Exploit investors by tantalising them in under 3 minutes

Startup Founders need to prepare and perfect a one-sentence pitch (the so-called “elevator pitch”), a one-minute pitch, a 3-4 minute “demo-day” or startup pitching pitch, and the conventional 10-15 minutes investor pitch.

Knowing which one to deploy in any given situation can take time, however, a Founder must always be pitching, even in family and social settings, as you never know whether the person you’re talking to will become your next investor.

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The one-sentence pitch format

The defined offering needs to be short, simple, and capable of being understood by everyone, like “a website”, “a mobile application”, “hardware” or “desktop software.”

The defined audience is the initial group of people that you will market your offering to. In the case of consumer applications, it is usually a demographic, such as “women age 25 to 35 years old.” In the case of business applications, it is usually a job function at a type of corporation, such as “system administrators at medium-sized technology businesses.”

Now that you have an offering helping an audience, you need to solve a problem. The problem needs to be something that everyone understands, such as “reduce the time collecting bill payments” or “engage in an immersive entertainment experience.”

The final component, the secret sauce, adds your unique approach to solving the problem and demonstrates a mastery of the market. Some examples are “by sending automated email alerts based on analysis of highest response times” or “with virtual worlds constructed in reaction to the movements of the players.”

Example: My company, [name of company], is developing [a defined offering], to help [a defined audience], [insert what problem they have that you solve], with [your secret sauce].

One minute pitch format

There is no shortage of startup contests where competitors have one minute to pitch their companies. Yet there are just a few resources for learning how to put that minute to best use.

The formula below was developed over time by Founder Institute.

Did you know that [CUSTOMER CATEGORY] experience [MASSIVE PAIN]? This is a [MARKET SIZE] billion-dollar opportunity in the US alone. [PRODUCT NAME] is a [PRODUCT CATEGORY] that [VALUE PROPOSITION]. Unlike other alternatives we, [KEY DIFFERENTIATOR]. The team includes [CREDIBLE TEAM BIOS] and we make money by [BUSINESS MODEL]. In essence, we are the [WELL-KNOWN ANALOGUE] for [ANALOGUE PRODUCT CATEGORY] and our vision is to [HOW WILL THE WORLD BE DIFFERENT? WHY DO YOU CARE?]. We have already [EXECUTED MILESTONES] and you are must be involved because [INVITE!].

Demo Day or 3-Minute Pitch Format

Demo day presentations tend to follow a consistent structure, but there is also plenty of room for variation, especially for experienced presenters. Here is an outline of the usual components, though the order of how you present them is up to you; in most cases, the introduction will come first and the conclusion at the end, though sometimes we advise companies to show impressive traction on the very first slide, and that is all it will take to grab the audience’s attention and hold it. I’ve heard my colleague Justin Kan yell, “Don’t bury the lead,” when a founder finishes with the fact that they have $5mm in revenue and are profitable, rather than starting with that fact.

The Introduction
This is not much different from the so-called elevator pitch. Briefly say what you are doing and why. It is especially helpful to start off by saying as clearly as you can what you are in terms that the audience is likely to understand. For example, “We deliver groceries to customers in their homes,” is clearer than “we are a next-generation, AI-based resolver of grocery needs.” This is sometimes called a mission statement, but regardless, strive for conciseness and clarity. A common error is to avoid describing what you do until far into the presentation. That is always a mistake.

The Problem You Are Solving
In almost every case, a simple description of the problem your product solves should be a part of your presentation. However, beware of the caveat above, and do not spend too much time describing your problem leading up to your fantastic solution, and leaving the listener wondering what, exactly, you do until half your pitch is done.

The Product and the Customer
Explain in more detail what you are building and for whom. This used to be where you would show a demo, but ironically, demos seldom work in modern demo day presentations. Explaining rapidly and clearly what your product does can be the most challenging, and rewarding part of getting ready for a demo day.

The Opportunity
This is usually expressed as a total addressable market (TAM). It is vastly better to be concrete and bottoms up (e.g., “We can sell for $X, and we have Y potential customers, leading to an addressable market of $X * Y”) rather than nebulous and top-down (e.g., “The software market is a $15 trillion dollar market…and if we can capture just 1% of that market…”). Your goal is to persuade the audience that the opportunity is real, that you are not making up data out of thin air, and that your company has a real shot at the dollars you describe.

The Traction
By demo day – thanks to the current era of shareware, frameworks, and AWS – most companies are up and running, accepting customers, and, hopefully, growing like weeds. Here is where you get to show your weed-like growth. Bring out your hockey sticks and show us your startup growth curves. Sure you have a great story – but now is the chance to persuade listeners that it is non-fiction. What happens if you have no traction or have not launched? This is not the end of the world. Many startups have successfully presented their companies pre-traction, but you must keep in mind that in that case, your success rests on the power of your story to persuade. You will be forced to lean more heavily on your personality and credentials, your story, and on your dream.

The Team
How you integrate your team into the presentation is up to you, but it is important to keep in mind that investors are investing in you and your team above all, and therefore to generate the interest you must sell the team. However, realistically you cannot do much during this brief presentation, so only spend time here on truly notable aspects of the team (“Jill has a Ph.D. in rocket science and holds the patent on the core technology upon which this market is built.”).

The Conclusion
Do not conclude with a whimper but rather with a bang. Insist that your audience remembers you. Tell them as directly as possible what to remember about your company and opportunity. It is often effective to list explicitly the 3 or 4 vertebrae you would like them to retain.

Although I did not explicitly include a section on the business model above, it is important that by the end of your presentation, investors believe you have one. Sometimes the model is obvious and it is unnecessary to belabor it (“we are a new kind of retail store”), but even in these cases, it may be necessary to explain why you will be profitable. Few in the audience will believe a model where the unit economics seem impossible. You do not have time to elaborate and explain your model in detail, therefore you must find a way to describe it in simple and easy to retain terms.

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