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How to pitch

Learning how to pitch VCs is critical for most tech founders (though, maybe it shouldn’t be).

Here are the key elements to remember:

1. Tell a simple story that convinces people that your company matters
2. Prepare well for Q&A. Understand the questions that smart and interested people are likely to ask about your business to learn more.
3. Prepare supporting material well

Tell a simple story

Good pitch decks are like children’s books. They have 10-20 pages. They never put more than one concept on a page. That concept is explained with one *simple* declarative sentence and supporting evidence on that page illustrates the point and tries to convince the reader that it’s true.

For example:

We are the fastest growing company in our industry

{Graph comparing growth rates with competitors}

When you remove the supporting evidence, you should be left with a string of simple, declarative statements. When read in order, these statements should tell a clear and compelling story about why your company is important. 

For example:

We are the Gates Foundation. We find ways to use philanthropy to solve critical problems that are hard for markets or governments to address. Billions of people face some crucial challenges related to health and education. We’ve figured out how to very effectively deploy money to help reduce and solve those problems. We have learned three things that are critical to deploying money effectively. We have unique access to capital and talent allowing us to continue deploying money effectively. Our operations are working globally, and we continue to expand. We intend to spend 50  billion dollars over the next 25 years. We expect this to save a total of 67 million lives and help raise 600 million people out of poverty. To date, we’ve been heavily focused on healthcare and education, but we think we can also apply our approach to solving additional challenges.

That may be an awkward example, I’ll see if I can get clearance to share a real example. But you get the idea. It’s ten sentences long and when you read it, it’s clear what the underlying story is and why the company matters. If you gave me that presentation, with supporting evidence that clearly proved each of those ten sentences, I’d be a massive Gates Foundation cheerleader.

If you want to build a good pitch deck, pretend you’re creating a children’s book about why your company will win.

Prepare well for Q&A

Your pitch is built to excite an investor. It’s gets them interested. That’s the first step of a longer process. For an investor to go from interested to excited, they will generally need to learn some more detail about the business. If an investor can ask, and get a solid answer to, a good question — that moves them forward and helps them make a decision.

Some questions aren’t good. They don’t explain much about the company’s strategy, or it’s potential for success. They don’t identify risks. They don’t do much other than build rapport and allow you to look confident. They are wasted time (being confident answering a bad question often doesn’t help you much. 

There are likely 10-15 good questions to ask about your business at this stage. When investors ask you a good question, you should rejoice — that’s a sign they understand the business, are engaged, and are smart. It’s also your chance to truly sell them.

Most people don’t spend enough effort getting this right. You should know the good questions to your business. What nuances are important? If you failed tomorrow and were asked to evaluate investing in a similar business, what would you ask? What risks do you face? If you fail, what are the 3-4 most likely causes? 

Spend the time to brainstorm all of the good questions you could get, both the ones you’re excited to expand on and the difficult questions that you hope you don’t have to answer. Don’t waste time on bad questions. “What’s your hiring plan over the next 12 months” is a bad question. The good forms of that question are “what’s missing from your team today and can you add that with this round” and “how will you build and manage a great team?”

Brainstorm good questions and then answer them as compellingly as you can. Write the questions in a doc and write the answers. Take the time to think through these well. You’re investing your time and life here, don’t shy away from asking the hard questions of yourself in hopes that you can avoid thinking about the risk your taking.

Most people don’t put in the work on this. Don’t be one of those people. Your answers to good questions are your opportunity to show that you know the business, that you are smart, and that you have good instincts. Refine your answers. Get to the point where they describe well, and fairly succinctly, what matters about that quesiton. 

For example:

Q: Why don’t you give more in the United States?
A: Our foundation spends about $500 million a year in the United States, most of it on education. That’s a lot, but it is less than the roughly $4 billion we spend to help developing countries. We don’t compare different people’s suffering. All suffering is a terrible tragedy. We do, however, assess our ability to help prevent different kinds of suffering. When we studied the global health landscape, we realized that our resources could have a disproportionate impact. We knew we could help save literally millions of lives. So that’s what we’ve tried to do.

Source: The 10 toughest questions we get asked (2018 Gates Letter)

In keeping with our Gates examples, this is a good example of thinking deeply about the hard, even negative, questions and coming up with an answer that is clear and compelling on why they believe their efforts are important.

Not everyone will ask good questions. That’s okay. They don’t understand your business yet. Your job is to navigate them to the good question, which can be done a surprisingly high amount of the time. 

For example, if someone asks the bad question: “what’s your hiring plan in the next 12 months?” Then you can answer their question briefly, then redirect and connect it back to a good question that you have an answer for. 

For example

Direct answer: In the next 12 months, we’re planning to hire seven engineers and one ops person, which will allow us get our product out the door and meet the milestones we’ve set with Customer X.
Pivot to answering “good” question: When I think about growing the team, I think that long-term, we’re missing a really critical person on risk and compliance, who I’d like to bring in as soon as we can find the right person (with knowledge that this one is a unicorn and will take some time).

Prepare supporting material well

I’m going to spend a lot less time on this, because it’s a lot more company and stage dependent than what you see above. 

You a seed stage company? Financial model might not matter that much, but employee and customer interviews might. If you’re Series C, you’re going to have your financials split 6 different ways and showing aggregate data on customer behavior might be more important than specific customer reviews.

Here’s what’s important to know. Once a good investor goes from interested to excited, they start becoming advocates for the deal, but they also switch from thinking “what could this be” into thinking “what are the ways this is going to bite me.” Welcome to diligence. It’s a critical phase to getting someone to say yes and work with you over the long-term.

Spend time thinking about what investors might need in this phase. Ask friends. Ask VCs. Ask your investors. If there are clear things that are likely to be common needs, set those up. Get some customers that are willing to do interviews. Get personal references for the key team. Get your financial model. Get your cap table. Whatever it is, don’t be surprised by a “can you send us the…”

This doc is a work in progress. Suggestions or ideas welcome.

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