“How should I prepare for an investor pitch?”
This is a question we hear a lot, both from first-time entrepreneurs and from founders who have raised before. There is no shortage of advice available on how to prep for a pitch meeting.
Here’s the problem: if you’re asking that question at the pitch stage, you’re already too late. Most of the time, your first meeting with an investor isn’t a pitch. Instead, it’s a coffee, or a cocktail, or an introduction at an event. Often, it’s not a meeting at all—it’s an email conversation.
You know the saying, “you only get chance to make a first impression?” This is especially true for investors. While there’s an awful lot of emphasis put on preparing for a pitch, an investor is going to form opinions about you based on your first interaction, well before the pitch takes place.
Here are 5 questions you should answer before that first interaction to help make sure your first impression is a good one.
What do they invest in?
This is an easy one. You need to make sure the business you’re pitching is in line with the type of business the investor likes to invest in. If an investor only funds B2B SaaS products, don’t try to pitch her on your mobile game company. Investors often like to get involved in industries and markets they understand, which is why most investor portfolio companies share a common thread. Make sure you understand what that thread is for every investor you talk to.
How do they invest?
This question comes with several straightforward sub-questions. What is their typical check size? Do they like to lead rounds, or simply participate? How hands-on do they like to be? Knowing an investor’s MO for the practical details of an investment will help you plan your raise and ensure you’re not wasting each other’s time.
You can start to figure this out by doing a little digging on Crunchbase, reading some press releases, and asking around.
What is their background?
Even if you’re talking to a large VC, you need to understand the individual(s) you’ll be working with. What about their background or experience suggests they could add value to your business? Have they worked with a particular audience or vertical that lines up with someone your business helps? Did you go to the same college?
Investors want to know that you’re not looking to get funded by anyone with a checkbook. Being able to make personal connections, or speak to why you want them involved, will help you catch their interest and start building a relationship.
What do they care about?
Answering this question will do two things. First, it’ll help you determine whether or not a particular investor will be a good fit for your company. We believe you should do due diligence on every investor you bring on board, and this is a good early step toward that goal. Second, it will help you know what to emphasize about your company that will catch their interest. Different investors focus on different things. While some may care about the founding team or the long-term vision, others are more concerned with revenue growth or the total addressable market.
Browsing an investor’s public channels, especially things like Twitter, Medium, Quora, and interviews, is a great place to start.
What do you want?
This is probably the most important question to answer before meeting an investor: what is it you want from them? Even if an investor is interested in your company, they need something to respond to. It’s best to not only have a clear ask in mind, but to also understand what alternative options they might offer (and know which of those options would be acceptable to you).
If you can answer each of these questions before you meet with an investor, you’ll not only make a good first impression, but you’ll put yourself in a much better position to get the outcome you want.
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