Not every startup has a business case for external investment. But let’s say yours does. You’ve probably got lots of information floating around your head just about now, as you are trying to decide what to put and what to skip in your upcoming investment pitch.
We’ve got you. Every year, promising startups pitch at tech events and conferences. As organizers of Arctic15, we’ve seen thousands of them. We picked three companies that have pitched in the past and have grown into bigger and more successful businesses since. They are native advertising solution Kiosked, seamless translation service Transfluent and alternative protein foodtech provider Entocube.
That they made it to the finals means they were voted by the public as one of the most interesting and viable companies on the roster, scrutinized by a investors & juries, and worked with real investors for months to make sure both the investors and the startup were actually well-matched in terms of personality, vision, and values. In their final pitches, all three used some consistent pitching strategies:
#1 What’s the “Pain Point”?
“Pain Point” is, just as it sounds, a point of annoyance or irritation. In business, it is the difficulty that your customer is facing, or is soon to face. Knowing the “why” behind your customer’s pain point is also valuable, as it may lead you to a more effective solution to their problem. Entocube did this very well:
The team understood that the world population was rising and that they would want more meat as well. Why would they want more meat? Because, as Entocube Business Manager Perttu Karjalainen noted, people are getting wealthier and as they get wealthier they want more meat. Combine this with an increasing human population, and the need for a more efficient protein production solution becomes clear. In now makes sense why Entocube endeavours to supply it.
#2 Communicate How Your Company Solves That Pain Point
Once the startups establish the pain point, they speak to how their product or service would make it all better. Now, these solutions have to make sense of course and should speak to your understanding of the person or business you want to buy your product. Kiosked showed this in their pitch when they highlighted that “[Web] Banner ads are [ineffective]. They annoy and disturb”. The Kiosked team felt the solution to this was interactive ads woven into the very content the person was consuming:
This strategy, the communication of how your startup solves the problem, is likely the very basis of your business, so you may know it well and believe in it. Still, do not make the mistake of valuing your opinion about your product or service above that of the customers.
Your customers are your most honest feedback. As they vote with their money or attention, listen to what they tell you, even if it is “we do not want this product of yours”. That doesn’t necessarily mean you give up after a few failures either. Put your product out there, evaluate the needs and wants of your customer, then adjust. There are a number of businesses that have successfully changed direction once they learned more about the true needs of their market.
#3 What Is Your Revenue Model?
Essentially: how are you making money? Revenue is your oxygen: it lets you improve the product, hire employees, train staff, pay bills, go to networking events, and promote your business. Investors don’t want to fund your expenses forever, so they will seriously wonder about this. Entocube did it nicely in their pitch. In fact, the Entocube team had developed two separate revenue models they explained:
As their startup is all about using insects – crickets, in particular, – to solve the growing protein demands of a society growing more wealthy, the Entocube team decided to take aim at the suppliers of that protein. Their revenue models have them selling to farmers who want to use crickets and cricket technology to lower the cost of protein production, as well as companies who sell direct-to-consumer products that make use of crickets.
#4 How Do You Plan to Scale?
Investors generally want to make a return on their investment, preferably at least x3. This is why they give you money in the first place. They want to hear how you plan to scale your business up and notably increase your revenue. Transfluent had this of in mind during their pitch.
Transfluent provides a near-automatic, accurate and human-powered translation service to businesses with customers around the world. Knowing this becomes important when you look at the pitch strategy employed by Co-Founder and Ex-CEO Jani Penttinen who stated at Arctic15 “[Transfluent] is extremely scalable. We have 15,000 translators in our network right now in 60 languages”. This clearly indicates that, while the co-founders had only started 11 months prior to the pitch, they have built up an impressive backend network to ensure the service can accommodate fast growth without threatening quality.
Here’s what worked for some of our past success stories. It is important to note that no strategy will replace a sound business model, product-market fit and execution. And by no means is this list exhaustive.
Did you pick up any insights for your pitch? Let us know in comments!