If you’re trying to start a new business, and want to accelerate growth either through raising capital or joining an incubator at some point in time your going to have to pitch your idea to investors.
Startup Accelerators are great way to start turning your great idea into an actual business. They provide your startup with a workplace, early capital, mentorship, and networking. They allow you to focus on creating a great product while not being distracted by the many problems that arise from starting a new business. We joined an accelerator to start Taggler, an online reverse auction marketplace for custom apparel.
Taggler was accepted into the Viterbi Startup Garage: a 12 week technology accelerator program at USC that included $20k in funding, space, strategic and financial resources. Our time in the Garage was invaluable as it gave us the resources to improve our product, access to mentors, and valuable lessons about running our own business.
Applying to get into the Garage wasn’t easy. We had only ten minutes to pitch Taggler to the Viterbi directors. We not only had to convince them we had a good idea, but one that could become a business. Luckily, we did a great job and were accepted into the program. Nailing your pitch the first time gives you the framework to continue to build on your presentation as you seek further capital down the line.Three months later we used the knowledge gained from that pitch to start presenting to angel investors, which led to Taggler raising money for our seed funding round. Here are five tips that we learned to creating a great pitch.
1. Grab Their Attention
Whether you are pitching to potential investors or to get into an accelerator, you will be presenting to people who have seen hundreds if not thousands of these presentations. Within the first sixty seconds you need to grab their attention. Think of it like a mini elevator pitch where you present the problem, your solution, and why your solution is the right one. Frame your idea in a way that gets the investors asking questions to further pique their interest.
2. Actions Speak Louder
Everyone has great ideas. You have to show that you’ve acted upon your idea, and have started turning that idea into a reality. Investors want to know that not only can you think big, but that you’ve got the drive and knowledge to make it happen. When Taggler pitched to get into the Viterbi Startup Garage, we already had released an alpha site that generated over $3500 in sales. By the time we sought our seed fundraising we had a refined beta. Already having a product (whether it be hardware or software) shows that you know what you are talking about, and that you are competent enough to get the job done.
3. Find Your Narrative
People love to hear a compelling story. There is a reason why you’re the one who came up with this idea and not somebody else. There is a reason you were inspired to start your own business and provide a solution to this problem. You have to show that your idea is unique solution and that you (and your team) are the ones right for the job.
With Taggler, our cofounders owned their own screen printing shop and knew how inefficient the custom apparel market was. We sought to change that by connecting customers with a network of screen printers who would quote to earn their business. Our story demonstrated that we had past success at running a business, credibility as experts in the industry, and intuitive enough to to come up with a solution to the problem.
Your initial inspiration does not have to be some epic realization like out of a movie, but shows that you’ve discovered a real problem that affects people and that you have the ambition to solve it. For example, AirBnB was formed when the founders could not afford the rent for their loft in San Francisco. They turned their living room into a bed and breakfast by accommodating guests with three air mattresses and breakfast in the morning. They saw that there was a market for customers looking for a cheaper alternative to hotels (and other lodgings), and sellers who were willing to rent out their homes for the extra money. They went from three guys renting air mattresses to a 10 billion dollar company in seven years.
4. Make It Relatable
Investors will not necessarily know the ins-and-outs of your industry, so it’s important that you present your idea in terms that they understand. Pitching by analogy is a common tactic used by startups when presenting to potential investors. You can use analogies to compare your startup to successful companies to describe what your company is and what its potential could be. You only have a limited amount of time so use a good analogy to show that your business model can be successful.
At Taggler, we like to use Expedia as an analogy. Investors don’t know how a screen press works, or the difference between directtogarment and screen printing, but they do know how Expedia works.
Before Expedia, people had to book their travel through a travel agent or the airline directly, and to compare prices they would have to call around. They had no way in knowing how to get the best deal. Expedia provides customers with pricing choices at one centralized location, and completely changed an inefficient market. Like Expedia, our reverse auction online marketplace connects people to information previously unavailable to them.
Does the analogy have to be exact? No, but it should provide clarification and be relatable so that investors can quickly understand your business model. LinkedIn compared themselves to eBay, PayPal, and Google when pitching to investors for their Series B fundraising back in 2004. They wanted to demonstrate that a network, in and of itself, is valuable and can lead to profitability. Were their analogies exact? No, but it got the point across.
5. Know Your Stuff
When you give your presentation you must know everything about your business, model, market, and team completely. You have to show that you know your stuff, and that you’ve also taken the time to do your research. With your pitch you must demonstrate that:
Your solution is unique. If there is already somebody out there doing what you plan on doing, then why does your startup need to exist? You need to differentiate yourself from the competition and show that your target audience wants what you have to offer.
There is a market (and its big enough). The problem you are trying to solve has to be a real problem that actually affects people. It also has to affect enough people that it can continue to grow and expand.
Your team is the right one. Is your team the one that has the skills needed to be successful? Investors are not only investing in your idea, but in the group of people you brought together to turn this idea into a reality. Your pitch is also an opportunity to show that you are knowledgeable about the market, and have the expertise to execute your vision.
Your business model is profitable (and scalable). Investors invest to make money (obviously), so you have to show that your solution is one that is profitable. Again, analogies are useful to show that similar models have succeed in different markets. Not only do you have to show that others have gone down a similar path to profitability, but that you have a plan to follow that path.
This guest post is courtesy of Jordan Del Guercio, Content Manage for Taggler. Taggler is the only online reverse auction marketplace for custom apparel. Post your order once, and Taggler’s national network of screen printers will bid for your order. Simply choose the printer that works best for you.