Every entrepreneur needs a value proposition statement for his or her startup that can hook potential investors and partners in less than a minute -- the short time you might join them in an elevator on the way to their offices. This may sound easy, but every investor I know is frustrated by wasted time listening to rambling, emotional pitches that are not to the point.
Passionate entrepreneurs tend to talk on and on about their disruptive technology, their intent to change the world and free services, but if a business can’t provide quantifiable value to real customers, the dream will likely turn into a nightmare. The better you understand what makes an effective elevator pitch, the more likely you will attract investors and customers.
Here are the most common elevator pitch missteps I see often as an angel investor and advisor to startups, with some quick advice on how to address each:
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Insist on leading with the story of the company. You don’t have time for any story at this point. Until an investor hears about a real customer problem, and understands your solution, the background is irrelevant. There will be plenty of time for the details of your arduous journey later, but for now my advice is to postpone the story to a later meeting.
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Rely on marketing content and emotion vs. facts. It’s good to speak with passion and conviction, but only quantified facts make a business. Skip the fuzzy terms, such as nice to have and easier to use in favor of specifics, such as costs 50 percent less or increases productivity by 100 percent. Skip the sales pitch and avoid preaching.
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Build up for the punch line at the end. Always start with a hook to get the investor’s attention. Good hooks define a real problem, followed by a specific solution (not technology). For example, “I have patented a new LCD with double the intensity at half the cost, already proven locally, and I just need resources to scale for this market.”
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Highlight features rather than differentiators. Investors worry about competitors more than customer features. Your second sentence should acknowledge competition, but highlight your added value. For example, “Unlike all the other LCD providers, our patented high intensity light has no blue tint or glare that looks unnatural.”
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Focus on the solution and skip your team. Smart investors invest in people, even more than a great product. Thus your third sentence should highlight why you and your team are the right ones to support. For example, “As you may know, my team and I are uniquely qualified for this opportunity, based on our first successful startup with solar.”
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Try to talk fast and extend the time available. Limit your elevator pitch message to about 150 to 225 words in 30 to 60 seconds. Trying to cram 500 words into that first interaction will only antagonize the receiver, and potentially lose the key impact of a highly-focused message. Always exude energy, conviction and commitment.
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Neglect to ask for any specific next step. Obviously, you won’t close many investment deals in a minute in the elevator. Don’t forget to ask for a follow-up session to present your full pitch. Ask for an hour, but always plan on speaking for only 10 minutes to leave plenty of time for addressing questions and concerns.
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Come unprepared with no written documents. For investors, you always need to offer an executive summary of your business plan to show this is not a dream, and provide reinforcement of the message you have just delivered. If you have no business plan or investor pitch to back it up, and the investor asks to see it, you will lose your credibility.
In reality, a good pitch is not just for elevator meetings. It should be in the introduction section of your business plan, on the first slide of your investor pitch and the beginning of your executive summary. You will find it the best way to start every networking opportunity, and a key communication vehicle that everyone on your team should know and use.
An entrepreneur’s elevator pitch embodies the value proposition that is being brought to customers, as well as investors and partners. Don’t hide it behind too many words, an urge to stay in the spotlight longer or unbridled passion. Catch the elevator up to make it a business.
