What Investors Are REALLY Thinking During Your Pitch
Camp One Ventures listens to almost 500 live pitches a year. If you consider that there are roughly 260 business days a year, then that is an average of 1.92 pitches per day. That’s a lot of listening. So what are we thinking while you are pitching us?
Typically, we bet on the jockey- not the horse. This means that investors are sometimes analyzing you more intensely than your concept. During a founder’s pitch, we routinely formulate the same types of questions no matter how well or poorly the presentation is going. If an entrepreneur can tackle what we really want to know in the first few minutes of their presentation, then we’ll probably be thinking about possibilities rather than protests. Here are some of the most common questions investors are thinking about when founders are explaining their concept:
‘Legit’ meaning more than just smart and credible. We are wondering if you have what it takes to disrupt an entire industry. We are sizing you up in what matters to us and putting you into a category as quickly as possible; You’re a product person, an engineer, a salesperson, a visionary, a creative, an operator… You’re well-educated, you’re a scrappy fighter, this is personal for you, this is just another venture you’re hoping for, this is an idea you’re betting your life savings on, etc. You’ve put your money where your mouth is, you mean what you say, you’re a wild card, you are well-networked, and more. We are listening for who you have worked for in the past, what makes you a specialist in this vertical of your industry. Just so you know, investors are sizing up all of these things and more in the first few moments at the table.
2) Does this person believe this product will succeed?
Of course, every entrepreneur spouts fire and fury about how their product is going to change the world. But talk is cheap, and we are not listening to what you say so much as listening to the actions you’ve taken thus far. Have you put in your own money? Do you have other skin in the game? Have you exhausted all other funding sources? Have you bootstrapped to the max? Would you invest your parents’ money in your own company? (Sounds ridiculous but you would be surprised) We are thinking to ourselves- Would this person bet his life on this concept succeeding? Do you have a Plan B? (For the record, the answer is that Plan A is Plan B and C)
3) Has this concept shown traction?
Once we have assessed your passion, credibility and commitment, we then move onto your concept. How far along the path to proof of success are we? Is this an incubator idea or a product that has buyers today? Has this founder sufficiently tested this product on a small scale to identify customer needs? Founders that have pounded the user pavement and derived significant customer feedback are ones investors will want to back. Without research on what the market wants, and a least an integrated pivot or two from applying those learnings, your concept is probably not ready for funding. It doesn’t matter what we think, or what you think, it matters what your customers and buyers think. And they will show or tell you, as long as you take the time to ask, listen and analyze thoroughly before approaching the VC firing squad.
4) Do you own this concept?
Owning a patent is a great way to get an investor’s attention. If you don’t own a patent, at least having a concept that is not easily replicated, or does not seem to have many competitors in the field. Who else is doing this? How are you doing it better? If no one else is doing this, why? What is the catch? It’s virtually impossible to completely protect an idea from being stolen, but how hard or easy to steal are we talking about? Any competitive factors in the form of complex coding, legally owned trademarks or first mover advantage are things investors are listening for and thinking about at the very start of your pitch.
5) Why do you need money?
This is where things get a little clearer. If you need capital to get over a growth hump in the form of customer support, or fulfillment staff, or other supporting roles to meet demand- those are good reasons to infuse capital. If you need development support in the form of programmers, designers, UX/UI guys, technical innovation, etc- those are obviously important to proving your concept and may deserve funding to give it a shot. Capital to “pay mortgages”, “hire salespeople” “get an office” or “give people paychecks while they work” are the types of answers where it gets a little more complicated. Can everyone work for equity? Can they work remotely? Can the founders sell at the beginning until the demand is documented? Listeners will try to categorize a capital raise for your company’s growth as one of two things: a “nice to have” or a “need to have”.
Hopefully these insights can help you as an entrepreneur structure your pitch for success. Answer these five questions for in the first five minutes and you just might get backing.
Madding KingThe views and opinions expressed herein are provided exclusively for informational purposes. CampOne Ventures, LLC, its affiliates, or its employees make no representation or warranty, express or implied, as to the information's accuracy or completeness. Information displayed on this blog does not constitute a solicitation or an investment offer or advice, and should not be construed as such.