Pitching is a Sales Process – Part 1
By popular demand (OK, a couple people asked) I’m writing a follow-up to my post a couple weeks ago about pitching your idea. I’ve been working with corporate clients for 15 years, developing interactive training programs built with my SoundLearningX© system. Because of the nature of the program, I got involved in a lot of sales-related projects, everything from financial and insurance sales to nuts and bolts and pharma sales, even military recruiting and tax preparation (seriously).
Startup Assembly Manual is mostly about getting a founder “investor-ready”, building a package that will resonate with potential investors. That, obviously, leads to the process of “pitching the idea”. When I got to the chapter on presenting to investors, I put two and two together and realized that it is a sales process. Having pitched a few deals, watched a lot of pitches and investor reactions, and caught a few deals as an angel, I came up with a structure for pitching.
First, you have to understand the expectations and motivations of an investor. Why are they there? What are they looking for? What do they want to hear? What is the fundamental, crucial point you have to prove to get their attention? The answers are that they are there to find an interesting opportunity in which they see promise; they want an opportunity that will make a profit some day at the lowest possible risk.
Before going on, let me tell you what they don’t want. They don’t necessarily care about: 1) how brilliant you are, 2) how much you believe in the product, 3) how the product works in detail. Initially, they really just want to know what value perception the product will present to a potential customer, and whether or not it is strong enough to create a motivated, paying customer. They aren’t there to hear a “sales pitch”, although it is. My philosophy about selling is pretty simple: get in front of someone you have determined is going to be receptive to your message, then “explain with style”. Nobody likes to be sold to, but explaining the benefits, clearly and confidently, to the right people is what it takes to create the “win-win” result, which is the goal of any sales process.
Understand your own motivations, too. You want somebody to believe in your vision, sure, but think of it in the right perspective: your opportunity is the product; the investor is the potential customer. That should help you think about it more clearly; it’s a process of putting a compelling solution in front of someone who has a problem and needs a solution.
The components that mean the most to them start with the simplest one: do you have a product that people—a lot of people—will pay for? If you prove that, everything else trails out behind. So, you have to provide three flavors of “proof of concept”.
- Technical (does it really work and will it deliver the promised value to the customer?)
- Economic (are the total costs of product and infrastructure going to be less than the price people are willing to pay?)
- Social (will people actually buy it?)
Putting that package of proof together is where your pitch starts (and it takes about 200 pages in the book). One mistake many founders make when going after serious money is pitching too soon, before the proof is complete. Investors may like the idea of your product, but if they can’t see that it will attract a market or not, they aren’t going to plop down real money.
The second critical thing to prove is that your team can actually build a business around the product concept they just bought into.
In Part 2, I’ll go into the management team expectations and the Seven Steps of Pitching.