As an entrepreneur, you’ve probably noticed that the Internet is crammed full of bodacious startup advice, mostly blogged by VCs and angels masquerading as normal (even altruistic!) human beings. Yes, they simply ‘want the best for you’, and they have no hidden agenda at all. And almost all of them are in the US.
Now… something (if not actually everything) about that preceding paragraph tells me that this whole American-startup-advice-from-on-high genre may not in fact be a particularly valuable resource for us over in the UK.
So here’s my own set of pitching lessons for you, all of which I’ve basically learned the hard way this side of the Atlantic (i.e. it’s a smorgasbord of my own mistakes and those of other entrepreneurs I’ve seen pitching). They may not be perfect, but at least they’re from the right side of the table.
(1) “I value my company at X”. Don’t do this! The ‘realpolitik’ of UK startup valuation is that angels rarely look for seed rounds with less than 20% equity on sale (if the entrepreneur is credible and everything’s all pretty much sorted). Any sniff of development risk and they’ll be looking for 30%+ (because most treat ‘risk’ as a binary function, i.e. risk is either trivial or non-trivial, never in the middle). No credible customers and they’ll look for 40%+. So, whatever you’re looking to raise in equity, you can divide by these percentages to get a valuation: i.e. £200K / 20% = £1m (best case). What I’m saying is that the size of the raise combined with the quality of your proposition already implicitly values your company. But can your turnover and margin forecasts back this valuation up? And can you achieve this as a competitive valuation? Things to think about!
(2) “My company has no competition”. Hilarious, and especially so when delivered with sincerity, as if customers have some fairy money in their budgets / wallets that they are only allowed to spend on your company’s new & untried products and services.
(3) “Competition is a good thing“. Well… yes, competition is a good thing for customers but actually only mediocre competition is a good thing for you. And if better resourced, more experienced companies than yours just happen to compete really well in your particular marketplace, your company is basically toast.
(4) “If we build it, they will come“. Well… it’s quite true that a handful of angels are so stuck in the mid-1990s that they respond positively to ‘Planet VC’ nonsense like this. But relying on networking through to oddly nostalgic angels to fund your company would be a bit like betting that a 2011 “Happy Days” movie would be a dead cert at the box office: sadly, times have changed, Mr Fonzarelli. So don’t do it, please.
(5) “As a child, my interests were…“. Sorry, but nobody cares. Angels want to punt their money on propositions that are (a) intriguingly valuable and (b) very much in the here and now, so that’s the time-frame upon which you should focus your efforts. Construct a short-term present-tense narrative about how your proposition is just about to make them rich, not about your personal redemption: leave all that for film-makers when your company is insanely successful. And no, Keanu won’t be playing you, OK?
(6) “Right now, it’s just me“. Unless you have a PhD in Renaissance Manitude from Harvard and a so-good-it-can-only-be-forged real-world reputation to back your claims up, admitting you’re doing it all on your own is pretty much a kiss of death turnoff to about 75% of angels. Really. Remember that it’s not about ideas, it’s about execution, rapid growth and scaling… and unless you have some weird octopus-like genetic mutation, you can’t do all that alone.
(7) “Exits are hard right now“. You don’t say. By which I mean “you don’t say this“. My understanding is that since ~2006 (when Euro VCs collectively decided that almost all risk was a bad thing), angels have seen their average length of time to a positive liquidation event roughly double. This lack of exits has long been one of the gnarliest nails in the UK angel investment coffin lid: hence there’s a strong case that a ten minute angel pitch should instead have roughly seven minutes’ worth of discussion devoted to exits – who’s in the market, what startups they have already bought, and what’s the likelihood they’d buy yet another marginal startup to add to their collection.
(8) “That’s the end of my presentation“. Factually true, but it needs to feel like it’s just the start of a beautiful thing you’re getting on with your angels.
(9) “I can’t show you anything today“. Don’t worry, that means they can’t be interested today either. Or tomorrow, come to think of it. Have you heard the old MIT slogan “demo or die”? You just died.
(10) “What we’re trying to do is…“. (A phrase-to-avoid I stole from this nice post here). Soft, ‘hedged’ language like this may technically be more accurate, but you’re in a sales meeting, remember? Find ways to harden up your prose. You’ll be grateful for this later, really you will.
(11) “Bla bla bla bla“. Bad. And exceptionally bad when the slide behind you says exactly the same thing. They’re looking to invest in bright people, not dull slides. Your slides should be provocations to get you to come across as your sparkling wonderful self, not a set of crutches to allow you to look your lamest.