May 11, 2017

Startup Fast Pitch 101: What Top Investors Are Looking For

In honor of Venture Atlanta’s 10 year anniversary we are featuring the incredible sponsors who help bring the event to life year after year. Recently, we we sat down with Steve Tye, Managing Director at Croft & Bender with over 15 years of investment banking and private equity experience, to give you expert insights into what top investors look for during a fast pitch.

Mastering the startup pitch

Fast pitches are a phenomenal way for entrepreneurs to share their innovative business ideas with the community while opening the doors to potential funding opportunities. They can also be incredibly intimidating and elusive to master, especially for those just starting out. After all, you’ve spent countless hours building this business – how could a 3, 5 or even 10 minute pitch suffice? The fact is, most investors say a fast pitch is plenty of time to make or break an impression and ultimately determine whether or not they choose to follow up with a company.

Whether you’re pitching on a stage in front of thousands or have the chance to pitch to an investor one-on-one, the ability to define the value of your company in a short period of time is a critical skill for entrepreneurs. Mastering a fast pitch takes a ton of preparation, hard work and a clear understanding of what potential investors are looking for.

Q: What should entrepreneurs keep in mind when preparing for a fast pitch?

If you are making a fast pitch, then the investor(s) you are pitching has a limited amount of time. Investors typically see hundreds of opportunities a year and make a select few investments. In order to give yourself a chance of making it through their filter, you need to communicate your company’s value proposition and differentiation clearly within the first minute. Focus on the key highlights of the business (as we will discuss below) and don’t try to cram too much into the timeframe allotted at the expense of diluting the message. Think of a fast pitch as a way to introduce your company and pique interest – effectively setting you up for a follow-up meeting. Lastly, you need to set aside time to practice over and over again. This opportunity is oftentimes the first impression and you want to practice your delivery (with trusted friends or co-workers) so that the investor is more focused on the message than your delivery.

Q: What should be included in every single fast pitch?

Below are what we typically view as key points that we need to have answered when we are looking at opportunities:

  • What problem the company solves
  • Understanding of the total addressable market. What portion is served today and what portion will the company be able to serve in the future?
  • A defined growth strategy with details on how the company will execute
  • Clearly defined proof points/customer adoption. A mentor of mine once said, “The company needs to show that the dogs are eating the dog food.” I think that’s key advice.
  • What differentiates the company’s offering (please don’t say you don’t have any competition) and what is proprietary?
  • What does each team member bring to the table and how do they complement each other?
  • A strong financial model with a clear path to growth and profitability (include gross margin and EBITDA margin)

Depending on the amount of time allotted, it can be hard to articulate all of the important aspects of your business. My suggestion would be to rank these categories in order of priority, spend time on the few key ones that differentiate the business, and highlight the others. Again, you don’t want to try to pack too much in the time frame allotted. If you hit the big ones and highlight the others, you will be able to drill down on all of them in a follow-up meeting.

Q: What should entrepreneurs avoid during their fast pitch?

Keep the presentation straightforward – don’t put too many words on the pages or create eye charts of data. You want the investor to be focused on what you are saying, not what they are reading. To that point, avoid packing your presentation with too many slides, which can make things feel rushed. I would also advise entrepreneurs to be careful when presenting their financial projections. While investors love passionate entrepreneurs, saying that your startup will be at $100 million in revenue and $50 million in EBITDA in three years is an unrealistic and empty promise. Get some help from a financial professional and come prepared with the facts. Finally, like I mentioned, never say you don’t have any competition. Everyone has competition. Saying you don’t can make you sound narrow-minded.

Q: Any closing words of wisdom/advice for our fast pitchers?

Remember that there is a fine line between confidence and cockiness, and investors take notice. Most investors are human beings who work closely with the companies in which they invest, so likability is certainly a factor to consider. Finally, I can’t say this enough, but make sure you are prepared. It’s very obvious when a person has failed to put in adequate time in this area. Get in front of trusted advisors BEFORE the pitch, get their feedback and practice, practice, practice.

Sponsor Spotlight: Croft & Bender

Tell me about Croft & Bender’s involvement with Venture Atlanta. How long have you been a sponsor?
We have been sponsors and big supporters of Venture Atlanta since it came together 10 years ago. We love being a part of its growth and seeing all of the exposure it has given to venture and emerging growth companies..

What services does Croft & Bender provide for emerging growth technology companies?
Our core business consists of M&A, capital raising, and financial advisory services. We advise emerging growth businesses on sales, recapitalizations, and capital raises with buyers and investors across the country. With over $70 million under management, we also have our own fund that invests directly in companies alongside lead investors when we are raising capital or when we can bring a particular industry expertise to a company (it is important to note that we do not invest in our M&A clients). We love working in this space and helping entrepreneurs think through some of the most important decisions they will make for their companies.

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