Perfect Pitch™ A Strategy For Concise And Effective Communication Of The Idea Behind Your Business And Why You Merit Investment
©David M. Adler, All Rights Reserved
My recent attendance at TechWeek Chicago 2012 reminded me of advice that I used to provide to start-up and technology entrepreneurs. I have spent the last 15 years of my law practice advising entrepreneurs and businesses in varying stages of development. At some point, all growing businesses will need an infusion of capital. Sometimes this comes from “friends, family and fools.” Just as often it comes from professional investors such as Angels or Venture Capitalists. If you or your business needs additional capital to get to the “next level” whether that be development of a “proof of concept,” execution of the go-to-market strategy or strategic investment in new people or technology, you will need to convince the investor that your idea or business is relevant to the target market, achievable by the people and intellectual capital behind it, and likely to result in a substantial increase in value.
It has been my experience that many entrepreneurs or CEO pitch-men lose sight of the forest for the tress. All too often, the “pitch” or presentation only focuses on one thing. Usually, it focuses too heavily on the idea or the market and not enough on the people and strategy. On the other hand successful presentations seem to incorporate three basic, yet distinct concepts, what I call the tri-partite “Perfect Pitch.” In a nutshell the Perfect Pitch answers three questions: Who Am I? What Am I? Why Am I?
Who Am I?
Answering this question tells investors about the people behind the idea. Every presentation should begin with a short, pithy and relevant description of the people and company, their history together and their qualifications for successfully commercializing this idea. For example: “John Doe, Jane Smith and Mary Jones each graduated in 2006 with a MBA from the Whoopity School Of Business. John has 5 years experience managing operations for a national retail chain. Jane has a 4 years experience as an assistant human resources manager for a Fortune 500 Company. Mary operated a small consulting business for 3 years before shutting down operations to pursue her MBA. Last year, they formed National Widget Sales Consultants (NWSC) as a Delaware LLC to capitalize on the emerging/growing/widening need for retailers to leverage the growing list of retail sales technologies.”
What Am I?
Answering this question tells the investor about the specific product or service offered and the revenue model. Put another way, answering this question tells investors what you do, how you do it and how you plan to make money. It never ceases to amaze me how many entrepreneurs forget the making-money part. They simply assume that advisors, investors and strategic partners will intuitively “get it.”
We won’t unless you tell us in plain and simple terms. If it is a product, does it stand alone or will it be incorporated into an end-product? Will it be sold wholesale, at retail, through VARs, through an inside sales team, or through an outside sales team, e.g. commissioned sales reps? How will the product be distributed? Will you have your own distribution? Will you piggy-back on another’s? Will you use a traditional courier, e.g., UPS or FedEx?
If it is a service, how will you market it? How will customers acquire it? Will it be licensed? How do you plan to keep customers coming back?
Continuing our previous example, “NWSC has created a proprietary and highly-customizable system that will be marketed and sold by an inside sales force. We will place consultants within our clients’ businesses to dissect their retail operations, identify operational and sales goals and evaluate which of the many technologies in the marketplace are the best fit for achieving those goals. NWSC generates revenue through consulting fees, commissions on technology sales and licensing the system to third-party business consultants.”
This is also the part of the presentation where you want to highlight the existence and commercial viability of any Intellectual Property including, Patents, Trademarks, Copyrighted content and Trade Secrets as well as proprietary technology or systems and methods.
Why Am I?
Now that you have convinced us that you are qualified to run this business and that you know how it will make money, you need to convince us how or why your idea meets existing or potential needs in the marketplace. Another common mistake I see is a focus on market size, penetration and growth. Yes, it’s true that VCs want to see Billion Dollar markets. But, more importantly, they want to know why your idea is going to penetrate that market and capture sales.
For example, is the market fragmented with no dominant provider? Are there segments of the market that are underserved by existing products/services? Put another way, what is your value proposition? Why will customers choose your product or service over their existing, entrenched ways of doing business? Again, don’t assume your audience will instinctively understand this. The more sophisticated the product or service, the more you will have to flesh out this value proposition.
The Bottom Line.
While following the method outlined above is not guaranteed to land you that round of financing that you are after, it will no doubt help. Paying attention to answering these three simple questions will help keep you focused, keep you on message and provide a framework for answering the types of questions that your advisors, investors and strategic partners will be asking themselves. Good Luck!