How to Pitch to Investors (Tips from Vinod Khosla)
When giving a presentation to investors, it is important to understand that they are driven by fear and greed.
Most investment decisions are made based on emotions rather than facts. Tips from Viond Khosla on sharpening your funding pitch.
Ask for the right amount of capital
When raising funds, ask for just enough capital to reach a specific milestone.
Asking for too much can give the impression that you lack focus, while asking for too little may not be enough to achieve your goals.
It’s important to justify why you are asking for a certain amount and what benefits you will deliver with that capital.
Emphasize the narrative and emotions
The story and narrative you present in your pitch are more important than the details.
Use emotion to connect with investors and clearly state the problem you are solving.
Show preparedness by covering all possible questions and risks in your appendix.
Handling valuation discussions
When discussing valuation with investors, there are two ways to approach the question.
You can let the market decide by indicating that you’re talking to multiple investors.
Alternatively, you can establish a range through analogies with similar companies.
However, avoid reasoning by analogy and avoid negotiating if the investor mentions a reasonable number.
Regaining attention
If someone in a group of investors is distracted during your pitch, you can use a trick to regain their attention.
Look them in the eye and address them directly.
This small gesture can help refocus their attention on your presentation.
Structure your pitch deck
There are different ways to structure a pitch deck, such as starting with an investment thesis or highlighting the problem you are solving.
It is important to present with confidence and engage the audience, avoiding generic statements and cliches.
Cadence and engagement
Pay attention to the cadence and engagement of your presentation.
Keep it interesting and avoid slides that convey little unique information.
Focus on substance over generic statements, and highlight the unique value and suitability of your team.
Simplify your message
When giving a presentation, it’s important to simplify your message and focus on the key points.
Use validated words to make your message more impactful.
Avoid clutter and unnecessary details in slides to keep the audience engaged.
Keep it concise and engaging
When giving a presentation, it is important to keep the slides concise and focused on conveying the main idea or concept. Use emotional language and make the headlines of the slides engaging to capture the interest of the audience.
Investors bounce between fear and greed. Emotions is the reason to invest (feelings, stories, narratives) and Rationale is the reason to ‘explain investment or not invest’.
Complexity scares investors because they cannot separate visual complexity from complexity of a business. – Eric Bailey
Pitch with analogies
Pitch by analogy to associate your startup with a large market and overcome objections by explaining the reasoning behind the analogy.
However, avoid reasoning by analogy as it can lead to a losing argument.
Design for visual simplicity
Pay attention to the visual design of your slides.
Use whitespace, concise bullets, and graphics to make your presentation visually simple and easy to understand.
Keep the font size large enough to be readable, and limit the number of words per line and per slide.
Be thoughtful in your approach
When approaching investors, it’s important to have a targeted list and be thoughtful about how you approach them.
If you’re not getting funded, you may need to start going to the long list of investors.
Be flexible with your vision
It’s important to have a clear vision but also be flexible with your tactics as you learn and iterate.
Reduce risk at every step and be pragmatic about the risks and tactics involved.
Climbing Everest is not a straight line, so focus on reducing risk and making progress step by step.
Visual elements matter
Be mindful of the visual elements in your slide deck.
Simplify the slides, avoid clutter, and use visual oomph through simplicity.
Command your numbers and ensure consistency in your data.
Be clear about what you don’t know and demonstrate preparedness by having backup slides available to address questions or objections.
Address risks explicitly
It is recommended to include a slide about the risks of your business and how you will address them in your presentation.
Addressing risks explicitly can help establish credibility and build trust with investors.
Engaging remote pitches
When pitching remotely, such as over the phone or in a video presentation, it can be challenging to engage investors.
In-person interactions are preferred because they allow investors to observe facial expressions and actions, but specific calls on certain topics can be done over video.
If you play games and hide things, it’s so easy to tell. The common message I get back is, ‘I didn’t trust them to really know what they’re doing or to disclose what they’re doing.’ – Vind Khosla
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