Yesterday I did two one-to-one mentoring sessions. Once again I found both founders to be pitching a great idea. One in the early stage of the idea and all it was missing was just a few small changes to address the investment proposal. The other, well the other I am not quite sure. what to say.
Let’s analyse the first pitch. The first pitch was great. I will not describe the product or give you names, to ensure confidentiality, however, suffice to say that he had a good idea. The idea was already validated and he demonstrated that by showing the competition and how well they were doing. This is great and it actually is what I always say “Make your competitors shine” but on the same note he had made the classical mistake “The startup has all the ticks and the competition well just a few”.
Ignoring the above which I have already covered, the next thing we had to tackle was just to simply answer the investor’s question. I could see that he was charging €2/user and he wanted to reach 3M users within three years. What I could not see is how he is going to achieve those sales. His marketing strategy was “We are going to use influencers, Twitter, and Facebook marketing”, and I hear you say the same as I “Aren’t we all?”. What I needed to hear was something more concrete. The 3 million was your objective. “That’s good. You have shown me the TAM, SAM, SOM and they look credible but as a seed investor I want to know how you are really going to get to your first 100 and 1000 clients.”
If you can only prove to me or show me a valid marketing strategy. A collaboration agreement, a contact that you have in the industry. Anything, honestly anything that would prove you can sell and will sell your product.
This is one of the most important things in your pitch. You have heard the saying “selling ice to Eskimos” and the point is that your product is obviously important but what matters more is if you can sell and I want to see that you can sell what you are proposing.
Here is where I came across this interesting article from Aaron Dinin Interestingly enough, he was asking similar questions. From an investor’s point of view, we want to know how you are going to grow and if your story stacks up.
As entrepreneurs, we are excited about our solution. Our solution is for the end-user and it solves the problem of the client. So it is important to remember that when we speak to investors we remember that the investor has a different problem/objective. Try to focus and answer the questions and objectives of the investor.
Here is the link if you missed my last article on the Fundamentals of fundraising, https://medium.com/@aliparandehzandpour/fundamentals-of-fundraising-learning-how-to-speak-the-investors-language-768545c4c206 , and if you are still struggling just book a free call with me.
Tomorrow I shall discuss the second pitch which requires a little more time and mmm patience.