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Hockey Stick Revenue Projections

For a pre-revenue or early revenue company, even 1-year revenue projections are pure fantasy. Demanding to see 5-year revenue projections seems perverse. No company in the entire history of the universe has ever come within telescope view their 5-year projections. They’re completely useless, and yet, absolutely necessary.

When someone sends me a pitch deck, I turn straight to the 5-year revenue projections. When we’re in the Q&A session at the end of a pitch to an angel group, it’s not the product slide or the team slide or even the critical traction slide that ends up on the screen but the revenue projections. …


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Need Traction!

The best way to overcome investors’ concerns with the team, market and every other challenge in your business is by demonstrating traction. I’ve been through countless pitches where I’ve noticed other angels in the room, bored expressions on their faces, playing with their phones in the middle of a pitch when the CEO put up the traction slide and said, “We did $100K in revenue last month and are growing 30% month over month.” All eyes lit up, phones set down on the tables. Oh, now this is something interesting said the expression on every face.

Entrepreneurs believe that angels and VCs are happy to throw money at great ideas. The truth is we only invest in a small number of companies each year. Though we examine your team and technology and market opportunity, the way to guess which of the thousands of companies that pitch us will be the one to succeed is if you’ve already proven that customers are excited enough about your product to pay real money for it. The likelihood of your pitch succeeding and getting into the due diligence is closely correlated to the amount of revenue you have. …


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They Can Swing a Bat But Can They Get Funding?

Every startup claims to have an all-star founding team. But let’s be brutally honest — if you really had an all-star team of seasoned executives with multiple exits under your belts, you’d (1) be able to fund that million dollar seed round yourselves without needing our little dribs of cash, or (2) you’d be able to call Tim Draper or Peter Thiel or whichever VCs funded your last big IPO and have a check for $10 million in your hands tomorrow. …


Betting on the Jockey, Not the Horse
Betting on the Jockey, Not the Horse

It’s a truism among investors that we bet on the jockey, not the horse. We often say the three most important factors in startup success are the team, the team, and the team. While that’s an exaggeration, there’s no doubt that with early stage investments, investors examine the team through a microscope.

At this stage the product hasn’t advanced much beyond MVP and market traction is minimal. Your product is still an experiment that will inevitably need significant tweaks if not a complete pivot before it takes over the world. …


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Yeah, yeah, I know, you don’t have any competition. Your product is so revolutionary, there’s never been anything like it.

I hear that at least five times a day. Every entrepreneur says they have no competition. But you do. And frankly, the fastest way to lose credibility with investors is to tell us you have no competition. Because while you’re on the stage zooming through your pitch, we’re on our laptops looking up your competition. The first question during Q&A is often, “What about this other company I found that seems to be doing something similar.”

Even if you’re first to market and don’t have any direct competitors yet, you still have competition. Before AirBnB, businesspeople stayed in hotels, college kids crashed on couches, the rich relaxed at fancy B&B’s. There were websites for vacation rentals and short-term furnished apartments for extended business trips. Was AirBnB better? Absolutely! Did AirBnB have competition? …


Your Grandma Sara had a secret recipe for out-of-this-world pancakes. When you make them for your family and friends, they always beg you for more, and encourage you to turn those pancakes into a business. Working long and hard with contract food packers, you’ve created a unique heat-and-serve pancake that can be sold at supermarkets, reproducing the same fantastic taste of pancakes fresh off Grandma’s griddle. Now, after years of scrimping, scraping, and small-scale trials, your pancakes have gone nationwide in supermarket chains and they’re selling like, well…hotcakes. Revenues are exploding, investors are calling to congratulate you, General Mills is sniffing around about a possible acquisition and your biggest problem is how to expand production. …


Business Plan / Go-to-Market Pitch Deck Slide

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Now that you’ve set out the problem, solution, and market size, it’s time to wrap up the introductory third of your pitch by connecting the dots between your wonderful product and the millions of people who need it.

Let me start with a story. My first startup experience, during the dotcom bubble days, was a device to connect to the internet using satellite. When we started building the product, I didn’t realize quite how small the satellite market was. Long term, that placed a limit on the size of the opportunity, but in the short term it was wonderful because the market was extremely tight-knit. …


After starting your pitch with a simple description of the problem and solution, you have to convince investors there’s a big market for it. This is particularly true for specialized or technical products where investors have no sense of the scale of the problem or even who the intended customers are.

Total Addressable Market / Service Addressable Market / Service Obtainable Market
Total Addressable Market / Service Addressable Market / Service Obtainable Market
TAM / SAM / SOM Market Segmentation

Of all the slides on your deck, market size usually gets the least scrutiny. It’s background information to give investors a sense of the scale of the opportunity. The key is to keep it reasonable; don’t exaggerate or you’ll lose credibility. …


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A good pitch starts with a description of the problem and your solution. You probably expect this is the easiest part of your pitch; after all, you’ve been talking to customers about it for years. But you’re wrong. It’s actually the most difficult section to get right, and the most critical since you’ll either hook your audience right away or leave them struggling from the beginning.

There are two mistakes I see frequently. First, the explanations of the problem and solution are often incomprehensible to anyone outside your niche, especially for B2B products. …


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In Lesson 2, I stressed that the pitch is a story about how your startup will make money for investors through an exit event. Today’s article will look at what that means with an overview of the pitch deck. Then in the upcoming weeks, we’ll dive into the details of each element.

To start with, keep in mind you’ll have a few different versions of your pitch and pitch deck:

Elevator Pitch — a very brief summary of the opportunity (not the product but why someone should consider investing) usually 30 seconds or less that rolls off your tongue when you meet an investor in the proverbial elevator (or lobby, or bar, or anywhere else) and she asks, “So, what do you guys do?” This is also the one (short) paragraph intro you message an investor on LinkedIn or email to see if she has any interest. The only point is to ask, “Would you be interested in learning more?” …

About

DC Palter

Entrepreneur, angel investor, writer, and sake snob. Author of the series on pitching your startup to angel investors at https://pitchingangels.com.

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