We are coming into the semi-finals at the 5th Seattle Angel Conference and will soon be getting ready to write a big check (May 22nd is the day of the big conference at the HUB in Seattle). This week and next we’ll be hearing from the top twelve teams pitch our group of angel investors as we try to refine the list of semi-finalists to a list of six finalists. We’re a diverse group of angel investors who are collectively trying to allocate the sum of our group’s investment dollars.
This approach to angel investing is somewhat unique where the dollars are committed up front and who gets the dollars is determined at the end. One great thing it does for the entrepreneurs is that it puts some parameters around the minimum investment that will be made (there is no cap on how much the investors put in after the minimum) and the timeframe of the investment. These parameters provide some known quantities for the entrepreneurs (a rarity when it comes to raising angel capital). What it doesn’t do though is make the actual art of pitching and getting angel investors on board any easier.
Continuing from my post yesterday on engaging with angels, here are some things to think about when it comes to pitching a room full of angel investors.
- You need to find one or two champions in the room to truly connect with
- Each investor is thinking about their own experience and bank account when analyzing you and your pitch
- Market size and business economics need to be put in context to get everyone thinking in the same way
- There are always engineers that will rat hole you with deep technical questions… try to not let that happen
- Showing progress against goals is important (the closer those goals are to customers paying you the better)
- Team is always #1 on investor lists, help the investors understand why you are the team for this business
I get that these aren’t specific tips on exactly what you should put in your slide deck or what you should say in front of the room or networking before/after the presentation. Those things are going to be different for every team that presents. These six things are important to think about when you are covering all the relevant areas of your business. They are a part of the context in which you are presenting. Let me dive into them a little more…
You need to find one or two champions in the room to truly connect with
Champions will help you when you aren’t around. They will have good things to say to their peers about what they saw in the pitch and what you told them beyond the pitch. Champions will be likely to join a team who will perform due diligence on your company and will be the first to say they want to write a check (or the first to say that they don’t want to write a check). Champions help to engage the other investors to think more seriously about your business.
Each investor is thinking about their own experience and bank account
Although it is a room full of people, they are not people who have agreed on how they want to invest. Each investor has a different background (some entrepreneurial and some more corporate). Each investor has a different net worth. Each investor is allocating a different percentage of their net worth to angel investing. Each investor has their own views on the types of businesses they want to invest in. Each investor has their own ideas about the kind of exits they want to see. Each investor has their own ideas about how they want to engage with the companies they invest in. It is important to recognize the different views in the room.
Market size and business economics need to be put in context
Because everyone is so different in the room, context matters a lot when you are talking about markets and business economics. Not every investor will inherently understand your market and the economics of your business. Many pitch doctors will tell you to explain your business to a high schooler to make things easier. This is a good way to think about it as the investors in the room have varying backgrounds and are switching from one presentation to the next which may have drastically different markets and models.
There are always engineers
Engineers like to talk about details. It doesn’t matter if the engineer is a founder, an investor, or an employee for someone else. The engineer mindset brings the details of the technology to the forefront. This is important for building and understanding great products; however, it isn’t the only important thing when it comes to building and understanding a business. It is one of many aspects of the business. If there is an investor in the room who is an engineer – the odds are high they will want to dig deep into the technology to understand it. During a short presentation with little time for Q&A it is fine to get into some details about the technology, but don’t let yourself get rat holed and only talk about the technology. Save that for a follow-on conversation during the post-pitch session. This way you allocate more time during the pitch to engage all the investors and you allocate more time to provide the kinds of answers the engineers really want afterwards.
Showing progress against goals is important
At the end of the day – investors want to see that you can get shit done. You can have everything in the world (product, market, team, and so on)… Yet if you can’t get shit done, investing in your team and business is not an easy decision to make. Show that you can set smart goals and milestones, show that you are achieving those goals and milestones. The closer those goals and milestones are to customers paying you money for your core business offering the better.
Team is always #1 on investor lists
I’ve worked with and interviewed hundreds of angel investors and can say with certainty that team is the number one thing on investor’s lists. It isn’t necessarily what school you went to or where you worked… it is more of a gut feeling about the team and an understanding of whether this team is a team that can truly scale the business and deliver on the potential. Does the team work well together, can they push through the hard times (there will be hard times), can they be stubborn at the right time and recognize they need to adapt at the right time, can they surround themselves with the skills they are missing, can they truly engage with customers and partners…
If you haven’t started down the path of putting your deck together or you are wondering if you’ve covered most of the key items, have a look at this sample deck – it is a good place to start.