Every sale travels along a continuum from baiting the hook to feeding the fish. Whether you’re selling an idea or a widget, you first must catch consumers’ interest — entice them to bite. To transform those consumers into regular customers, you must provide nourishment — feed those fish with information, customer service, and a great product.
In his three-part battle plan to get venture-capital funding, Garage.com pitch master Bill Joos focuses first on baiting the hook — a great elevator pitch — and then on feeding potential prospects a nourishing snack — a succinct killer business summary. The real meal, though, only comes once the big fish have decided to fund you. Before you get to “yes,” you have to meet with the VCs and give what Joos calls the “overview presentation.” This little show gives potential investors enough information to make the enlightened decision to fund your company without overloading them. If they’re interested, they’ll ask for more.
“Pitching is an art,” says Joos, “But there is science to it too. And science tells us that one week after your pitch, the VCs will remember only 10% of what you told them.” Joos calls this pitch decay, and it’s a grim obstacle to any sale. As Joos puts it, “You can highlight the 10% that matters most, or you can let them figure it out for themselves. You choose.”
Pitch decay underscores one of Joos’s favorite themes: brevity. He insists that overview presentations comprise about 12 slides — the dirty dozen. “You may think it’s impossible to condense your message into a dozen slides,” he says. “It’s not only possible, it’s imperative. We have clients who are changing the molecular structure of insulin, who are reinventing the world of encryption. No matter how complex the technology, we’ve never exceeded 14 slides. You must boil it down.”
And while you try to hide your nerves, remember to have fun. “This is a bizarre thing,” Joos says. “You won’t always enjoy the game — nobody does — but you have to look like you’re functioning and enjoying the challenge. You’ll have the highest highs and the lowest lows as an entrepreneur, sometimes on the same day.”
Joos recommends dividing your presentation into these rough chapters: summary, market, solution, team, use of funds, and recap. Here’s his quick outline on how to wow investors with your overview presentation.
Start by saying, “If you only remember three things about our business plan, you should remember these …” Adapt your elevator pitch, including your mission statement, business idea, and call to action. In one or two slides, tell them what you’re going to tell them, give a quick sketch of your business, and let them know what kind of money you’re looking for. “Don’t make it a secret,” says Joos. “VCs hate a striptease. Tell them what you are up front: ‘We’re a hardware solution designed to help cache better on servers, and we’re looking for a round of about $5 million.'”
“Lead with the problem,” Joos advises, “and follow with the opportunity.” Describe the need your business will meet, and then explain how you will transform that need into a business opportunity. Back up your case with market research. The more granular and consumer-focused — the better it will be.
This is the solution part of the presentation. Joos breaks it down into five pieces, but he doesn’t necessarily recommend one slide for each.
- The Idea: Sketch out your idea. Remember this is an overview. You may have to delve into details briefly, but don’t get caught up in them. “When I sold for IBM,” Joos recalls, “customers would say, ‘Hey, how does this big computer work?’ And I’d say, ‘It works damn well, and let me tell you what it can do for you.'”
- The Technology: “Next,” Joos says, “VCs need to understand something about your technology. They’re thinking about barriers to entry and intellectual property, so you don’t need to get too granular. Just give a basic grasp of what you’re doing.”
- The Competition: Discussing the competition means striking a tricky balance. Don’t dwell on the competition, but don’t leave out any major competitors out either. “You don’t want to make them paranoid,” Joos says. “At the same time, nothing turns off a VC faster than discovering a competitor you didn’t bother to mention. Remember, too, no competition isn’t so good a sign: Apple came out with the Newton ahead of any competition and failed miserably.”
- The Marketing Strategy: “The day of dotcom Super Bowl ads is over,” Joos says. “VCs want to hear real facts and figures about how you’re going to market your idea. A strategic alliance? A killer pilot site? You must explain your leverage points. You can’t move the world alone. Where is the fulcrum?”
- The Path to Profitability: “Finally, tell the investor how you’re going to make money,” Joos says. “Break out the bar charts and the financials, but be forewarned: All those charts look the same and everyone’s making $70 million in the third year. VCs will care about your assumptions and your metrics, the pedals that make your business move faster. Tell them, ‘We plan on getting $100 per customer, per year. We plan on owning 14% of the market. Therefore, we plan on making this.’ Your assumptions and your metrics help them gauge your logic. And your logic is more important at this stage than the results of your mathematical equations.”
Tell the investors about your team’s relevant experience. If you don’t have a complete team, say so. “If the investor notices that you need a VP of marketing, and you don’t address that obvious need, you will look unprepared for the road ahead,” Joos says. “Tell an investor your shortcomings so she can understand what you’re thinking about.”
Status, Time Line, Use of Funds
“This can be real simple,” Joos says. “‘We’re completing beta trials and expect to have a pilot site up by July. We’re going to use the funds to complete our team.’ VCs don’t need to know that you’re going to spend $51,000 on capital improvements. They won’t believe those numbers anyway. Just explain your time line and how you plan to use the money in broad terms.”
Here’s where you tell them what you told them. Remember pitch decay: pull out the main points of your presentation, and restate them with a renewed call to action. You must cut it down to just a few key points — five is okay, three is ideal.