How to pitch your early-stage startup to angel investors and VCs

Even the best startup ideas cannot succeed without money. Finding a partner who will believe and invest in your company takes time, business acumen, and preparation. In this article, we have gathered 6 steps you need to take before pitching your early-stage startup to potential investors.

Step 1: Know who you’re pitching to

Like in marketing, acting, or stand-up comedy, knowing your audience is a key to success. Before you figure out how to pitch a startup, you need to think about whom you’re pitching it to. When pitching it to potential investors, you need to look at the world from their perspective. And if you do that, you will soon realize that their job is a lot harder than it looks.

First of all, angel investors are well-educated, intelligent, and experienced business people. But even they don’t know everything. They can’t know all the nuances of your startup’s industry. How to pitch to people like this? Avoid using jargon and explain industry assumptions without oversimplifying them and focus on benefits instead of technicalities.

Second of all, they are extremely busy people. Assuming this is their full-time job, they will talk with different startup owners every day. And for every pitch, investors spend at least a few minutes listening to the founder and then discussing each idea among themselves.

So, how to pitch to someone who has seen it all? Your pitch and your startup idea need to stand out. Find something unique that the investors could remember you by. It could be the way your presentation was prepared, your in-depth understanding of your target market landscape or the unique USP that your startup is offering.

Third of all, investors are optimists. They want to like your idea and they want it to succeed. Despite what you might hear during the presentation, they are on your side. After all, your success is also theirs.

How to pitch to optimists? Don’t be discouraged by their difficult, sometimes very specific questions. They might sound harsh, but in reality, it’s them sharing their experience with you. Chances are, they came across a startup that failed because of a problem that none of them even thought of. And they want to save you from making the same mistake.

Uber is a great example of how one can’t conquer every market with the same business model, which lead to Uber’s inevitable failure on the Chinese market.

Step 2: Sell yourself and your team before selling your idea

When pitching your startup, you are presenting your business idea as well as your ability to execute it. Investors will ask themselves if they understood your pitch, if they find it exciting as well as if they liked you and your team. Assuming you did well, the answer to these questions will be yes.

How to pitch your startup so investors see you as a reliable CEO?

You need to perfect your pitch.

• Start off with something strong and memorable: a surprising piece of data, a unique insight, maybe a quote from a satisfied customer?
• Be short and to the point: it’s better to leave room for questions than to bore your audience,
• Be exciting: if you can’t be passionate about your idea, why would anyone else be interested in it?
• Show the revenue stream: where your sales are (or will be) coming from, and how you will reach your customers?
• Show your startup as a solution to a customer’s problem.

If your pitch ticks all those boxes, the angel investors are likely to view you as someone who can foresee a problem and come up with a solution.

How to pitch to investors and what to focus on to make that happen?

According to Forbes, it’s about proving that you can:

• lead a company,
• execute a winning strategy,
• overcome challenges,
• pivot.

These skills will matter whenever you will face a big decision. For example, if your startup has multiple founders, you need to find a way to share ownership rights and profits between yourselves. In this case, our advice on splitting equity among founders is to do it with one of the three approaches that we recommend, namely:

• you can assign even equity to all founders,
• you can assign equity based on each founder's contribution and expertise,
• or split it based on the future value each founder is expected to bring to the company.

Your choice will affect how much equity will go to your angel investors, so they will be asking about it early on in your partnership. Having an answer ready during your pitch shows the level of preparation that they would like to see.

Step 3: Focus on the details of your idea, don’t be vague

At some point during your pitch, the investors will ask about your pitch deck – a brief, visual presentation of your startup’s details. To create one, you will need input from your co-founders and your leadership team, for example:

• your chief of marketing should help you with slides explaining how are you going to reach your target audience,
• chief of finance could focus on explaining the company’s cash flow and budget projections,
• chief product officer could prepare slides related to strategy and product roadmap.

Information in your pitch deck should be backed by evidence, such as user behavior data. You should also be able to explain your revenue metrics, different milestones, or how exactly your product is standing out. A complete pitch should have slides describing:

1. your product,
2. your team,
3. your business model,
4. key financial data,

How to pitch your startup using a pitch deck?

You should prepare two versions: one general and one detailed. Then, you should send the detailed version to your potential investors, and use a general one during your pitch. That version should focus more on visuals than text and and should excite your investors about your startup.

