For many founders, raising capital is a key part of growing their businesses — and it’s a good time to be pitching investors. According to a July 2021 CB Insights report, in the first six months of the year, Canadian founders had already raised more than two times what they did in 2020. What’s more, a TechCrunch+ analysis of the data found “Canada’s venture capital results now rival those of the entire Latin American region… [But] notably, no Canadian startup deal in the quarter was worth more than $500 million.” According to TechCrunch senior editor Alex Wilhelm and reporter Anna Heim, that’s good news because it indicates that, instead of being dominated by a few companies that raised billion-dollar rounds, Canada’s investing landscape is “performing well more generally.”
But how do those deals actually come to fruition? It all starts with a killer pitch. Here are the six things every founder needs to include in their decks and presentations.
1. Include the right info
Specific details will vary by industry, not to mention who your audience is, but generally, pitches should include:
- An introduction, including a brief overview of your team.
- Background on the problem you’re solving, and who your target market is.
- The solution your company is providing to its target market.
- Insight on the traction you’ve already made. (This is also where you’d include background on your competition.)
- A marketing and sales plan
Cherry Rose Tan is a serial entrepreneur, executive coach and Entrepreneur in Residence with Schulich School of Business, an ecosystem of 200 startups and 3,000 members based out of York University. And over the years, she has noted that founders often skip the background section, something she says is a big mistake.
“I see a lot of pitch decks where founders introduce the company and then immediately go into the product,” she says. That’s not surprising, because founders “are so excited about their solution. Their approach is, ‘We just know that this is really needed.’ But VCs don’t have any of that context. So, it is very important to show the VC the world of the customer that we’re looking at.”
Another overlooked element? According to entrepreneur and small business consultant Amoye Henry, founders should always try to include calls to action. “Explain how the listener can learn more, be involved, participate etc.,” she says. “It’s all about making a small impact on your listener’s day. If you can leave them feeling interested and compelled enough to want to book a meeting or chat even more, you’ve succeeded even in a small way.”
2. Research, research, research
Henry, who co-founded Pitch Better in 2019 to help female entrepreneurs improve their chances of securing capital, knows what she’s talking about — her biggest pitching win was securing $500,000 in funding to run Pitch Better. She says her success was mostly down to the work she did to prepare.
“The thought process that went into it was vast because it required a lot of research, data collection and data analysis,” she says. “Preparation is always key. I’ve seen founders not know their company valuation and how to communicate the value of their business. I have seen founders know nothing about their industry and the market share they are looking to seize. It’s on us as founders to know our industry and our businesses thoroughly because investors want to be able to trust that we are the subject matter expert and that the investment of their time, money, energy and/or resources will be worthwhile.”
3. Identify your differentiator
This is the reason why someone should invest in you, Tan says.
“I’m a venture partner at an angel network that’s based in the States, so I’m seeing deals all the time pertaining to VC, at Schulich and elsewhere. First-time founders often feel like their solution is so unique,” she says. “But the reality is that a lot of investors actually see the same kind of pitch. Let’s say there’s a startup out there doing something ecommerce for a particular segment. Sometimes a VC firm or angel network might see five other startups that are also in that exact same space.”
She advises founders to talk about their differentiators as if they’re defending an argument, because in a way, they are. “If somebody had to solve this problem with a total addressable market that’s over a billion dollars — because those are the kind of numbers that VCs are looking for over a 10-year span — why are you going to be the team that actually wins in this field?” she says.
4. Learn how to tell your company’s story
You also need to make sure you can communicate your differentiator. Founders often use their pitches to highlight the five things they do really well. “They’re trying to stuff in so many things into the story, which actually dilutes it,” Tan says. That makes it harder for investors to get a clear sense of why they should invest. “It’s really important to tell a cohesive story so that when people leave your pitch, they understand the differentiator and what they can see for that startup.”
5. Understand your audience
Different types of investors are looking for different types of investment opportunities — and they need different information, including quantitative data. That’s one thing Tan thinks is missing from the conversation around pitching. “An advantage for founders is when they actually understand what VCs are looking for. Oftentimes, I start the conversation with founders by asking, ‘How much do you actually know about venture capital, and how this works as an asset class?’ I know it sounds dry, but it’s actually very important,” she says.
Here’s how she breaks it down: when VCs invest, they’re doing so using funds from their own investors, called limited partners. For a VC to continue to get funding from their limited partners in the future, they need to be able to return the initial investment plus a profit.
“If you don’t show in your pitch deck that you understand what a VC needs in order to be able to take that risk for you, a VC will glance at your pitch deck — they’re not even going to reply to the email, or they’re not going to invite you for an initial meeting,” she says.
6. Practice your pitch in real life
Maybe you’re bootstrapping your business, or not quite ready to seek out investors. That doesn’t mean you can skip creating a pitch deck. “Founders have to pitch all the time! Pitching to investors is just one element,” Henry says. “Founders also have to pitch to prospective customers, they have to pitch for procurement and contract opportunities and they sometimes have to pitch to potential team members, board of directors and the general public overall. You need a great pitch and pitch deck period, whether you are bootstrapping or selling equity or shares in your business.”
And as you share your vision and solution, gauge the response you get and tweak accordingly — this will help hone your story.
Looking for support to build your business? Find connections with funders, mentors and advisors here.