The number of startup pitching competitions around the world is out of control. Sadly I believe funders’ interest in these competitions has an inverse correlation: more events competitions = less funder interest.0
My personal lack of enthusiasm for pitching competitions is the result of both the abundance factor, and my own philosophical view about what it “means” to pitch a funder and the entire experience surrounding the pitch.
In my opinion, pitching is a symmetrical discovery activity and must be approached as such. There are certain things that both Founders & Funders need to keep in mind when they pitch each other.
Pitching is about stimulating engagement
Founders need to think long and hard about how to stimulate engagement with funders. Engaging in a two-way conversation is the best way to ensure that funders are listening and really digesting the critical dimensions of the business. I consider totally useless long pretty presentations that are structured as one way communication flow. Founders should consider presentations as a tool to stimulate engagement instead of as a goal per se. The best presentation I have ever seen in my life was by Daniel Ek, CEO and Founder of Spotify: he never opened his laptop and used a whiteboard to drive my engagement.
However, as we say, it takes two to tango: funders should also make pro-active efforts to engage and ask smart questions. Note, however, that those questions should be focused at learning more about the founder and his/her business and should never be seen as tool to show off knowledge. Intellectual arrogance is one of the worst behaviours that I have seen by funders during a pitching session.
I believe pitching sessions should be called mutual-engagement sessions and should be aimed at cross-learning. I detest all the instances in which both funders and founders interact with empty cross-selling statements without engaging in a real conversation.
Pitching is about getting to know the person
Both funders and founders should use the pitching session as first and foremost a “get to know you” effort. Specifically, they should both explore whether their personalities actually click. Both parties should make an effort to understand who the other person is, his/her background, what are his/her motivations. Both founders and funders should keep in mind that to observe their reciprocal behaviour during the pitching session can be a great way to estimate the quality of their future interactions: existing behaviour can be a great a proxy for future behaviour.
In order to get to know the entrepreneur, funders should ask left field questions and observe the founders behaviour in front of the unexpected. This is often the best way to take the discussion to a different level, to move out of an artificial script and to observe the founder’s real personality.
Founders should disagree during the meeting without hesitations. Pitching is not about playing lip service to the person in front of you. It’s about exchanging views and learning during the process. Observe your future funder when there is a disagreement and see how he/she reacts.
Pitching is about understanding the motivations
Both founders and funders should always ask each other the most basic of all the questions: why do you do what you do? What’s your motivation?
A clear insight into each others motivations will provide a totally different depth in the founder/funder relationship. Deep motivations are also the secret source of energy when things do not work out as planned and its time of crunching.
All the cases in which funders are investing because is a good deal, or founders are starting a company because is an interesting space, are always very concerning. Watch out!
Pitching is about being selective
Neither funders nor founders should consider pitching a statistical exercise based on the concept of: more pitches = higher statistical probability of finding the right funder.
Founders and funders should do significant more upfront work before committing time to each other: is it worth it to invest time in a mutual-engagement session?
Spending time in getting to know a person or a team when it is clear that there is no fit, it is something that should be avoided by all parties. Let’s engage in a process of deep reciprocal learning of each other only when it’s understood that is worth to do so. Today there are tons of public data available for both founder and funders that should be reviewed and analysed in advance of deciding on any meeting (e.g. LinkedIn references, Twitter profiles, App store rankings, etc).
The deep mutual engagement that comes with pitching is first and foremost the beginning of a discovery process. If neither the founder nor the funder want to invest the emotional energy that this implies, please change careers or don’t start a company. There are plenty of jobs in banking ☺ and elsewhere.
In conclusions, 7 tips to consider that both founders and funders should keep in mind during pitching time:
1 — A Selling based pitch sucks: engagement is the way to go.
2 — Pitching is not a statistical game aimed at increasing odds to be funded but a discovery process to learn. Less noise more substance is what we all want. Aka avoid useless pitching every time you can.
3 — Pretty slides are useless. Create tools to stimulate engagement: simple slide, whiteboard session, demo, etc.
4 — If the founder/funder chemistry during the first pitching session is not right run away, follow your gut.
5 — Pitching is not about following the script. Go off script when you can and push the other person to do so too. Ask unexpected questions and watch the reaction: best way to get under the skin of the person in front of you.
6 — Ask direct questions to deeply understand the why founders and funders are involved/want to be involved with the business. Be skeptical if there is not why.
7 — Do your homework in advance of a pitching meeting.
Roberto Bonanzinga blogs at Entrepreneurship at Work (where this post first appeared) and tweets as @Bonanzinga
12/04/2015