Step 3.1: If you don’t want to share details in fear of your idea being stolen, you might as well not pitch

No one wants to be “Zuckerbrged”. It’s a fairly new word, which means to have your idea stolen but changed just enough so someone can claim it as theirs. The truth is, ideas alone aren’t worth much. And if you don’t believe it – try selling one. No startup, no IPs, just an idea. You will see that the notion of a “million-dollar idea” is nothing more than just an empty phrase.

If you’re wondering how to pitch your startup idea so that it doesn’t get stolen, the answer is: you shouldn’t worry about it. Some entrepreneurs even go as far as to say that if someone steals your idea, you should let them and consider it as a compliment.

What really matters in growing your startup is execution. According to David Sivers (founder of CD Baby, a large online distributor of independent music), a business idea alone is worth only $20, while “the most brilliant idea takes great execution to be worth $20,000,000.”

If someone steals your idea, they would still need to put a lot of time and effort into bringing it to light. And even then, their end result might differ from what you would have done with it. That doesn’t mean you shouldn’t secure your ideas at all. There are still things you could do to protect them.

For example, if your idea is an invention, and you will share it with the public (like when pitching it to potential investors) it will no longer be suitable for patenting in the US. In this scenario, you should first seek legal advice on how to best protect your idea. If your business idea is something else than invention, we have five tips on how to pitch it safely:

1. Consider entering into a non-disclosure agreement (NDA) with your investors to keep your idea legally protected. However, this solution comes with a drawback. Not every potential investor will agree to sign it, so at some point, you may have to decide if having an NDA protect your idea is worth more than pitching to an investor.
2. Keep a paper trail of everything that relates to your idea, including conversations with potential investors. Save the documents, emails, or other records that could help you prove in a court that the idea was yours (if it ever comes to it).
3. Keep your idea secret. As much as tempting it must be to tell everyone about your new and exciting startup, it’s best to keep the group of people “in the know” as small as possible.
4. That also goes for keeping it secret from your investors, at least until the day of your pitch. Obviously, you will need to explain some details of your idea beforehand, but reveal only as much as you need to. You will disclose your know-how, industry insights, or other solutions only when you sign the deal.
5. Be careful who you’re pitching to. Getting your idea off the ground would require some effort unless the company that you’re pitching to already has the resources and experience in the industry. Do research on your potential investors to avoid pitching to your direct competition.

Step 4: Tell a story, investors are tired of “I’ve got a million-dollar idea” stuff

The slides in your pitch deck should be as short as possible, but still be able to convey information about your startup and how it’s going to succeed. To make the whole presentation cohesive, it could follow this order:

1. A brief explanation of a problem that your business is solving (a problem statement).
2. Your solution to that problem.
3. A business model that you propose as well as the selected pricing model.
4. A visual demo of your product (for example, a prototype), if you already have one.
5. Your sales and marketing plan.

To keep your deck both brief and informative, it’s best to make it only 10 slides long, present it within 20 minutes, and use a font size of 30 – this advice is also known as 10/20/30 rule.

Within these 10 slides, you should communicate your company’s roadmap for success, namely its vision, market potential, advantages over competition, financial projections, and exit strategies. However, there’s another way of pitching that you can consider – one that involves forgetting the deck altogether and focusing on creating a compelling story.

The strength of this approach comes from two ideas. First, the angel investors must have seen thousands of pitching decks in their careers. A pitch that is different from the usual format is a nice change of pace for them, which they are more likely to remember.

Second, humans in general are wired to respond to storytelling. Every successful commercial, political speech, or TV series follows that principle. Presenting your idea as a story is a sure way to grab your investor’s attention. How to pitch your startup using storytelling? Prepare a narrative that:

• identifies a problem (eg. 25% of shoppers leave their cart without completing their purchase),
• sparks intrigue (what if I told you that the solution to that problem was under our noses this entire time?), 
• shows your startups value, instead of just telling about it (imagine you have a small e-commerce website, and you are looking for ways to make it your full-time job)
• talk about how your product benefits the users, instead of just saying what it does (in two weeks, our test group has improved their conversion rate by 15%),
• shows a demo o your product.

These are only guidelines, not rigid rules, as storytelling is more of an art than a science. You should keep that in mind when pitching your startup, as you might find that some of these tips fit your idea better than others.

