Great Startups Can Hook an Investor in 60 Seconds
An “elevator pitch” is a concise, well-practiced description of your startup and your plan, delivered with conviction and enthusiasm, that your mother should be able to understand in the time it would take to ride up an elevator. Everybody knows about these, but few people seem to deliver a good one. A good elevator pitch is not just for an elevator discussion. Use it in every networking situation and business conference introduction. The elevator pitch should be the first few paragraphs of your business plan, your executive summary, your investor presentation, and the first page of your web site. A different message everywhere is no message.
An elevator pitch should always contain the following key elements:
- Problem-solution “hook.” Open your pitch by getting the investor’s attention with a hook. This is a statement or question that piques their interest to want to hear more. Good hooks succinctly define a real problem, and suggest the solution. For example, “I just patented a new cell-phone technology that will double battery life for half the cost. I need your help in getting it to market.”
- About 150-225 words. Your pitch should be about 30-60 seconds (average elevator ride). Don’t think that you can just talk fast to cram 500 words into that time. It won’t work.
- Obvious passion. Investors expect energy, conviction, and commitment from entrepreneurs. How do you expect them to get excited, if your startup sounds like a dull subject to you?
- A request. At the end of your pitch, you must ask for something. Ask for time to give a full presentation, or ask for a referral to someone who can help.
My friend, Dave Bittner, offers a simple template to get started that will work for most products and services: “We sell [product/service deliverable] to [market niche] who want [unmet market need]. Unlike [competition], we [differentiation].” All you have to do is fill in the brackets and you have the essence of an elevator pitch.
Here are some additional recommendations to increase the impact:
- Describe your product or service. Provide a one-paragraph description of what you sell. Focus on customer benefits rather than features, indicating real pain, rather than just nice to have. Cohort analysis can be a valuable tool for this step.
- Quantify the market. Make sure you clarify how large the market is, how much money they have to spend, and a positive level of growth. A product may be great, but it won’t make a business if you don’t hit customers with money to spend.
- Outline the revenue model. Giving the product away, or selling below cost may make it attractive to customers, but your business won’t be attractive.
- Highlight people strengths. “Bet on the jockey, not the horse” is a familiar saying among investors. Tell them the high points about you and your team’s background and achievements.
- Present a sustainable competitive advantage. You need to communicate effectively how your company is different and why you have an advantage over the competition. This could be a patent, key partners, domain expertise, or a better distribution channel.
Most importantly, avoid the most common mistake of turning this into a sales pitch for your product or service. The investor is “buying” the business, not the product. Tell him why and how you will run a winning business.
Consistency and redundancy are the keys to communicating any message. Another key to effective communication is practice, practice, practice early. Remember, you only have one chance to make a great first impression.
All opinions expressed are those of the author, and do not necessarily represent those of Gust.
Written by Martin Zwilling
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