In a recent post “A VC” Fred Wilson explains How To Calculate A Return On Investment – because he has seen multiple cases of financial projections from entrepreneurs who don’t quite understand ROI. As Fred points out “You don’t need to get a finance MBA to be able to do this kind of thing.” Read his post, and you’ll be one of those who gets it.
Archive for the 'The Pitch' Category
In a post this week , communications consultant Matt Eventoff talks about two “killer apps” (i.e., killer problems) that afflict startup pitches:
- No central (clear) message. Too much complexity
- No practice or preparation, resulting in a distractingly bad presentation
I’d have to agree that Matt’s two “killer apps” can indeed be killers. When pitching an investor, the compelling idea, your solution, and how the investor makes money must all be spelled out simply. And if you don’t practice the pitch, you’re likely to stumble through it and actually make it harder for investors to figure out just what your company does. So keep it simple, and practice, practice, practice!
In an earlier post, I argued that you really do need an elevator pitch – if for no other reason than to be sure you have a clear concept of what your business is. But how do you create a concise, compelling elevator pitch?
At OTBC, I’ve often used the following fill-in-the-blanks template. I’m not sure who to attribute this to – I’ve seen variations on it in multiple places. It does make creating an elevator pitch easier by providing some structure. So here’s the template:
- For: (describe your target customer)
- Who: (describe the compelling, unmet need your target customer has)
- Our: (give a one-line description of your product or service)
- Meets this need by: (describe very briefly what your solution does and what value it delivers)
- Unlike alternate solutions: (describe how your solution is different/better)
- We make money by: (describe who pays you and how)
Fill in the parentheses-enclosed phrases with the appropriate declarations about your product and business, and you’ll have an excellent start to an elevator pitch. Of course, if you’re pitching an investor, you’ll want to mention the market size, state the “ask” (how much investment you’re seeking) and say something about the “exit strategy”.
But if you cover the above bullet points in a compelling way, you’re well on your way to giving your audience, whoever it is, a clear, compelling idea of just what your business is all about.
The most important reason for having a good elevator pitch doesn’t have anything to do with investors. Yes, having a concise, compelling elevator pitch can help get an investor’s attention. Or get prospective team members excited about your company. And it’s useful to have that well-rehearsed answer on the tip of your tongue when you get asked the “so what do you do?” question at the next cocktail party.
But none of those are the most important reason for having one. My experience in working with a lot of startups over the past three years at OTBC is that entrepreneurs who can’t give a concise, compelling and clear answer to the question “what do you do” don’t understand their business as well as they should.
A fuzzy elevator pitch reflects the fuzziness of the entrepreneur’s thought process about the business. It usually means they don’t have a clear idea of one or more of the central aspects of the business, like who the customer is, what the compelling unmet need is, how their solution is unique, or how they’ll make money.
Some lack of clarity at the beginning is understandable. When you’re in the “idea” stage, thoughts are still coalescing. But if you’re ready to build a team and start designing a product or delivering a service, you really need to have an effective elevator pitch. Otherwise, you don’t have a clear idea of what you’re building and why. And with that kind of a start, you probably will not be happy with the results.
So spend the time to develop a concise and compelling elevator pitch. And if you’re having trouble doing it, ask yourself: what part of your business do you not understand well enough?
In my next post: how to structure your elevator pitch in five steps.
