Investors want an inspiring story from entrepreneurs and a short pitch cannot address every question an investor will have. The goal of the first pitch is to inspire not answer every detailed question.
However, content that is aligned with investors”™ needs will be more inspirational. So a good pitch will speak to the questions that investors have in their minds, even if only at a high level.
The order, structure and detail will vary but generally good pitches include:
A SOLID, ATTENTION-GRABBING INTRODUCTION. Â In any story the lead is critical and that is just as true for investment pitches. The opening is an opportunity to present something that makes investors want to listen to to more. From the investor”™s perspective, if an entrepreneur can”™t explain the opportunity up front the investors will probably never understand it. On the other hand, if the investors can understand it in the first 30 seconds, they will want to learn more.
THE “PAIN,” OR MARKET NEED. There should be a strong market need, the clearer the need, the better the opportunity. The more tangibly the investors can understand the need, the more interested they will be in the solution.
THE SOLUTION. The company”™s product or service should directly address the need. One mistake entrepreneurs often make is to spend 80 percent of their pitch on the solution. Investors need to know what the solution is, but for this first pitch the description should be concise, so that there is time to discuss everything else.
THE ADDRESSABLE MARKET SIZE. The market for the product should be at least $150 million, ideally much larger. There is no expectation that the entrepreneur will capture all of it but investors do want to understand the potential.
THE BUSINESS MODEL. This describes how the entrepreneur will make money and how. They may sell a product, rent the product, charge a fee for service or sell advertisements. Sometimes the innovation itself is in the business model not the product, so investors will want to see clearly how the business will work.
EXPERIENCE IN THE MARKET / MARKET VALIDATION. Feedback from the market, especially feedback from customers that addresses any obvious weaknesses, is a powerful way to demonstrate value and show momentum.
CHANNELS TO MARKET / MARKET STRATEGY. Sometimes this is covered in the business model, but if not investors want to understand how the company will drive awareness and sales. Investors do not want to see how big 1 percent of the market is, based on the assumption that getting 1 percent of the market is easy. The entrepreneur should show that she has a concrete plan to deliver sales and value.
COMPETITION. Every product, no matter how innovative, faces a next best alternative, a competitor. Before the very first calculator people used slide rulers. So somehow the market need is being met today, the questions are how and how is the entrepreneurial solution better.
THE TEAM. Angel investing is more about the people and the team than anything else. If the market assumptions are wrong and the product doesn”™t hit the mark, a good team is more likely to pivot and make the business work.
FORECAST / PLANS.  A plan for spending money and for delivering returns. In a 12-minute pitch this cannot be detailed, but it is necessary even at a high level.
EXIT STRATEGY. Angel investors make money when a company is acquired so they need to know know who may be interested in acquiring the company and for how much. Entrepreneurs often don”™t like thinking this way, but angel investors really care about the exit.
THE ASK. Every pitch should clearly state what the entrepreneur needs from the investors. Pitchers often forget this, but it is a key part of any investor pitch.
This is a long list and there will be many pages of detail behind each element. By crafting a well-told story that touches on these points, the entrepreneur will have a better chance of engaging investors so that they to delve into that detail.
Jeff Loehr is a principal consultant at Stratist Consulting in White Plains, a firm that helps businesses of all sizes design strategies, business models and execution plans, and a founding partner of the Westchester Angels, an investment group that brings early-stage investors and startups together. He can be reached at jeff.wbg@stratistconsulting.com.
