By Fernando Berrocal

As a startup entrepreneur, one of the most nerve-wracking experiences you will have is pitching your idea to investors. Even entrepreneurs with extensive public speaking experience become nervous when doing this, and for good reason, an investor pitch is the equivalent of a job interview on steroids. This is because it’s not only you as an individual that is being evaluated but you are also having your concept evaluated. In this article, we provide examples from current investors and entrepreneurs to highlight what not to do, as well as give you helpful advice on how to improve your pitch.

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When Pitching Investors, avoid these Mistakes:

• Worrying too much about the aesthetics and not articulating the concept well enough:  While your deck should appear professional, you should not try to secure investors only with the premise of the deck. There are several excellent tools available, such as Pitch.com, which handles the style for you. What matters most is that your idea is well expressed and that your team is adequately represented.

• Using a Script as a Guide:  You must have the ability to improvise. Venture Capitalists enjoy hearing themselves speak, so you can almost always count on them interrupting you with a question. You should have enough practice with your pitch to be able to improvise and get back on track. As a leader, you look more confident when you can improvise and act organically.

• Overestimation or Mischaracterization of the Total Addressable Market (TAM): "The size of our market is X; if we reach Y percent, we will do Z in sales," is one of the least appealing statements to make. To sum it up, most TAM estimations are incorrect. They are carried out by large consulting/research organizations, which typically have a poor track record of predicting market sizes. Top-down TAM estimations also exclude growth and connotation: your startup might, and should, expand the TAM or create a new category.

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• Don't undervalue the competition: A cringe-worthy remark that is likely to raise the eyebrows of investors and implies that no one is addressing your problem: “Nobody else is doing this!” This is a simplistic perspective of your market and product: someone might not be doing what you're doing right now, but could easily do it. Even if that's the case, it's how you execute that counts. Therefore, be aware that you'll have competition, so don't act as if you aren't aware of it. It's more important to persuade people that you have a distinct advantage in implementing a concept than to persuade them that you're the only ones doing it.

• Name Dropping and Fake Stories: The founding narrative of your business should be real and emotional. Small elements can be altered to improve the narrative's consistency, but plain distortion should never be used.  This is especially true when discussing additional investors to lend credibility to your startup. It's a terrible form to drop names to give yourself more credibility unless you're 100% sure the person you're discussing would be fine with you using their name. The product and team you're establishing should be self-contained.

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Investor Pitching Skills are a must-have:  

Create a flexible and strong narrative. There should be three versions of this story: one minute, ten minutes, and a full story / free-form (more than 30 minutes). Consider it an elevator pitch, a dinner pitch, and a walking pitch all rolled into one. One you can tell in the elevator, another you can tell over dinner but don't want to spend the entire time talking about, and the third one you can tell over an extended period. In each of these cases, the pitch should respond to the following three questions:

• How has your situation affected you personally?
• Who else is dealing with this issue?
• What is the result of resolving this issue?

Accept uncertainty and the fact that you won't have all of the solutions. It's preferable to say that you don't know the answer or that you need more time to consider the topic than to respond with a rushed, ineffective response.  Responding with inaccurate information or clumsy logic puts you in a position as the entrepreneur and results in more inquiries than answers. Don't ramble and be concise. For these two reasons, you'll always have less time than you anticipate: People's attention spans are short, and people don't have that much time on their hands.

It's important to craft a concise pitch, with high-quality content. Consider it like a movie: there is a beginning, middle, and end to every great film. The form of that narrative varies: some individuals start with the ending and then build the tale around it, while others follow a strict timeline. Whatever you choose to do, the core of your concept should be shown as soon as possible. In terms of the actual deck, it's best to make two of them: one that's a quick overview and one that's more detailed.

Perfection comes with practice: As previously said, the greatest approach to improve at pitching is to practice. Founders should make video recordings of themselves to observe how they appear and sound from the outside. Until you see or hear yourself, you never know what type of nervous ticks you have or how many 'umms' and 'likes' you might often use.

Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.

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