Lessons learned from Pitches at our Impact Investor Challenge Kickoff

Impact Investor Challenge Kickoff
Posted on: April 9, 2019 Posted by: Keith Ippel Comments: 0

Lessons learned from Pitches at our Impact Investor Challenge Kickoff

Spring’s annual Impact Investor Challenge started last Wednesday with 20 amazing companies pitching to a room of 19 investors. Since I first volunteered with Spring in 2014, I can proudly say that it was one of our best and most moving events.

It was inspiring and humbling to hear the stories of how these 20 entrepreneurs were using business as a force for good to create positive impact in health, environment, community, accessibility & diversity, economic empowerment, and arts & culture.

Having had a week to digest I want to share some observations and lessons I thought I could share to help companies in better showcasing themselves.

 

Format:

Our pitches were 2 minutes long, back-to-back with no Q&A. After the 20 pitches were done, investors deliberated on a few companies to call back for Q&A. The investors then deliberated again and would narrow down 10 companies to invite back the next week for another round of Q&A.

 

Lessons for Companies

Pitch Decks:

  1. There’s a difference between your pitch/presentation deck and your takeaway deck.
    • Your pitch deck should support you. You are the star, not the deck, so make sure it’s light and doesn’t steal the attention away from you.
    • 6-10 slides are a good number for a 2-3 minute pitch, 10-15 for 5 minutes. Appendix slides not included in this number.
    • The key slides in the minds of the investors are: The Problem, Solution, Market Opportunity, Traction or Progress, Business Model, Impact, Team, The Ask.
    • Font size no smaller than 30, no more than 2 sentences per slide. Takeaway decks can get away with more content as it needs to be self-explanatory.
    • Presentation matters, keep your slides clean and consistent.
  2. PDF your decks if you are submitting them for an event where you’ll be pitching alongside multiple companies. This ensures that the quality of your images remain consistent and will account for any stretching if different screen resolutions are used.
  3. If the decks will be shared with investors, send them via a tool that allows you to see who and how many times they have accessed the file instead of granting open access and DocSend is one such software.

 

Pitching

  1. Tell a story. You’ve probably heard this tip, but what exactly does it mean to tell a story?
    • If you’re just stating something like: There are X many farmers, and X% of them struggle with X… you’re making statements and facts. While logically sound, they aren’t memorable. It doesn’t help that investors hear over 100s of pitches like these every month.
    • Tell a story from a personal perspective or from the perspective of a customer: John went to Uganda on a USAID volunteer expedition, there he saw that XYZ… John is one of our early customers and he loves our solution because of XYZ.
    • Evoke arousing emotions to be memorable – excitement, humour, frustration, disbelief etc.
  2. Pay attention to global vs. local problem statements:
    • Global: Food waste is a problem (doesn’t tell me who you’re specifically serving, what you’re solving for them, how painful that problem is for them)
    • Local: When looking for a job, candidates end up browsing multiple boards and send out hundreds of resumes before hearing back…
  3. Framing market opportunity from a top-down vs. bottom-up approach.
    • I’ve never heard an entrepreneur frame their market as a small market, everyone seems to be taking 1% of a billion dollar industry these days.
    • Investors that are familiar with your industry should also already be familiar with the market size/opportunity.
    • Only highlight top-down if you can speak to:
      • Changing market/industry trends that aren’t obvious and work in your favour.
      • A really unique and clear niche that you’re targeting.
    • Otherwise, try a bottoms-up approach for a change. It allows you to spend more time highlighting traction and gives investors a sense of predictability and how you’ll scale with their money.
    • e.g. We currently have 2 sales people doing an average of 60 demos a week, this results in about 5 new enterprise clients every week and $XXX in revenue.
  4. Measure and highlight your impact. Yes our event was specifically for impactful companies and impact investors. However, it’s always a wow and feel good factor if you can highlight how many jobs you’ve created, how much waste you’ve diverted from landfills, how many patients have benefitted from your technology etc.
  5. Start with your STRONGEST point first. In some cases it might be the problem you’re solving, in others it might be your traction or a key customer you recently closed, yet others might highlight a rockstar advisor or team member (only worth highlighting if you have someone really notable – i.e. CEO of Slack or some other large industry known org).
  6. Don’t forget to highlight traction. The more you can de-risk the opportunity for investors, the more interested they will be in a follow-up conversation. Highlight key customers and use timelines to showcase how quickly you’ve progressed.
  7. Omit with purpose. It’s OK to leave out certain pieces, these should spark conversation and also give you a sense of who’s interested enough to warrant a follow-up with. But be strategic with what you leave out to ensure it doesn’t lower the quality of how you may be perceived.

 

Lessons for Investors

Listen for

  1. Focus less on what’s being said instead of how it’s being said. Some people get nervous on stage and I’ve seen amazing opportunities sidelined in favour of less qualified companies/founders because they floundered with their pitch.
  2. Pirate Metrics (AARRR) is a good rule of thumb to evaluate companies against:
    1. Acquisition: Do they know their channels and have they discovered a repeatable way to get new customers
    2. Activation: They could be good at marketing, but do their customers actually use their product? How long does it take these customers to start becoming active?
    3. Retention: This is an indicator of product-market fit/quality control. Do people join immediately and leave? Are there repeat projects?
    4. Revenue: Optional for seed-stage companies, but good to know if they have a clear path/plan of action. A warning sign is if they list multiple possible revenue streams (shows that they don’t know what will work best yet and are still experimenting).
    5. Referral: Is there organic growth, again optional in a pitch, more as something to dig into in due diligence.
  3. Is this founder a hands-on founder? Founders should know their business and numbers, too many “I don’t know off the top of my head” can be a warning sign.
  4. The WHY. Is this founder sincerely motivated, what motivates them, do they really care about impact? This is important because opportunistic founders who start a business purely for monetary gains or “freedom” tend to fail (of course there are exceptions). Remember, businesses don’t fail, founders find jobs.

 

Why Diversity Matters in Investing

While I’m on this topic of screening dealflow, might as well also point out an observation – often not intentional, but apparent as an unconscious bias.

The phenomenon of inherent gender bias in the investment process is well documented, and one way it is expressed is in questioning the credibility of female founders while assessing men as having expertise. Here’s a couple of quotes from an article in the Stanford Social Innovation Review:  “A study featured in Harvard Business Review highlighted how investors will generally ask promotion-oriented questions to men and prevention-oriented ones to women, and award nearly seven times more investment to startups that fielded promotion-based questions. … Indeed, one of the biases noted by the BCG study is that women founders are subject to pushback when making presentations. According to the research, investors often assume—or say—that women founders lack technical knowledge. However, men are permitted to overpitch or oversell their ideas with best-case scenario projections. Likewise, a 2014 study from MIT, Harvard, and University of Pennsylvania researchers demonstrated that the same idea pitched by an attractive man is at least 60 percent more likely to get funding than one from a woman.”

Here is one of the many simple exercises out there to become more aware of our inherent gender bias (which is definitely not limited to men). This is a powerful tool especially for impact investors who’s thesis focuses on identifying undervalued companies that are great deals because of their underrepresented founders. Here are some interesting VCs to check out who share this thesis: Standup VenturesBackstage Capital, and Dream Maker Ventures.

Research shows that companies founded by women perform better. Here’s one example: “First Round Capital took a look at 300 of its portfolio companies and almost 600 founders, and found that the teams with at least one female founder did 63% better than the all-male founder teams when looking at how much the company values have changed since the firm’s investment in them.” Here’s another report that female-led startups grow faster.

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