The number of startup pitching competitions around the world is out of control. Sadly I believe funders’ interest in these competitions has an inverse correlation: more events competitions = less funder interest.
My personal lack of enthusiasm for pitching competitions is the result of both the abundance factor and my own philosophical view about what it “means” to pitch a funder and the entire experience surrounding the pitch.
In my opinion, pitching is a symmetrical discovery activity and must be approached as such. There are certain things that both founders and funders need to keep in mind when they pitch each other.
Pitching is about stimulating engagement
Founders need to think long and hard about how to stimulate engagement with funders. Engaging in a two way conversation is the best way to ensure that funders are listening and really digesting the critical dimensions of the business. I consider totally useless long pretty presentations that are structured as one way communication flow. Founders should consider presentations a tool to stimulate engagement instead of as a goal per se. The best presentation I have ever seen in my life was by Daniel Ek, CEO and founder of Spotify: He never opened his laptop and used a whiteboard to drive my engagement.
However, as we say, it takes two to tango: Funders should also make proactive efforts to engage and ask smart questions. Note, however, that those questions should be focused at learning more about the founder and his/her business and should never be seen as tool to show off knowledge. Intellectual arrogance is one of the worst behaviors I have seen by funders during a pitching session.
I believe pitching sessions should be called mutual-engagement sessions and should be aimed at cross-learning. I detest all the instances in which both funders and founders interact with empty cross-selling statements without engaging in a real conversation.
Pitching is about getting to know the person
Both funders and founders should use the pitching session first and foremost as a “get to know you” effort. Specifically, they should both explore whether their personalities click. Both parties should make an effort to understand who the other person is, his/her background, and his/her motivations. Both founders and funders should keep in mind that to observe their reciprocal behavior during the pitching session can be a great way to estimate the quality of their future interactions: Existing behavior can be a great measure of future behavior.
In order to get to know the entrepreneur, funders should ask left field questions and observe the founders’ behavior in front of the unexpected. This is often the best way to take the discussion to a different level, to move out of an artificial script and to observe the founder’s real personality.
Founders should disagree during the meeting without hesitations. Pitching is not about paying lip service to the person in front of you. It’s about exchanging views and learning during the process. Observe your future funder when there is a disagreement and see how he/she reacts.
Pitching is about understanding the motivations
Both founders and funders should always ask each other the most basic of all the questions: Why do you do what you do? What’s your motivation?
A clear insight into each others’ motivations will provide a totally different depth in the founder/funder relationship. Deep motivations are also the secret source of energy when things do not work out as planned.
All the cases in which funders are investing because its a good deal or founders are starting a company because its an interesting space are very concerning. Watch out!
Pitching is about being selective
Neither funders nor founders should consider pitching a statistical exercise based on the concept of: more pitches = higher statistical probability of finding the right match.
Founders and funders should do significant upfront work before committing time to each other. Let’s engage in a process of deep reciprocal learning of each other only when it’s understood that it’s worth our time to do so. Today there are tons of public data available for both founder and funders that should be reviewed and analyzed in advance of deciding on any meeting (e.g. LinkedIn references, Twitter profiles, App store rankings, etc).
The deep mutual engagement that comes with pitching is first and foremost the beginning of a discovery process. If neither the founder nor the funder wants to invest the emotional energy that this implies, please change careers or don’t start a company. There are plenty of jobs in banking and elsewhere.
In conclusion, here are my seven tips for good pitch meetings:
1. Selling-based pitches suck. Engagement is the way to go.
2. Pitching is not a statistical game aimed at increasing your odds to be funded but a discovery process to learn. Less noise, more substance is what we all want. Avoid useless pitching every time you can.
3. Pretty slides are useless. Create tools to stimulate engagement: simple slides, whiteboard session, demo, etc.
4. If the founder/funder chemistry during the first pitch session is not right, run away. Follow your gut.
5. Pitching is not about following the script. Go off script when you can and push the other person to do so too. Ask unexpected questions and watch the reaction.
6. Ask direct questions to deeply understand the why founders and funders are involved/want to be involved with the business. Be skeptical if there is no good “why.”
7. Do your homework in advance of a pitch meeting.