The following is Part Two of our two-part series on entrepreneurial elevator pitches. In Part One, we examined the reasons why every small business owner should master an elevator pitch and offered tips on how to structure one for maximum impact. In this follow-up section, we focus more specifically on targeting an elevator pitch to an investor or venture capital audience.
Although elevator pitches can be presented to a variety of audiences in the service of several different business goals (as we saw in Part I of this series), their most common purpose among startups and early stage small businesses no doubt still involves the attraction of capital. But whether it’s an angel investor from around the corner or a large VC firm in Silicon Valley, this cohort often proves to be the most difficult for an entrepreneur to impress, inundated as they are with similar pleas for financing day after day. So, to stand out from the rest of the pitching crowd, it pays to fine-tune one’s presentation to improve one’s chances of scoring that potentially life-changing investment.
Using the elevator pitch to get your foot in the VC door
“From my experience, a lot of introductions to venture capitalists happen in written format,” notes Andrea Rice, president and co-founder of CareerCore, a New York-based executive consultancy. “The entrepreneur may know someone who knows a potential investor and that becomes a way to get an email in front of the right person.” But while it may be tempting for an entrepreneur to attach their entire business plan and send it along in hopes of wowing a potential investor, Rice says this initial opportunity is better thought of as the proverbial short elevator ride via correspondence rather than a formal meeting.
“You’ll be lucky if the VC spends more than a few seconds on your email,” explains Rice, who has spent time on both sides of the pitching table, first as a Wall Street equity analyst listening to pitches and then, more recently, as an entrepreneur making pitches to raise funds for her current venture. “The purpose of the email,” she notes, “is to get the VC to look at your Executive Summary. The Executive Summary is the written equivalent of an elevator pitch for an entrepreneur.” (For a detailed breakdown of what this email should contain and to see a sample written executive summary, check out Rice’s “Elevator Pitch to a VC” blog post.)
Avoid the “form letter” elevator pitch
Dr. John Cooley, co-founder of the energy storage startup firm FastCap Systems, says that during the several months his company spent prospecting for seed stage venture capital, he and his partner routinely tweaked their core elevator pitch to best fit who was going to hear their presentation. “Sometimes our first slide was a description of our team, sometimes it was a description of our technology, and other times it began with the more classic description of the problem we were trying to solve,” he recalls.
This is a wise strategy, according to Rice, since each investment group and VC firm has its own favorite industry sectors and within these firms each principal often has expertise in an even more narrowly defined sub-sector. So, recalibrating your pitch to more closely target the individual audience’s “sweet spot” makes good sense, she explains. “Ideally, you’re talking to the right partner, the one who cares the most about your [market] space,” she says. “But you still want to paint the opportunity in the best light no matter who is listening to your pitch.”
Why rehearsing your elevator pitch matters; remember the “10th C”
Subtly changing your elevator pitch for each presentation naturally suggests the need for some extra rehearsal time to ensure a smooth delivery, one that avoids glaring omissions or embarrassing redundancies. In his book Elevator Pitch Essentials, author Chris O’Leary similarly emphasizes the importance of having a clear, concise, and consistent pitch—these three characteristics being part of what he calls the Nine C’s that comprise the best elevator pitches. But entrepreneurs shouldn’t overlook the fact that, in small presentation settings, studies have found there is a tenth “C” that has a surprisingly powerful ability to sway minds: confidence.
Alex “Sandy” Pentland, professor at the M.I.T. Media Lab, studies nonverbal communication and one of his recent experiments focused on exactly these kinds of situations. In a Q & A with the Wall Street Journal, Pentland explains that even though his study’s subjects were mid-career executives presenting real business plans, the peer ratings of those plans had little to do with the plans’ actual content. In fact, Pentland was surprised to discover that the ratings could be accurately predicted simply by assessing the confidence of the pitcher’s voice and body language. “It was how they delivered the plan that determined how it was rated. That’s pretty amazing,” explains Pentland. “They were listening to how excited the presenter was about the plan; they were not listening to the facts.”
Obviously, there are significant hazards to venture capitalists making significant investment decisions based solely on such immediate, emotional feedback, which is why they include lots of other steps in their pre-investment due diligence. Nevertheless, there’s still a lesson here for entrepreneurs about the intangible value of displaying confidence and enthusiasm in one’s elevator pitch. “In venture capital, one of the things investors pay attention to is the buzz in the start-up group and the way it feels,” Pentland notes. “And what the venture capitalists are actually doing, I think, is reading the honest signaling.”
Avoid these common elevator pitch pitfalls
Showing enthusiasm for one’s own business idea may be a no-brainer, yet many entrepreneurs balk at signaling that their pitch also excites competing investors. This effectively sells your idea short, says Rice. “You want to leverage any momentum that you have when pitching a VC, particularly if you’re an early or seed stage startup,” she notes. “So, if you can communicate that there are others legitimately interested in investing in your business, you shouldn’t shy away from mentioning that.”
However, using one’s elevator pitch to try to unleash a VC bidding war is an obviously poor decision, so conveying outside interest does require some subtlety, Rice acknowledges. “If I’ve just pitched a VC firm out in Silicon Valley via conference call, for example, I might end my pitch with something like: ‘I’m going to be out on Sand Hill Road all next week and would love to schedule a face-to-face meeting with you one day while I’m in the neighborhood.’”
Such an understated tactic has another positive side effect—it demonstrates the ability to navigate a relatively cutthroat investment environment, which is often seen by VCs as a precursor to executive performance in the future. “To VCs, bringing in a great idea is no big deal,” notes Kourosh Kaghazian, managing director of M.I.T.’s annual Elevator Pitch Competition. “They also want to see them demonstrate why they are the proper person to successfully execute the idea.”
All this pressure to stand out, be confident, and prove one’s capabilities can result in what is perhaps the most common mistake made when pitching investors—information overload. Packing too much story and data into an elevator pitch almost always leads to one of two different end results, both of them bad. Either the presenter rushes through the pitch—burying their core message under a blur of words and data—or talks for far too long—wearing on the audience’s patience and causing them to lose interest.
“You simply can’t expect to answer every possible question with your pitch and you have to accept that,” explains Kaghazian. “It says to the investor that you have trouble prioritizing information.” And if an entrepreneur can’t handle pulling off a 60-second elevator pitch, most investors will naturally begin to doubt his or her ability to handle running an actual company.
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