Step 4.1: Target an attractive market or prove that the niche you’re targeting has potential

When we talked about how to pitch to sell yourself, we explained how important it is to demonstrate that you understand the market that you’re trying to enter. But, for your pitch to be successful, you also need to convince your investors that you know where to look for paying customers. One thing that will help you with that is defining your target market. In simple terms, it is about four things:

1. Describing people that will become your customers. How old are they? Where they live? How much they make? These are just some of the questions that you need to answer, of course.
2. Your product: what problem does it solve?
3. Researching your competition. Is someone else offering a product or service similar to yours?
4. Show that there’s money to be made. It could be done through your first sales report, white papers on the size of your market, or surveys that you conducted with your potential clients.

Step 4.2: Prove you deeply understand that market, not just winging it

Demonstrate to your investors that your idea is carefully considered and that you have the business acumen that they are looking for. By conducting surveys with potential customers and conducting product pilot launches you should get a deeper understanding of the industry as wells as pain points of people in it. This will help you come up with deeper insights that you will base your product idea on.

Step 4.3: Show investors where the money is

Finding a revenue stream, or evidence that there is a market for your product, shows your investors that you have an understanding of what they’re looking for. Being able to show your existing sales, no matter how small they are, will also help in pitching your startup:

• it will prove that there is a market demand for your startup,
• it will make your financial projections more believable than just a chart showing growth with no evidence,
• it shows that you understand how the finances of your business work,
• it shows that you have a clear business model,
• it will give your investors an idea of the timeframe needed to see returns on their investment.

Step 4.4: Present your product roadmap and MVP development timeline

Product roadmap is a “plan of action for how a product or solution will evolve over time” in terms of vision, features, or sales and what goals will you achieve along the way. To achieve that, a roadmap that you should use when pitching a startup should have these four elements:

• a product vision statement that names the purpose and values of your startup’s product,
• definition of your target market,
• a list of needs and pain points of potential customers,
• an estimation of your time-to-market (TTM), and whether you know how to release your product before your competitors.

Pitching your startup with a roadmap demonstrates that you have a clear vision for your product’s future. It could also be used to track your progress in completing your goals.

How to pitch your startup in a way that shows that your roadmap is achievable and that you thought of everything?

Add an MVP development plan. A roadmap with an MVP development plan should include:

• a project scope,
• a timeline,
• features that you plan on building,
• required resources,
• milestones,
• and a detailed cost estimation

If an MVP is something that you haven’t had a lot of experience in, it could be wise to hire an MVP development company that has worked on similar projects in the past.

Step 5: Showcase a compelling prototype

Nothing beats showing your investors a prototype of what your idea might look like. For a digital product, this can be just as little as a clickable mockup, or images of basic features that you can show to potential customers. If their response will be positive, many investors will see it as evidence that your product has a chance to succeed with your target market. Other benefits of prototyping are:

• feedback from customers that can be used to further improve your product,
• it saves your time and money of developing a product no one wanted,
• it helps with communication with your development team.

How to pitch your startup if you don’t have a prototype yet?

You could try using a method called Fake Door MVP. It involves building a simple landing page that would describe all the features of your MVP. By showing it to your target audience, you can test if they would be interested in buying it. You would get market validation and a working landing page that you could use once your product launches.

Deciding which approach will be right for you requires experience in the matter. Investors don’t expect you to know and do everything yourself, but they will want to see that you know how to solve problems. If there are aspects of your startup that you wished you could brainstorm with someone, make sure to book product workshops with us. Our cross-domain experts will share their knowledge with you and help you find the right type of market validation for your startup.

Step 6: Get used to hearing “No.” and push on

Even the best pitch deck complemented with perfect storytelling will have a few weak points. You will hear questions that will be uncomfortable because they will make you realize that you missed something in your pitch.

Investors are very good at spotting these gaps and using them as an excuse to say “No.” to your idea. But that’s OK – as long as you use each rejection as a learning opportunity. With every pitch, the list of uncomfortable questions will get shorter until you reach the point where you have heard them all. And you will have all the answers prepared. You won’t get there overnight, but your investors will see it as a sign that you are committed to your idea.

Lifting your startup off the ground is hard. If at any point in your journey, there is something our development teams could help you with, feel free to contact us.