Every Thursday evening, the prestigious ERA accelerator in New York holds a fundraising pitch practice session for its current cohort of companies.
In the initial weeks of the practice the companies pitch to ERA’s in-house team. For the next couple of weeks they practice in front of ERA alumni companies. And then, for about 6 weeks straight before demo day, VCs are invited into the practice session, two at a time, to hear the pitches and share their feedback.
I was at ERA for two of the VC Thursdays in August and listened as all 10 companies received the kind of tough love treatment that would prepare them for fundraising in the wild. At the end of each pitch and Q&A a moderator would ask the investor: would you take a second meeting with this company? With many company pitches still quite rough around the edges the response was often no.
What was compelling about these pitch sessions was how public they were for both the companies and the VCs. You learn a lot from your own pitch but imagine how much you learn when you hear pitches and feedback for 10 companies, once a week for 12+ weeks in a row. I was also compelled by the feedback and questions from the VCs. You’d think that being all NYC based and engaged in early stage funding their approaches and reactions would be similar, but not at all.
What never varied however was the importance investors placed on the pitch narrative and flow, and on the founder’s ability to tell a big and yet succinct company story. Here’s some feedback and observations from the sessions that really stuck with me:
- Their jargon yes, your jargon, not so much. Investors expect you to speak the language of MRR, ARR, Network Effects and ROI but they’re almost always looking for a lay person explanation when it comes to your tech.
- Pitch verbose and you’re lost. For a good pitch you need a reliable ONE sentence that does 80% of the job of explaining your solution to 100% of the people. Your icing on the cake functionality and value propositions can be explained during Q&A, when you get there.
- Your context: Know that investors will very likely try to compare you to companies in their current portfolio, in terms of vertical market, customer type or business model. Their assessment of your potential will also be informed by where those companies are hitting speed bumps or how quickly they’re scaling.
- Will you survive long enough? You may focus your pitch on how easily you can secure early customers and revenue but the question an interested investor will most often want you to answer is: Will this investment help you to survive long enough to become really interesting i.e. reach scale or the next funding milestone?
- Got ML? Who cares. Machine learning capability – or innovative product architecture of any kind - is not a differentiator. Mention it for sure and then zoom back out to the business story whose principle characters are use cases, customers and your customer acquisition journey.
- VCs are also human and like the rest of us they’re suckers for a great brand and company story. So before you pitch, stand back for a second and ask yourself: am I telling my very best story?
I hope these insights are helpful. More from my recent re-immersion in the New York tech scene coming soon.