“You say there is a need, but you must describe why.”
Listen carefully to investment pitches and you’ll learn a few things about what investors want to hear from new venture teams. An ideal way to be a fly on the wall is to attend the Venture Labs Investment Competition (formerly Moot Corp) which completed global rounds last week at The University of Texas at Austin.
Last year I wrote about What Questions Will an Investor Ask You? Lessons from Texas Moot Corp. Here are six tips judges had for the venture teams this year:
1. Keep Your Numbers Straight
Even sophisticated investors have to digest the financials flashing on the screen, so be very precise about your ask. David Altounian of Motion Computing told one team, “I had a hard time understanding what you are asking for, you said $6 million at one point, but then it looked like $8 million later. I also need to understand the profit potential, the gross margins, give me a clear picture.”
2. Slow Down Your Pitch
The clock is running, but don’t let that force you into speed dump mode. You’ve practiced your pitch a zillion times, but it is all new to your audience. Lucas Braun of OnRamp recommended that teams “Slow down, force pauses in your presentation and allow investors to catch up with the technical presentation.” After one pitch, entrepreneur Ed Charrier complained, “It is still unclear to me how the product works.”
3. Allow Your Audience to See, Hear and Experience
Pitch teams were reminded that people learn in different ways. Gary Forni of the Central Texas Angel Network advised one team to not overwhelm their audience with “a lot of verbiage before the investor understands the product and its implications. Some people learn by hearing, and others by seeing.” A technology team that brought a sample of their product was advised to pass it around at the beginning of their presentation, so judges could understand the characteristics of the product right away.
4. Make it Clear Your Intellectural Property (IP) is Iron-Clad
Investors are likely worried by the possibility that your rights to the technology or approach are not exclusive. Kevin Koym of Tech Ranch Austin challenged one team, “Why couldn’t a big company just walk in and take over the IP on this?” Time and again, judges made it clear to the pitch teams that IP risk is a huge consideration for investors. If you’ve got the technology locked up, say so, and say it early.
5. Don’t Assume the Market Needs Your Product
“Don’t take for granted the clear market need,” warned Braun. “You say there is a need, but you must describe why. Focus on your sustainable competitive advantage. Talk about substitutes and alternative approaches.” Pitch teams have obviously convinced themselves there is a compelling need for their product, but investors have to be convinced with clear evidence, not just bold talk.
6. Network Like Crazy
The final learning point was evident throughout the four days of Venture Week, as the teams took every opportunity to meet fellow entrepreneurs and investors, with rarely a break. Rene J.R. Fernandes, faculty advisor of the team from the Federal University of Minas Gerais and Fundacao Getulio in Brazil, summed it up, “For these guys to come to a competition like this, it is a tremendous opportunity for them to increase their network, get feedback from the judges and to improve their business plan and keep on track to launch the business.”
Winner TNG Pharmaceuticals was one of over 40+ university teams gathered to pitch new product ventures to a team of judges during what is considered the “Super Bowl of Investment Challenges.” TechCrunch Announcement Here.