Pitching to Investors - Things People Often Get Wrong
Pitching is difficult. Whether it’s your first time or your 1000th, it’s hard to sell your business in a way that feels compelling, fresh, and authentic every time. There are obviously a thousand how-to blog posts out there, but we think that there are some more nuanced reminders that could help the water entrepreneurs out there.
Storytelling matters
“Those who tell the stories rule the world” is both a Native American proverb and a paraphrase of Plato. It’s as close to a universal human truth as it gets. And this has nothing to do with investors - good storytellers win because they can hire the best people, they can convince early customers to buy (and yes, they can secure the capital to make good on their promises). What makes a good storyteller is complicated, and only comes with study and practice like any other skill, but it’s helpful to think of it as a role - basically a very slightly heightened version of you. You, but with the game face on. And don’t forget who your audience is: when talking to us at Burnt Island Ventures or any other water specialist, please don’t spend ten minutes explaining the story of the water crisis. We know. Get to your story.
“If you can’t do this, what else can’t you do”
Logical, well designed pitch decks are now a complete commodity. Between Canva and Upwork, and the unending pitch advice online (!!), there is no reason for bad layout, bad design, or bad logic. And if you can’t take the time to make use of readily available online resources, it raises the question: what other obvious thing can’t you do? It’s our job to look through the poor presentation to find the diamond in the rough, but why make our job harder? Spend $150 on Upwork and you will avoid sending unintended messages about your entrepreneurial ability.
There is nothing like primary evidence, and a lot of it
If the answer to “how do you know this” is “I have spoken to ten customers”, that’s not deep enough. Try 200-300. That volume of customer data could be something you have acquired over a decade working in your industry, but we also have a ton of respect for those who have just done the legwork. The important thing is to get to the point where marginal surprises approach zero. It gets really boring, and couldn’t be more important. You need to show you understand the reality of the market you’re approaching.
Mistakes > successes
In your pitch, be careful of painting too rosy a picture. On the entrepreneurial journey, there are always troubles, trials, and tribulations. People who hide that fact just seem unrealistic and untrustworthy. There is always a way of showing your work and letting us know that you are someone who can come across an obstacle or make a misstep, reflect, and iterate. We want to see the evolution of your thought process, and these stories tell us so much more about your strength as a founder than a typical ‘success’.
Wider does not equal better
“We have our first four deployments in four different continents” is not the plus you think it is. In general, it’s a good idea to have your first deployments within cycling distance of where you live (this is the “Bevi test” - they didn’t leave Boston until after they raised their $17m Series A). Going too wide too soon means you risk losing focus, and undermining the quality of the experience of your initial customers. We are more impressed by what you choose not to do, and why, then doing a bunch of things at the same time.
Nothing is certain, except death, taxes, and competition*
Even if it’s just inertia and the status quo, there are always competitors. Don’t make us point that out. It’s also more than a good idea to be aware of companies that have tried and not made it in your chosen area. Learning from the mistakes of others is a seriously high value activity. Similarly with risk. If we ask you what your key risks are, and you only get as far as “we may see too much demand” or “we may not be able to hire fast enough” then it’s not a great indicator. The earlier you are, the longer the list should be - you just have to be clear about how you plan to mitigate them. If you don’t say something key that is simple to identify from the outside, we don’t know if you haven’t realized some area of competition or risk, or are hiding it from us. Neither is good.
Realism around valuation (especially now) says a lot
This sounds like self-serving VC crap, but especially in this market, if you don’t have a very good reason for it, be very careful about your valuation expectations. Anchoring too high, even if you expect to be negotiated down, makes you look naive. I also worry about the chess game of people who anchor too high. Ok great, shoot your shot, but it’s going to take you six months to get there (if you ever do), which represents huge opportunity cost. Your discount rate (the time value of money, basically) as a startup is HUGE. $100,000 today is worth way more than $100,000 in two months given the progress you can make in that time. Having a reasonable valuation, getting the capital in the door and putting it to work seems to be a far more entrepreneurially sensible thing to do, especially if you’re a first-time founder.
On that note, beware of what you tell us without meaning to
A good example of this is unrealistic bullishness. Water has a knack of curing overconfidence the hard way, especially for founders with no background in the sector - no matter how senior they were elsewhere. Coming in hot with the hard sell is a good way of letting us know you haven’t spent enough time in the market yet, and if we say yes and give you that check, we are going to be funding that learning curve. And we would always rather fund you after it.
Timing is everything
Being early is the same as being wrong. Especially if you’ve been in business for some time, if you’re asking us to underwrite to an inflection point, there has to be a very good reason why. Make sure we know what that is.
We hope that helps all the entrepreneurs. We’re here to find, fund and support the best water entrepreneurs globally, so register your company with us. Who knows, you might be the next Burnt Islander.
*and Tottenham being the worst. (Sorry - from Tom)
This post was originally published on Aquatech and is available here.