Editor's Note: Learn from a panel of experts and entrepreneurs who have successfully financed their own ventures and are helping others do it at the Thought Leaders Live 2013 event May 29, in Long Beach, Calif. Event and ticket information can be found here.
Every year, Pace University and the MIT Enterprise Forum of New York City host the Annual Pace Pitch Contest, which launched in 2004 and is open to any current or recently graduated college student. Winners of the New Business Concept and Social Venture categories are each awarded $25,000.
The contest teaches aspiring entrepreneurs to deliver a winning business pitch within minutes -- an important skill even for seasoned business leaders.
"In today's busy world, with 140-character Twitter [posts] and one-paragraph Zagat reviews, everything has to be shorter and persuasive," says Bruce Bachenheimer, competition founder and director of entrepreneurship at Pace.
How the contest works
After weeks of preparation and videotaped practice sessions, each team or individual presents a three-minute elevator speech to a 200-plus audience and a judging panel of investment pros. For the last contest, which took place on December 3, 2009, 10 finalists emerged from a field of 150 concepts and challengers from 40 schools.
Their ideas ran the gamut, including an all-natural sports products manufacturer, IT solutions to enhance hotel guest services, a medical diagnostic kit to test women's tears for proteins that indicate breast cancer, mobile phone apps to streamline India's vast street markets, and more.
Reviewing these award-winning pitches offers an ideal model to measure against your own elevator speech. The same elements that earned the judges' approval -- and some real funding -- can reward your own bid for an investor's attention.
What is an elevator speech?
The contest defines an elevator speech as "an extremely concise presentation of an entrepreneur's idea, business model, marketing strategy, competitive analysis, and financial plan, which is delivered to potential investors."
Such pitches are part of entrepreneurial legend. Picture a glint-eyed newbie who spots a potential investor and seizes the moment by getting into an elevator alongside the prospect. During the brief ride, while the investor is captive, the newbie passionately presents his or her business idea.
"All you're trying to do, whether it's a three-minute pitch or a six- or eight-minute presentation, is to whet the appetite for a follow-up and get an in-person meeting," says Somak Chattopadhyay, principal at Greenhill SAVP, an early stage venture capital fund in New York, and a longtime Pace judge.
What goes into an elevator speech?
The most important factor in an elevator speech is the overall story, says Chattopadhyay. "What is the genesis of the opportunity and why are you excited about it? What niche are you trying to exploit?"
He points to three critical arenas that must be quickly and clearly explained:
- Who is in your management team, what are their qualifications and what makes them suited for this opportunity?
- Where does the idea fit into the competitive landscape? What makes it a true niche and a real opportunity? "There are killer pain points and then there are things that are nice to have [in your speech] -- like the difference between antibiotics and vitamins," explains Chattopadhyay. You need to be addressing something important.
- Lastly, how will your idea scale? "This is where most companies don't make it to the next step," says Chattopadhyay. "It might be a $1 billion health care market, but if you're selling software only used by receptionists at certain types of medical practices, that's another story." If you describe a billion-dollar market, specify the percentage of that market you expect to capture.
Chattopadhyay also advises providing a clear explanation of why the opportunity will work and why the competition or other startups haven't been successful.
Make your elevator speech ride with the times
Claims of huge returns and outrageous market grabs aren't credible anymore, say Suzanne Muchin and Rachel Bellow at ROI Ventures, a social-impact market strategy firm based in Chicago. "Now you need a big idea, one with social and cultural impact," says Muchin.
"These days, businesspeople aren't talking about how much more money everyone is making," agrees Bellow. "They're talking about how to inspire stakeholders."
Your pitch must also convince investors that you won't burn through money. "This is the era of the lean startup," says Bachenheimer. "If the idea costs $1 million, you need to show $100,000 milestones, a working model of how you will get and grow customers to make investors more comfortable."
And the winners are
The critical requirement, sums up Bachenheimer, is "venture capitalists need to be convinced not only that it's a good idea, but that you can make it happen. It's always better to bet on the jockey rather than the horse."
At the Sixth Annual Pace Pitch Contest, the gallop to the finish line put these ideas in motion.
- The New Business Concept award-winner: NewlyWish, an online wedding-registry service that links offline and online retailers and service providers with local engaged couples and gift-givers.
- The Social Venture award-winner: EGG-Energy, provider of an affordable, battery-powered energy solution that relies on established power grids to provide service to remote parts of Africa.
For more tips, check out videos of the Pace pitches here.