How to Pitch Your Startup to Raise Investment Capital

People who make their failures public should be lauded as heroes. The more cringe-inducing the failure, the more there is to learn. 

I was reminded of this fact while on a run here in Venice Beach, listening to the worst startup pitch I've ever heard. In the podcast, startup founder Michael Blumberg (of Gimlet) scores a meeting with prominent investor Chris Sacca. Then, he proceeds to bomb the meeting in every conceivable way.

Luckily for the rest of us, he also recorded the entire spectacle. As the pitch fell apart, Sacca cut him off to deliver the pitch back to him — in perfect form, including every detail an investor would want to hear.

The result is magical. A pitch guide from one of Silicon Valley's most sought-after investors is an incredible resource, even if it came at the expense of Blumberg's golden opportunity.

It also got me thinking about some of the best — and worst — pitches I've seen in my tech career.

Learning how to pitch properly is critical for early-stage startups. Otherwise, you may as well be burning time and money.

As a mobile app developer and startup founder, here are the basic structure and tactics we coach our clients in here at Dogtown Media. 

Understand: what's a pitch deck?

Pitch decks are presentations, usually accompanied by a prototype demonstration, conveying everything an investor needs to understand about a mobile startup concept.

Slideshows, or "decks," are the most common method for structuring this goal. (For samples, see decks from big companies like Facebook and AirBnB here.) Unfortunately, most startup decks stretch way longer than the average investor's attention span.

Pitching is storytelling. 

Pitching is storytelling, and hard facts like data and market positioning need to support the story, not the other way around. A bad pitch leaves your startup sounding average — a good one makes it feel inevitable.

Breaking down the modules

Like any story, every pitch is based on a relatively static set of basic elements, which you can think of as modules.

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Being formulaic isn't great for business, but formulas are at the heart of a great pitch. Investors shouldn't have to squint to see the big picture (or the small picture for that matter).

Here are the must-have modules your pitch has to establish:

1. Credibility

The first thing investors want to see is credibility. What's your experience in the industry? Previous successes or failures? Position yourself as an authority.

2. Problem

The best apps solve problems. Uber solves the problem of getting around, while Facebook solves the problem of keeping up with friends.

Explain the problem your app solves — is it a serious problem that users will pay for?

3. Solution

Now that they know *who* you are and *what* you're fixing, show them the *how*: how will your app solve this problem?

Specifically, be sure to highlight how your app is better than the current solution. To continue the above examples, Uber is an improvement on waiting around in the rain to hail a random cab. Facebook is an improvement on chain emails and family newsletters.

If you have a functional prototype, show it off now.

4. Advantage

Solutions are great, but anyone can solve a problem. If investors are going to bet on you, they need to believe that *only* you and your team will be successful at solving this problem.

What's your competitive advantage? Why will you get there faster than the next team? Deep market research, a solid prototype, and relevant industry experience are all good resources to back up your advantage.

5. Market

Will users really want this app, or will they stubbornly stick to their old solution?

This is especially important for non-essential "problems," or startups in mobile gaming or social networks that might hard to justify outside the entertainment value on offer.

At this phase of the pitch, hands-on user interviews and market research pay off in a big way.

6. Monetize

Most apps are free, and even national-scale startups often go for years without turning a profit. Tech investors are usually looking for high-potential startups with 100x growth — like how Chris Sacca turned a $25,000 Twitter investment into a 15% stake worth millions of dollars.

Even if it's years out, a clear monetization strategy is what separates startup failures from massive successes like Twilio (who launched an IPO on the strength of growth over profit).

7. Competition

Truly unprecedented app ideas are rare. For most of us, any great app idea will have competitors.

This is actually a good sign, since it means your idea has value for users. The trick is showing that you have a clear idea of where you stand in context of that competition, and how your positioning will give you an advantage.

8. Resources

At this point, investors should have a crystal clear picture of your potential to succeed. Now, it's time to make the "ask" — what do you need from them, now, to make this happen?

Crunch the numbers ahead of time and have a specific amount of money you need, and a plan for how you'll break that money down and put it to work. If your request sounds arbitrary, investors will assume you haven't done your homework.

9. "Are you in or out?"

Mobile startups are time-sensitive. If your pitch has done its job, investors should have a sense of urgency about giving you the capital you need to move forward immediately.

If they aren't ready to say "yes," don't wait around. Move on and find someone who is.

Use Psychology to your advantage

If you have a spare hour, this presentation from Harvard i-Lab gets into the nitty-gritty about psychology, imagery, and more. Dry, but worth the investment. 

Pitching is intimidating, but investors are actually the best audience a Los Angeles mobile app developer could possibly have.

They believe in tech. They're passionate about the startup industry. And they have the resources to turn your startup dreams into a reality. If you tell a good story, results are practically guaranteed.

That said, investors are also risk-averse — and for good reason. Studies frequently cite a less than 10% success rate for startups.

Here are three psychological tricks you can use to make investments more likely:

1. Adapt and mirror

Investors want to invest in smart, successful people — which means that they're looking for people similar to themselves, whether they admit it or not.

Adapt your pitch to the crowd's energy and dwell on the parts they seem energized by.

Business types? Bring out more facts and figures. Creative crowd? Delve into the emotional side of the story and let your quirks shine.

2. Brevity, brevity, brevity

Unnecessarily long pitches are the number one problem I see among early-stage startups. Founders are obsessed with their ideas, and obsession doesn't translate to brevity.

Trimming down the mountain of data into a serving-size pitch take a lot of work, but it pays off when you go up against less succinct teams. Don't leave out the meat, but alway leave them wanting more.

3. Leverage emotions

Tech is a young industry, and most investors have founded their own companies at one point or another.

Put them in your shoes — let the emotion driving your startup's mission shine through. When they can see themselves in your story, they're more likely to trust you. Trust leads to investments.

Failure is feedback

The art of pitching, like any art, takes a long time to master. In the face of rejections and failures, keep in mind that only a fraction of your contacts will invest. As a startup founder and iPhone app developer in New York City, I know first-hand that it can take months to find the right backers.

Be prepared to get the silent treatment from investor cold calls, and don't get discouraged if you have to drop a potential investor because they want too much control of your dream app.

If you can learn to iterate on your pitch and turn criticism into improvements, there's no question that you'll eventually earn the resources you need to take your app idea to the next level. 

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At Dogtown Media, we're creating the mobile future every day. Get in touch with my team for a Free Consultation. If you can dream it, we can build it!