Pitching your idea to a potential investor is like speed dating with people who have the power to change your life forever. No pressure, right? Think about it like this: it’s an intricate tango where the stakes are high, but you have to appear calm. Don’t let those stone-faced VC dudes trip you up. The tango is hard; but once you know the dance, it’s about confidence, knowledge and that finesse that only you can bring to your brand. Basically, put some stank on those stats.
It essentially comes down to three things:
- Don’t Be Desperate: As soon as they smell even a drop of desperation, you’ve lost whatever semblance of leverage you once had. It’s acceptable to show interest, but you don’t want them to know you need them too early on. Let them believe they’re one of many options, not your one and only lifeline.
- Know What Kind of “Money” You’re Talking About: Take a moment and think about this: how much money would you need to work 1-3 days a week, travel on a whim, and take care of your family? 50k? 100k? 350k? If you didn’t say 1 billion dollars or more, you and your investor might not be a match. Most VC investors’ ears don’t perk until you drop that b-word. Does that mean you have a bad idea? No. Does that mean that there’s no market for your product? Nope! Keep swiping right, but don’t give up on your idea. Your match-made-in-startup-heaven is out there!
- Cut Through The Crap, And Know What They’re Asking Of You: Pitching to investors is hard enough without having to jump through linguistic hoops. At AWC, we Stan the the nurses, the teachers, the stay-at-home moms (and dads), the Communications major + Anthropology minors. We believe in diversity, and that means diversity in tech. It’s perfectly understandable that you find yourself scratching your head at Silicon Valley jargon if you’ve never been immersed in that world. AWC is your not-so-secret, secret weapon. We got chu.
Here are some questions you’ll want to know the answer to when pitching to a VC:
VC Dude asks: What’s your burn rate?
What he’s really asking: When are you going broke?
- How many months or years do you have left before you’ve run out of the money needed to keep your project afloat? How much do you spend per month on average?
VC Dude asks: Can you tell us about your traction?
What he’s really asking: How much progress have you made thus far?
- No one wants to jump on a sinking ship, so put your best numbers forward, polish those stats, and show them all you’ve achieved thus far. Assure them that you’re making (money) moves! Cardi!
VC Dude asks: What’s your LTV?
What he’s really asking: Is your customer a ride or die? Or are the cancelling left and right?
- Your lifetime customer value refers to how long your clients and customers stay with you (and keep paying, obvs).
VC Dude asks: What’s your TAM?
What he’s really asking: Is this project big enough for me to care about?
- Your TAM, or total addressable market, is a number that puts investors at ease. Basically it means: how far can we take this? 2b? 10b? 20b? More? Even better.
VC Dude asks: What’s your CAC?
What he’s really asking: Do you know enough about your market to keep gaining new customers?
- Your CAC, or customer acquisition cost is basically asking: if an investor gives you 100k, how many customers can you gain with that amount? You need to spend money on ads. Period. This is not the time to brag about not using ads to promote your company because it will lead the investors to believe that you don’t have strategy when scaling your business.
VC Dude asks: What are your organic growth channels?
What he’s really asking: On which platforms do you have social media presence?
- Where are you showing up in the social media world? Keep in mind though, that having a strategy will make you stand out. Organic growth can be fickle and unpredictable. Strategy scales companies, not luck.
VC Dude asks: Can you tell me about your team?
What he’s really asking: Impress me.
- Two words for you: name drop. Mention your coach, your advisors, any past companies you’ve worked for. Show them logos. Dance for ‘em a little bit! AWC Bootcamp alumni: mention Tara Reed’s name and watch them start to pay more attention. Use what you’ve got.
VC Dude asks: What’s your path to $1b?
What he’s really asking: Let me see a graph!
- Literally, just take that line, and draw it straight to the top, cause that’s where you’re headed anyway!
We’re just getting started. Knowing the answers to the above questions will set you apart from the competition. Let’s take these concepts off the paper, and see them in action, shall we? Check out AWC CEO Tara Reed during her 500 Startups pitch of Kollecto. Spoiler alert: She goes hard!