Common Mistakes in Investor Pitches
September 12, 2011
Pitching to investors is a crucial moment in your company’s life. It’s easy to get so caught up talking about all the big-picture awesomeness of your product that you forget to go into the specifics of your business plan. But investors expect your to address both the business and product sides of your endeavour. If you spend too much time explaining one side or the other, it might leave investors unsatisfied or confused about your company. So, in order to help you better understand what specifically investors are looking for in a presentation, we at YetiZen have decided to describe some of the most common mistakes in investor pitches and how to avoid them.
DO NOT try to cram too much information into your slide presentation. You want your deck to reinforce your argument, not distract from it. Entrepreneurs tend to get so excited about their ideas that they feel the urge to cram in as much information as possible in their pitches. But providing too much information can make your presentation seem unfocused and muddled. The key message from each slide should be immediately recognizable and related in the context of the overall presentation. Don’t go overboard on the number of slides in your presentation, between 3 and 7 slides is the ideal amount. According to psychologists the average person’s short term memory is 7 +/- 2 chunks of information. Stress, fatigue, boredom and the like lead to a short lead memory being on the shorter end of the spectrum. So don’t overload your presentation with information. Boil it down to 3 key take-aways, and use the rest of your presentation to convince investors that these 3 take-aways are true.
DO NOT spend too much time educating investors about the market opportunity move to team fit quickly. Many entrepreneurs get so excited about talking about the market opportunity that they forget to clearly describe how they are going to take advantage it, but this is crucial information to investors. Investors want to hear how you are different than the competition. What makes you special? Spend time highlighting the skills and experience of your team, and demonstrate what makes you uniquely qualified. If your team has worked with recognizable and relevant names in the industry, talk about it! Make sure you don’t come across as arrogant, but clearly explain in detail why your team is the best fit for the opportunity you presented to them.
DO NOT leave out important information about your demographic. Explain what makes your target audience different, and why you are uniquely qualified to capture their interest. Talk about the big picture, but be to include specific numbers. Give as much relevant detail as possible about the size and value of your target audience, and don’t forget to cite your sources. Use charts and graphs to demonstrate the size of your market. Estimate what percentage of the market you expect to capture, and show far have you progressed towards your goal already (in the case of startup weekend talking about your progress with you prototype or plan is equally acceptable). Investors want to know that you have fully considered the identity of your customer base and that your plan of action is specifically tailored to your them.
DO NOT tell investors that the real work will start after you get the money. You want your company to appear as derisked an investment to investors as possible. If you say you will begin work after investment at worse it makes investors feel you will be learning on their dime. At best it reduces your ability to create a win win opportunity for them as you are not painting the picture that you are providing something mutually beneficial, with forward momentum. So, present your company as a flourishing project that anyone would be lucky to join. After all, it’s always easier to get people excited about your vision once you have demonstrated velocity.
Once you’ve made sure your pitch is ready to present, you will be able to focus all of your attention on the delivery, which is an art form in itself. At the YetiZen members participate in personalized pitch practice sessions every week in the 3 months of the program so they can fine-tune their pitching skills. Then, once they are ready, we give them the opportunity to present their companies in front of 7 prominent VCs and 30 angels in the game space. If you are interested in finding out more about YetiZen and how we can help your game company succeed check out our website or come meet us at one of our San Francisco Game Developers Workshops and Mixers. We are always looking to connect with leaders and innovators in the game industry that are looking to create strong exitable businesses!
This article was written as part of the Mega Startup Weekend held September 9th - 11th in Mountain View, California. The event, powered by the Kauffman Foundation and hosted by Microsoft’s BizSpark, brought together leaders in Education, Health-care and Gaming in order to address current social problems in need of innovative solutions. YetiZen founders Sana Choudary and Japheth Dillman coached gaming startups on their pitches helping them clarify their strategy, polish their messaging and delivery.