6 Things to bring to your pre-seed VC funding pitch
Let’s be honest.
There’s actually not a lot ‘there’ at pre-seed, except your business idea itself and a few plans and forecasts. Big dreams and small budgets.
In fact, the only real substance you bring into the pitch is yourself.
Revenues at this stage are either non-existent or so small as to not be a factor. It is confidence in you that plays the biggest part in swinging investment decisions one way or another.
Of course, if there’s a founding team, rather than just a founder, it is confidence in the leadership and entrepreneurial qualities of the team as a whole that are considered. But it’s very much the same strengths you need to demonstrate whether you are a powerhouse of one or a dream team of three or four.
Here are the six key qualities you will need to demonstrate to bag that pre-seed funding.
1. Know your numbers
Venture Capitalists are not interested in saving the planet. Snap out of it.
VCs have rigid investment criteria and aggressive capital placement targets and deadlines. And they are BUSY.
This is binary. If you don’t know your numbers you either don’t have a business model or you aren’t fit to run a business.
Map your 3 year P&L, know your production margins, projected revenues and costs for at least a 3 year build plan. That should give a clear indication of expected profitability, correlating (ideally) with your proposed valuation.
There really is no excuse to fail here. If you don’t have a handle on your numbers you are wasting your time and theirs.
2. Be the assertive, competent leadership team
Every company in its early stages faces a struggle to find the time it needs to get all that needs doing done. The truth is you will never actually have enough time to get everything ticked off.
VC’s know this only too well. What they want to see is an entrepreneur who can get things done quickly and effectively. They want a firm decision maker able to take action and deliver against agreed plans.
But that’s not all.
They also want evidence that you understand exactly what your leadership priorities are, from a VC’s perspective that usually means mapping the clearest and fastest path to revenues and profitability. You need to demonstrate a laser focus on the things that will make the most impact, and leave the rest for another day. Demonstrate exactly how your funds will be used and the impact they will have on your business and it’s value.
3. Clarity. An elevator pitch that lasts three floors max
Practice describing what you do in 30 seconds or less.
This is essential.
How do you describe your business at social functions? Does it change after a few tequilas?
You must not only exude absolute confidence in your vision for your company but you must be able to articulate this clearly, compellingly and succinctly. If you can’t explain it simply you don’t know it well enough.
This short expression of your vision is a critical part of your pitch and will be central to building customers, supplier negotiations and recruitment. Customer bases are built, at the early stage, on vision – so make it exceptional. (Do not drink tequila before your VC pitch.)
And stop sounding like you swallowed a thesaurus. Describe it in real talk, humanize the language and ditch the lingo bingo.
Trust me. Eyes glaze over when budding founders wheel out their “enterprise grade critical infrastructure cyber resilience improvement protocols”… but tell a room full of VCs “you stop big banks being hacked” and watch the ears prick up. No need to dumb it down, just avoid the unnaturally verbose and overtly formal language. Be you.
4. Make like a cool glass of water. And shapeshift.
Try placing a square peg into a round hole; all day long it won’t fit.
If you are the square peg and your VC is the round hole then at least one of you is going home empty handed.
Now stop playing with pegs and imagine you are water. The wetter the better. Naturally assuming the shape of any container out there. Think of your VC as just another container, you naturally adapt to their form, reflecting their communication style and areas of interest. They want to talk finance, dive into the numbers, they are more interested in your product… guess what, so are you.
This isn’t to say that VCs are hunting for someone who mirrors their values. More that they look for leaders that combine a strong vision with the flexibility to adapt.
Successful entrepreneurs are always shifting and adjusting their contribution to the business. Their vision holds firm while business plans, teams, products and market strategies can evolve rapidly.
5. Roll with the punches
Every entrepreneur has an Achilles Heel.
In fact, many have several, but that’s no problem. As long as you are aware of the things you fail miserably at, and have plans in place to address them, your achilles heel won’t trip you up.
But, having a Glass Chin is another matter.
Startups are grueling: long hours, constant pressure and frequent setbacks. You must be able to show you can roll with the punches and demonstrate resilience. And you can expect a few unsuspected left hooks and upper cuts thrown at you in your VC pitch. Don’t argue, confrontation will get you nowhere, be open, honest and constructive, and if possible, demonstrate you expected and prepared for the tough questions.
6. Secret sauce – Give yourself the edge
This quality is much harder to pin down – but it’s absolutely critical.
Try and define ‘the secret sauce’ that differentiates your from the competition. It may be your deep technical expertise that enables a technological advantage and attracts talent. Perhaps you have specific or unique product features or patents that set you apart, or a unique model enabling a particularly low cost… or a disruptive pricing format…? It could even be the market connections and networks that you can tap into to build early traction.
Whatever it is it should be rarer than rocking horse shit and it should be 100% aligned with the way that your company will achieve growth.
So just to recap, before you head to the shark tank, here’s what you need to pack for that pitch:
- Know your numbers
- Be the assertive leadership team
- Nail your 30 second elevator pitch
- Mirror your VCs interests
- Practice your counter punches
- Bottle your secret sauce
That’s it for today, best of luck getting funded!
If you’d like to discuss joining the G33K incubator please let me know ([email protected]). G33K provide investment and growth support to early stage businesses, we are currently accepting applications for investment.