There are two basic pitches that every entrepreneur should develop.
The first is the comprehensive pitch, typically used in formal presentation circumstances, such as pitching at investor conferences, venture capital or private equity funds, or any other organized investor group settings. The second is the informal “elevator pitch” used in one-on-one situations, in which the entrepreneur needs to get his or her point across very quickly (in the time it takes to ride the typical elevator).
Each of these two types of pitches has its own unique characteristics and requirements.
The formal pitch should be developed with a pitch deck — a slide presentation that accompanies the verbal presentation by the entrepreneur.
A well-formulated deck should have 10 to 12 slides maximum. The slides should be image/graphic rich and text should be bullet-point summary statements. A good rule of thumb is to think about presenting to a large room, and to format the slides so that a person sitting in the very back could still read everything on the slides while they are projected on a screen at the front of the room.
Each slide within the deck should be formatted to convey specific information to the audience. The first slide should be an attention grabber that immediately engages the audience, communicated the unmet need that the product or service offered will address. The use of questions is a great way to grab the potential investor’s attention. Humor is also a powerful tool.
Enhancements to a basic deck — such as embedded video, live demonstrations of products or services, swag/samples and the like — will improve the entrepreneur’s chances of attaining and maintaining the audience’s attention throughout the pitch.
The entrepreneur should plan to spend about one minute on average per slide when presenting. This is a loose rule of thumb, but it is a good measure of time to keep the entrepreneur focused, to ensure that the pitch is succinct. This means that the entire pitch should take no more than about 10 to 12 minutes.
With this stated, depending on the venue, the entrepreneur needs to fit the presentation within the allotted time. For example, most investor conferences have strict time limits, and the entrepreneur needs to complete the pitch within that allotted time.
I served on the executive committee for the Clean Business Investment Summit and we positioned a timer in the front row of the venue with a stop watch who timed each presenter. If an entrepreneur could not complete the pitch within the time allowed, they would be cut off in midpitch, which can be extremely detrimental for that entrepreneur’s chances of securing funding from a member of the audience.
When building a deck, there are many software programs available today that can help the entrepreneur build an impactful deck. While PowerPoint is a good basic program, there are many others with enhanced features like Prezi that have movement, video, interesting graphics, shapes and the like that can greatly enhance the visual appeal of the deck.
In the past, and still in some situations today, it is necessary to print out the deck for audience members. This is usually required with smaller groups of 10 or fewer. If the entrepreneur will need to make printed copies of the presentation, it is advisable to avoid using colored backgrounds, especially black, as these require a lot of ink, which can make printing the deck very expensive. These days, most presentations are distributed electronically, so there is less concern about printing issues.
The informal elevator pitch is a different animal. While some investor conferences do a lightning round sort of format where the entrepreneur may have only a minute or two to present, most allow for a longer time period, so the formal deck is the more appropriate presentation format.
The elevator pitch is preferred for one-on-one engagements, in which the entrepreneur is pitching a prospective investor. This pitch is almost always verbal, although it is a good idea to have a written version of the elevator pitch available.
Because the elevator pitch must be completed within anywhere from 30 seconds to about 2 minutes, it is critical that the entrepreneur can effectively communicate the core value proposition of their business.
Some of the key components of a well-formatted elevator pitch are:
» The hook — State the unmet need the product or service addresses, or ask a question or make a statement that quickly grabs the prospect’s attention
» Product or service — Tell the prospect what the company does and why customers will buy it
» Target market — Who is the customer and how many are there?
» Stage of development — Are you at the concept stage, in prototype, penetrating the market, into significant revenue?
» Competitive landscape — What are your competitive advantages, who are your competitors, what are the alternatives, etc.?
» Who are you and who is on your team?
» How much money have you raised and how much do you need?
Whether you are presenting a formal presentation or an elevator pitch, the entrepreneur always, always, always must ask for the investment. While there are circumstances in which the entrepreneur may present in a forum where raising money is not the objective, this is rare.
Typically, the purpose of the pitch is to raise money. Tell the potential investor what you need and what exactly you are asking them to do. This, of course, means that part of the process of formulating your pitch, assuming the purpose is to raise funding, is to develop a funding round so you know what the specifics of that round are — are you selling stock, bonds, asking for a loan, etc.?
Another key aspect of presenting to keep in mind is that investors invest in compelling ideas and compelling people. With this in mind, it is imperative that you exude confidence, make eye contact with your audience, and convey a strong sense of integrity and expertise in your industry. An investor may love your concept, but if he or she does not believe you can build a business around that concept, they will never invest.
This is a general overview of the broad strokes of building a powerful presentation. Each deck must be developed around the business idea, the market, the competition, the team and many other factors.
Practice, practice, practice. It is essential that, once the pitch is completely developed, the entrepreneur practices the pitch until it is automatic, and it fits within the allotted time available. The delivery should be conversational and natural, and the entrepreneur should not need to read a script to present the pitch.
Being fully prepared can make all the difference.
— Craig Allen, CFA, CFP, CIMA, is president of Allen Wealth Management, and has been managing assets for foundations, corporations and high-net worth individuals for more than 25 years. He can be contacted at craig@craigdallen.com or 805.898.1400. Click here to read previous columns or follow him on Twitter: @MPAMCraig. The opinions expressed are his own.