Taking your elevator pitch to the top
Being struck by an inspired business idea is a thrilling moment. At this time, it’s tempting to believe that every investor in town will be begging to hear an in-depth explanation of your wondrous start-up before throwing copious bundles of cash at your feet.
The reality, unfortunately, is a little different. Investors and potential business partners are often busy, healthily cynical people. You will need to perfect a strong elevator pitch before they will even consider backing your business.
An elevator pitch is so named because you should be able to deliver it in the time it takes for you to corner an investor in the lift. If nothing else, it will help you boil down the essence of your business and allow you to cut the waffle.
Keeping it short
“People are passionate about their businesses and they can talk for an hour straight about their ideas,” says Niki Scevak, founder of estate agent search engine Homethinking and mentor for the Startmate program. “I’ve done this and it hasn’t gone so well.”
“Even though you’re passionate, you need to be brutally precise. Even one sentence is too much, in my view. You should be able to sum up your business in a few words.”
“That brevity gives you a good kick-off point for the investor. If you’re talking for longer for 30 seconds, it can prevent the conversation flowing and the asking of further questions. Don’t feel you have to say everything at once.”
David Jones, another Startmate mentor and co-founder of ThreatMetrix, adds: “Australians are generally not good at elevator pitches. We are wafflers.”
“In the US, they have a debating culture in their schooling that allows them to put forward arguments in concise terms.”
“Also, we have the self-deprecating thing that we share with the Brits. Entrepreneurs need to be able to blow their own trumpet in an effective way.”
Two pitches or one?
Jones believes that entrepreneurs should master two pitches. One is a “explain to a person on the street pitch” that should consist of 20 words and include what the business is, the problem it’ll solve and its target market.
The other should last a minute, according to Jones. This gives more in-depth information about the business, such as the market it operates in. Start-ups should, for example, be able to name all of their potential competitors and identify a clear point of difference to them.
“You really want to be able to nail that differentiation,” he says. “The investor will then say ‘Okay, so how will you make money?’ You then need to nail that, too.”
Scevak advises: “The biggest breakthrough is to show empathy with the problem rather than the solution in your pitch. The biggest mistake is to go through all of the features of your business rather than identify the problem that it is looking to solve.”
“It’s also good to anchor your proposition in something understandable. For example, we call Homethinking the ‘Yellow Pages for estate agents.’ Yellow Pages is an anchor – it’s something everyone knows. Use that anchor and modify it for your own use.”
Present yourself well
Scevak says the presentation itself is important too.
“People use Powerpoint as a crutch, which I hate,” he says. “You should have one broad concept which you can use as a slide. Even one paragraph is too much – it’s a bad way to present.”
“People like to connect with the product you’re talking about too. If you demonstrate it well at the presentation, that’s almost as important as anything you say.”
Jones concurs, but says that flashy presentations can often be empty.
“The strongest Startmate presentations were structured and the bad ones were waffling and had no confidence,” he says.
“One had done a video that included a couple of skits that were very funny, but they didn’t actually explain the value proposition of the company. It all got lost in visual effects.”
Packing a punch
Attention-grabbing clarity is what investors are looking for, according to Jones: “Investors see a lot of people and they do a lot of deals. You have to respect their time and grab their attention.”
“Be very clear what you want from them. Ultimately, they don’t care about you, they don’t know you. So you have to excite them. You’ve got to sell the sizzle, not the sausage.”
“If you’re sending an email, they won’t read the attachment. You’ve got to get them with the teaser in the email. When we started, we had to strip everything away (that we sent) because it was always too much.”
Phil Weinman, a serial entrepreneur, investor and StartupSmart mentor, says that he’s heard “hundreds” of pitches in his time, often from people who accost him in an actual lift after one of his speaking engagements.
“I’ve heard so many, there’s not a week that goes by when I’m not pitched to,” he says. “Usually it starts with ‘I’ve got a brilliant business – please sign a non-disclosure agreement.’ I say, ‘Well, first let me know what the idea is’.”
“A lot of people think they have a multi-billion dollar idea and that an NDA somehow gives it value. But it’s not worth much if you don’t get it off the ground.”
Scevak backs this up, saying: “I always share as much as possible. People way over-estimate the chance of someone stealing an idea. As an investor now, I can really see the naivety of businesses that don’t share their ideas. The pros of sharing always outweigh the cons.”
Keeping it realistic
Weinman says that he values one thing above anything else when he’s being pitched to – honesty.
“If someone says, ‘I’ve got this idea and I need a mentor, can you help me out?’ I tend to gravitate towards them because they know they haven’t got the best business in the world,” he says.
“Often, businesses aren’t very good at summing themselves up. They usually ask me for money. They can’t look past their next salary day. What I’m looking for is leadership and big vision.”
“You need to show passion and be honest. There’s no way you can fake passion. You also need an end game – whether that’s to exit, to be in it for the next 50 years or grow it to stage X.
“The best thing you can hear is that someone says they want you to back them for nothing for a year. They put skin in the game and back themselves. That shows passion.”
Tips to improve your elevator pitch
Michael Fox, co-founder of online retailer Shoes of Prey advises: “A great elevator pitch does four things: it sets out the problem, it sets out the opportunity, it sets out how the business is going to solve that in a way that's valuable to customers, and, most importantly, it inspires the listener.
“Not all of those four points should be explicit in the pitch, but each of them must be implicit and easy for a listener to arrive at and understand.”
“It doesn't have to and shouldn't give all the detail - you don't need to describe the features you're building. The goal of the pitch is to inspire the listener to want to spend time with you to find out more.”
“Here are some questions to ask yourself before putting your elevator pitch together: What do you and others find inspiring about the business?”
“What are your key selling points? If you had to describe it to your grandmother what would you say?”
“In my view the ideal elevator pitch is 10 seconds and at most two sentences long. Here's what I imagine the elevator pitch to be for three of my favourite companies:
“Google: We're the fastest, most relevant search engine on the web. We'll monetise the results by showing useful, relevant ads to users.”
“Apple: We design and manufacture aesthetically amazing, highly desirable, easy to use consumer electronics products.”
“Facebook: We connect everyone in the world with their friends online, and make it easy to communicate with them.”