup
This should include your background, story, and how that fits into your venture. Framing is essential; a laundry list of achievements will likely not make the same impact as a specified story of what you have done and how that ties into your business. Next, you should outline the basics of your business model and the pain points it’s solving in your target market. Brevity is essential; you’ll have time to deep dive later on in the conversation. Also, be ready to preface why you are here:
Are you fundraising?
Looking for connections?
Future partners or subject matter experts in your domain?
Usually, this is listed in your deck and read ahead, but it’s always helpful in guiding the chat and stewarding both parties’ time. Essentially, everything you share should be tied together to convince an investor of your credibility and establish confidence in your venture.
How committed are you?
Investors are actively trying to sniff out those who are “trying” out a venture and those who are all in and are willing to follow through when it gets tough. Here are some indicators that might raise red flags in an investor’s mind in the dedication of a founding team:
Founding members holding other jobs
Actively working through university and not committing to the startup after graduation
Still having several years left in one’s military commitment
A founding member working concurrently with the venture can be perceived as using it as a side hustle, needing a safety net, and also being distracted from fully focusing on the startup. Though many startups are founded in school, it can be seen as a risk-free opportunity to try out an idea; if it fails, you can still pivot to another job before the close of your degree. Unless you have a background in your current venture, it generally takes time for transitioning veterans to determine what career path best fits them. Entrepreneurship is especially challenging due to the ambiguity and instability involved. Gaining experience in a more established profession might be helpful in building credibility and showing why now (a few years down the line) is the best time to stake out on your own. We’d like to stress that none of these are disqualifiers, but if any of these apply to you, we recommend being willing to defend why now is the best time to start your venture and show your all-in skin in the game commitment to your business.
Funding
Money talks, and if you’ve convinced investors to deploy their capital, you should feel confident in sharing how much you have raised and at what valuation. It’s important to show how you have been a responsible steward of invested capital to date. Ideally, you can effectively display how resourceful you have been, and be able to break down how you allocated funding to the different functions of your business. Additionally, be ready to outline how you will use a VC’s investment and why that amount is needed, how much runway it will give you, and why now is the optimum time to raise that capital.
Traction
Come to the meeting with (sales) metrics ready, not just in the generic YOY growth, but also outlining what comprises those sales.
Is it from a diversified customer base? Are your sales centered around one large customer?
What go-to-market (GTM) methods have worked, and how will you acquire more customers?
One of the most common figures to be called into question is your growth projections; having traction that reflects your sales numbers is a key lever you have in convincing an investor to invest.
Next Steps
If a VC wants to learn more, they will likely ask for access to your data room and referrals from previous employers/customers to better understand who you are and the granular details of your business. Having these items readily available in a google drive (or something of the like, docsend, dropbox, etc…) will show sophistication and organization.
Questions to ask potential investors
The questions you ask, or fail to ask, are incredibly telling of your savviness as a founder. Your meeting is two sided. Not only are you information sharing but you are also collecting and learning information to see if they are a good fit. For that reason, you should be prepared to ask questions about the potential investor so that you can evaluate them as an investor. Here are a few questions that might be worth asking in the meeting:
What are your typical check sizes?
Are you actively deploying or raising capital?
What stage do you target?
What’s your investment thesis? Why?
What does a partnership between your fund and a company look like?
What’s the process/timeline from pitch to wire transfer?
What’s your network look like in the VC community? (Access to top firms for IPO IB connections)
Would you mind if we added you to our investor mailing list? (If you think there’s a potential they’d invest in the future)
If you come across as someone who will take anyone’s capital, it’ll come off as needy and (potentially) a lack of confidence in the company you are creating. Essentially, make sure their partnership is the right fit for all parties including you and your company.
Conclusion
Your pitch is your first introduction to a VC; just because they don’t invest the first time you chat doesn’t mean they aren’t outright interested in you or your company. It could be a wrong time, a wrong fit situation that changes as your company evolves. Regardless of whether an investor invests in your start-up or not, we’re actively rooting for the success of founders. If we can’t be helpful, then we try to facilitate introductions. We also convene our Military Veteran Startup conference which could be fertile ground to meet other founders and investors. We hope these notes are helpful with pitching and wish you and your startup success!