Haje Jan Kamps - Pitch Perfect: Raising Capital for Your Startup

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You have it. The perfect idea for a company is crystallizing in your mind. Early research indicates that the journey you are embarking on could be both fun, challenging, lucrative, and engaging. Things are coming together beautifully. And now its time to raise some money.

This book is focused on the pitch process; it is a guide to how to put together an extraordinary pitch. It will help you create an excellent narrative for your potential investors. But it is much more, too. It will help explain what parts of the story will be most potent in how you can raise money. It will discuss different ways of thinking about how to craft your story and how you can catch your target audience by surprise.

As with all great storytelling, you need to know your audience. You have to understand how investors think and what the driving forces are behind making an investment. To successfully raise money from institutional investors, you need to understand how venture capital (VC) works (Chapter ).

Fundraising is a complicated process with many moving parts. Buried deep in the intersection of the people youve attracted to help build your business, the market youre going to be operating in, and the problem you are solving, theres a story. You are going to move the world from where you are today to the universe you can imagine in the future. To do that, youre going to deploy some resources, including money.

A startup fundraising pitch is designed to do one thing exceptionally effectively: paint a comprehensive picture of your company and the economy it operates in. Your potential investors will look at your pitch deck and listen to your pitch. A compelling story will make investors lean in and hitch their wagon to your dreams. An excellent presentation anticipates everything an investor will want to know about your venture. Both the greatthe things you are better at than anybody elseand the not-so-great. In this book, I will dissect all the slides that typically appear in support of a pitch deck. I will talk about the things that throw up red flags for investors and about the things that are positive indicators for fundraising. I will take you behind the scenes of the decision-making process investors use to help you craft the best story possible.

The truth is that pitching is brutal: Laying your whole business bare in under 20 minutes means that theres no space for fluff, and there will be very little to hide behind. Investors see dozens of pitches per week and are extraordinarily attuned to how this format works. If you are padding or beating about the bush, if youre lucky, they will call you on it. If you are less fortunate, the investors will tune out and mentally write you off long before you make it to the end of your story.

When I do pitch coaching, the nowhere to hide aspect becomes apparent all the time. Sometimes, when a founder stumbles over a slide or a part of the story, theres a simple fix. Perhaps a point needs to be set up earlier in the presentation. Maybe the story is cleaner if you dont delve as deep into a particular aspect of the business.

Surprisingly often, though, working with founders on their pitch decks doesnt show the shortcomings of the presentations. Instead, it reveals cracks in the foundation of the company itselfflaws in the go-to-market strategy and/or weaknesses in the team. Market dynamics that dont pan out or obvious flaws in the pricing or business model that prevent the business from being viable. A book cant cover every eventuality in where your company goes wrongthats where my coaching practice comes inbut I will teach you the thought processes to help you self-assess.

You cant trust investors to tell you where your story falls apart. They are incredibly busy people. Some investors are willing to give you a nudge in the right direction, but in my experience, they dont have the bandwidth to engage in a long back-and-forth to fully ascertain the challenges in your pitch. They are in the business of investing and helping grow the 0.5% of companies they end up investing in, not fixing the underlying architectural challenges in the 99.5% they choose not to invest in.

Many investors are much more likely to give you a soft no, which usually comes in the form of a "youre too early for us to invest," or "we dont focus on this market right now," or "please check back with us when you have some more traction." The complicated thing about the soft no is that it may be genuine: the investment firm may really want you to check back when you have a bit more traction, or they may actually be defocusing from the market you are talking about. However, investors are in the business of finding extraordinary humans building spectacular companies. In my experience, they will engage in conversations with companies, even if they arent a slam dunk, if the opportunity is good enough. FOMO (fear of missing out) runs deep in the venture world, and a lot of the time, however, the soft no serves another purpose. It exists to help the firm have an option to talk to you again further down the line. If you find yourself getting a lot of soft nos, it probably means that theres something about the business thats not fully working.