A VC Pitch Gone Horribly Wrong
When founders think of pitches and pitching, they think of presenting in front of a potential investor. In the back of their mind they also might envision a situation similar to what Christopher Hussain experienced when he was pitching his business, RealKey! So what went wrong? Listen here or read some of our highlights below with a few tips on what to avoid.
Check out this Podcast by Gimlet called The Pitch. The host, Josh Muccio, features an entrepreneur on each episode pitching to potential investors.
Our breakdown of what went wrong:
Christopher started off strong, his company has great traction, he did a great job of presenting the size of the problem and the size of the potential market. However, little did he know that he had already committed his first mistake. His pitch was actually about a product that they decided to pivot away from. Thus, the investors thought the product and company were at a growth phase and, in reality, the business was moving back into a product market fit stage. So why was this a mistake?
Most investors specialize in certain areas of a company's life-cycle. This is how the entire investment industry is structured and divided. The most common way you see the industry divided is as follows: investors or funds segment by idea phase, gaining traction (beta testers), prototyping, launch phase, growth phase, and then a mature business.
When Christopher advanced further into his pitch the investors realized that the company was pivoting away from its initial success. Christopher set a certain expectation in the beginning, but the substance of the pitch did not support that expectation. At the most basic level this was Christopher's mistake: a failure to set expectations.
Are you putting together your pitch? If so here are some things to keep in mind.
- You need more than 1 pitch.
- One per target customer profile (Sales)
- A conversation starter for networking
- A traditional "Pitch Deck" format for investors
- A competition-style pitch, 3 to 6 minutes
PRO-TIP: Don't be that founder at an event who drones on about their business without giving the other person an opportunity to interact with you. Don't go into deep, deep details or features, unless the person seems very, very interested.
We have seen a lot of pitches at Accelerate DFW Foundation. The worst thing a founder can do is lecture or present for more than 10 minutes without interaction with the audience, who ever that is. In most instances your pitch should be a conversation. Its format is determined by what action you want out of that conversation.