Perfecting the 3-minute startup pitch
On March 28, we will see 20 startups compete for $130,000 in funding at the Velocity Fund Finals. We decided to look back at a past $25K winner and share his tips and tricks for creating a great pitch. This article was written by Lightbot Founder, Danny Yaroslavski, Velocity Alumnus. Posted on Medium.com, July 10, 2016.
Delivering a captivating 3-Minute Startup Pitch is challenging.
It really forces you to hone in on all of the important aspects of your business while doing away with anything that’s less relevant.
There are hundreds of things that you as a founder can touch upon in a pitch, however, in most great 3-minute pitches, you’ll see a pattern emerge of things to talk about. That’s because of the core aspects of most businesses, those that an entrepreneur definitely wants to cover in their 3-minutes, are generally the same.
Problem. Solution. Competition. Market. Traction. Team. Future.
Once you’ve seen your fair share of 3-minute pitches, you’ll start to recognize these as the archetypal parts of a startup pitch. Making sure your pitch touches each of the elements in the formula should be your starting point. Beyond that, the way you dive into each part is up to you.*
* Although you are free to present each part in your own way, there are many things you should likely not do, covered below.
Always start with the problem.
If you do anything at the beginning of your pitch other than talk about the problem, there’s a high chance your audience will have to work hard to adjust to what you’re talking about. Your audience is not ready to begin to digest the meat of your presentation from the first sentence of your pitch.
Do not jump into your product or service right away. This is especially true for an audience that may be unfamiliar with the problem space you’re tackling. By stating the problem first you prepare your audience for some background beforehand.
That background can go into the industry you are tackling or the landscape that you are working in. For an unfamiliar topic, you can provide some of the ‘before-we-start need-to-knows’ for the audience. Once the audience is primed, only then can you begin to talk about your solution.
Your solution should, in general, directly follow the problem. You want to make sure that you get across exactly what it is that you are doing and what your unique quality or main selling point is.
Don’t be vague. At the end of your pitch, if all else fails, your audience should know exactly what it is you do.
It is only after you explain what your solution is that your audience can start to absorb why your solution is, say, better/faster/cheaper than your competition. After this point in the pitch, your audience should be able to repeat back to you what it is you do with some certainty.
Once your audience understands what you’re doing and what problem you’re solving, you can move onto the nitty-gritty details in the formula.
*The following can be reordered as you see fit.
Your industry probably has competitors. In some industries, you may have very many competitors, whereas in others, a few really big ones. Address the existing competitors head-on. They are the elephant in the room. Put up the logos of competitors your audience most likely thinks your solution resembles. Talk directly about how or why your solution is better or different. And if you have deeply entrenched competitors, use this time to talk more about how you’ll break into your industry and take market share away from incumbents more so than what your unique product features are.
If you truly don’t have any competitors or only have competitors that your audience is likely to have never heard of, mention something to the extent of what you’ve done to search or prove that an existing solution does not exist. Don’t leave the audience thinking you’re avoiding your competition.
And if you have big players in your space but they are not competing directly with you, you should still call them out and explain how your solution will fit in and live with these existing competitors in your market.
Who is in your target demographic? How big is the market for your product? What is the specific market size of your product and how is it changing year over year? These are all good things to point out to give your audience a sense of scale for how large your business can grow.
But again, don’t be vague, especially when talking about your addressable market size. If you are creating a fitness app, you should not be taking the entire market for fitness and fitness related products as your addressable market size. If you are building a chatbot for buying clothes online, you should not say that the addressable market for your product is the entire clothing industry. Find your overarching market, then find subdomains within it until the market you decide on is a reasonable size that you could realistically see your startup taking a big slice out of.
And if you do have a big addressable market, do not use the “If we could only get .1% of this huge market we’ll be a $B dollar company” line. The market you are playing into has incumbents and status quo effects. If you do say you’re planning to take .1% of the market, you better have some great reasons to back up that claim.
Traction is likely the most crucial part of your entire pitch. Traction is all about validity. For those individuals in your audience that are well versed in your industry and what you are making, they can form their own opinions about the likelihood of success for your business. For everyone else in your audience, their opinions will be swayed by cold hard data.
If you say you’re planning on building X, talk about what you’ve already built, in what length of time. If you’ve launched a pilot or run demos, talk about how those went.
If you say that your target market will buy X, present the numbers: how many have already purchased, for how much, over what period of time?
If you haven’t sold anything or are more early-stage, there are still plenty of other things you can mention. Talk about how many people put their name on your mailing list, downloaded your app, visited your website, registered, have come back week over week.
Anything you can show that emphasizes that you are the real deal and that real people want what you are offering should be laid out for your audience.
The traction you choose to highlight should be that which is most relevant to your business being a success. If you’ve received press you should mention that as well, but press alone is not a positive justification for your business model. The number of users, retention, customer satisfaction; those metrics that are most relevant to your business should be at the front and center of your pitch when covering traction.
You don’t need to go into the life story of each of your team members but show that the skill-set of the people on your team matches the skill-set required to pull of the solution you are pitching. If you are pitching a software product and only have people with business experience on your team, maybe you don’t have the right team for the solution. The same thing goes for building a hardware product with no team members with engineering experience or building a life sciences company with no one that has a bio-background. Your team and combined experience provide the legitimacy for whether you’re the right people to bring your solution to the world.
If there’s a mismatch between your team’s experience and your proposed solution, the only thing that can save you, in that case, is traction and what you’ve already built. Only in that case, because you’ve already built something that proves you can complete your solution regardless of your team expertise, your lack of experience becomes less of a red flag.
You should also mention any mentors you have at this point, so long as your audience knows of or is explained the role and/or importance of those mentors to your team.
You’ve explained the problem. You’ve described your solution. You’ve explained how you’re better/faster/cheaper than the competition and pinpointed the size of your addressable market. You’ve talked about your team’s expertise and covered all of the traction you’ve had to date. Now that your audience is up to speed, it’s time to let them know what the next steps are. What it is that you’ll be doing, in both the near and more distant future, that your audience can cheer you on for.
In the near future, talk about any pilots you’re planning to run, Kickstarters you’re planning to launch or users you’re planning to onboard. Talk about partnerships you have in place, sales you will be closing, shipments you’ll be making or deployments you will be executing on.
Then, talk about what you plan for the company to achieve in the long run, whether that be a sales target or mission statement. End off on selling the dream. When all is said and done, your audience will be the ones choosing for themselves whether or not they want to climb aboard your rocketship of an idea.
Catch part 2 of this article series: 5 Ways to Make Your Startup Pitch a Winner.