This Is How Startups Pitch Investors

You walk into the room, palms sweating. You go over your script in your head. You pray to God your computer doesn’t crash. Eyeing you skeptically are a bunch of grey haired money guys. Don’t screw this up.

At the very least, that may be how the public imagines the meetings where startups pitch investors. The reality isn’t quite so dramatic, especially now that virtually all meetings are conducted via Zoom. I just got off such a meeting myself with a Software as a Service (Saas) company that was looking to raise about half a million in funding. While I can’t discuss the specifics of the company, here’s an overview of what these meetings are like:

1) Intro: The founders describe what the company does, what the market is like, and how the company has grown so far.

2) Deck: The founders go through a slide deck (PowerPoint presentation) that provides further details on what their product does, what makes it different from its competitors products and the size and growth of the market.

3) Demo: This is when the founders actually show you the product in action. I found this part the most interesting. I remember doing software demos myself when I worked in the field, and invariably, something seems to go wrong that worked in rehearsal 1,000 times. But investors understand that, especially if you can get it working in a few minutes.

4) Q&A: The other investors on the call asked a lot about the competition. How is this company different from others in its area? What stops larger companies from shoving their way into the market, elbowing you aside?

I was immediately struck by what a small room one of the founders was in during the call. His chair appeared to nearly touch the door behind him. This brought a smile to my face: they’re not using investor money to pay themselves exorbitant salaries before the company is a clear success.

The other co-founder mentioned getting a refund of $30 from a vendor that accidentally overcharged them. I don’t think he was trying to make any particular point with this story…it was an incidental detail to a larger narrative. But it made a strong impression on me: these are frugal founders that will be good stewards of the capital they’re raising.

I can’t say for sure, but I think this company has strong odds of being funded by our investor group. The round is led by other investors and they’ll already be getting a substantial sum from them, in any event.

The competence and frugality of the founders, coupled with year-on-year growth in the hundreds of percent, is likely to convince a large number of investors.

For more on startups, check out these posts:

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Photo: “Rich Uncle Pennybags” by Sean Davis is licensed under CC BY-NC-ND 2.0

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