Ed Graffin of @CapTarget on Preparing To Pitch

Pitch preparation can be some of the most important work an entrepreneur does in the early stages of business development. Knowing what to say and how to say it can make or break a pitch.

Founding Team Alignment – Meet with your team, make sure you are all aligned in your company’s efforts. Having a lack of clarity when it comes to strategy or capital requirements within the team can kill a deal before it ever starts. In a multi-founder startup it’s a good idea to designate one founder as the fund raising champion, this helps keep the message and offer consistent.

Material Preparation – When creating presentation materials remember to do the following:

• Keep it simple … real simple. Investors groan when they see a 60 page business plan, no matter how good the opportunity. Expect to produce a 2-6 page quick pitch document that will be supported later by a more in depth 15-20 page document. Everything else investors need to know, even on big deals, comes from meetings with management.

• Step outside of your expertise. Remember to speak to your investor as if they have no technical knowledge of your product or industry. Although you may be a technical expert, emphasizing this at an early stage can negatively affect the pitch. Investors are primarily concerned about the possibility of a return on investment, not necessarily how brilliant you think you are.

• Don’t skip on financials. Detailed, realistic long-term projections not only express potential earnings but also make the statement that you and your team is driven by real, attainable financial goals. Expect your projections to be scrutinized and have supporting documentation for everything possible.

Practice and then practice some more – When you start approaching more sophisticated investors in the venture capital and private equity worlds you only get one chance. These investors are so inundated with deal flow that they just don’t have time for someone who is not prepared.
To drive home this point – the first pitch call I ever made in investment banking went very poorly. I was unprepared and the VC cut me down to size in about 30 seconds. Ten years have passed and I still can’t call on that firm. I am not kidding when I say you only get one chance.

You can practice honing your pitch with:
• Friends
• Family
• Coworkers
• Pitch Clubs
• Mentors

It’s less important who you practice with and more important that you practice. When you do dry runs of your pitch always dress and present as if you were pitching to your ideal investor. Worst case you get practice and good feedback, best case you might land an unexpected investor.

Know who you are pitching to - Raising capital can be a long process from start to finish. Having an understanding of who you will be contacting can help save a lot of time that is generally spent just looking for a qualified party to hear you out. Do the research to identify firms and groups that have a track record of investing in your industry and geography and in similarly sized deals. One of the biggest mistakes startups can make when looking for groups to approach is to look only in the city the company is located in. If you do this your chances of securing funding plummet. Go where the money is, wherever that may be. Be prepared to have to travel to get in front of the right group because odds are they are not where ever you are.

Fighting the urge to jump right in to your capital raise can be one of the best decisions you can make. Having a clear direction, solid presentation materials and a good idea of whom you are pitching to and how you will be pitching are critical first steps to building the foundation of a successful capital raise.

About the author: Ed Graffin is the director of research at CapTarget, LLC. Captarget provides investor and deal flow research for the M&A, Private Equity and Entrepreneur communities. To learn more about CapTarget’s services please visit www.captarget.com or follow us on twitter @CapTarget