5 Steps To Keep In Mind While Pitching For Seed Investment

Startups must delve deep into their pitching strategy to extend the ideal pitch deck before seed investors
5 Steps To Keep In Mind While Pitching For Seed Investment
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Founding Team Member, Roots Ventures
7 min read
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The most successful startups are created on a great idea. Greatness here implies workable ideation. No matter how revolutionary the idea is, it is akin to a seed. Without optimum conditions, it cannot mature. As an entrepreneur, you can sow the initial seed for your business, but for it to germinate you will require various essential elements such as a working staff, official space etc. All of this would require a substantial injection of capital and it is often hard for most businesses to support these considerable overhead costs. At least during the initial run.

This is where venture capitalists (VCs) step into the picture. Due to the business-curbing effect of the pandemic, businesses are currently undergoing a nerve-wracking moment and securing funds has become a challenging aspect. It is all the more important for startups with a promising vision to align their interim strategies to gain financial patronage from VCs. At the same time, VCs are also exercising extra caution before funding emerging startups.

VC firms or funds are known to essay an all-important role by funding small companies that seek expansion but do not enjoy access to traditional mediums of finance. But raising seed investments from them is no walk in the park. Startups must delve deep into their pitching strategy to extend the ideal pitch deck before seed investors. With innumerous pitch decks from a plethora of startups constantly competing to gain that invaluable funding, VCs can also be quite picky in choosing a pitch. Therefore, like everything else, making a viable pitch with just the right VC outreach is both an art as well as a science.     

Let’s look at the five steps that are essential for startups to make the perfect pitch that can impress VC investors. 

Substantiate your product-market-fitness and minimum product viability

The PMF (product-market-fit) is one of the most crucial elements of your startup framework. Its absence can lead to pitch rejections. PMF literally denotes whether the startup is in a healthy market and whether their product/service can satiate the market forces.  It is generally a given fact that startups do not have a valid PMF during the initial growth stage. It is ascertained only through a process of relentless trial and error, grasping customer response and evaluation, and most importantly value exchange in the particular market, which eventually translates into revenue-generation.

You can effectively illustrate your product potency by showcasing that the product in question has been created with sufficient features to satisfy the initial round of external users using alpha testing and beta testing techniques. Such methodologies allow you to emphasize on the feasibility and market value of the said product using both internal and external small-scale deployment. This will prove instrumental in demonstrating the required MVP (minimum viable product) through various testing phases and product reviews. This is crucial for etching out the fact that your product commands enough market utility for it to be procured by buyers. Having a visible PMF alongside a proven MVP helps startups in enhancing their value propositions and gaining the required seed funding from VCs. 

Assessing the market prospect

Your market must be well-established and sufficiently extensive to enable financial backing from VCs. This involves; evaluating market competition; underlining the problem statement and your company’s potential solution for the same; depicting the current loopholes that are unable to solve the exiting predicament; ascertaining overall growth prospect of the market and highlighting your company’s market relevancy and worth in an ecosystem replete with the competition. An important element here is stating the range and size of the market problem that you are attempting to resolve and whether your product is following the various growth parameters that can help predict the subsequent growth and development of your product.

Delineating your market prospect is a subtle phenomenon and requires a middle ground, neither generalized nor too explicit. This helps you draw high conversion and penetration rates to illustrate a lucrative business model that can derive funding from VCs. Align your evaluations feasibly and make sure they comply with your product-penetration levels. This aids in depicting a clear growth trajectory for your startup. A prudent and aggressive approach signifies your commitment to a sustainable business blueprint and shows that you are here for a long haul. 

Enumerate your initial tractions

Leveraging VC funds require that you clearly quantify and calibrate your initial traction and business haulage. It is the single-most important factor that can help you acquire the essential investment for your startup. It helps gain a fund’s faith and supplants them with the belief that you can carry out your vision into practical fruition. It is a fact that companies that effectively valuate their early users, initial transactions and a sound PMF succeed in extending the most potent pitch decks. Nothing can convey your present growth as efficiently as numbers. The product pitch should be coupled with an authentic financial projection along with the details of all the expenses for one-three years. This projection will help the VC understand your business plan better with how do you visualize or interpret every element of cost or income.

Illustrate your team’s merit

The quality and credentials of your founding team can have a substantial impact on closing a VC prospect. While companies with a meritorious and proven lineup of entrepreneurs may have a better chance at capturing seed investments, those who don’t should optimize their mettle and charisma to persuade the investors. You can even utilize alternative approaches such as showcasing previous successful stints and small-level entrepreneurial triumphs if your team does not contain any well-established players. After all, VCs as a rule are always on the lookout for practical qualities such as business fortitude, poise, market engagement and selling capacity. Make sure you focus on indicating your key strengths to invoke the investors’ confidence to the fullest.   

Pitch perfection

Your startup’s pitch is more than just presenting a set of facts and figures to VC investors. Think of it as a convincing communication that can clearly outline your startup’s area of expertise, the problem that you have set out to solve, potential gains, and proficiency of the professionals responsible for the task. Perfecting your pitch is an arduous task that needs consistent practice and tuning to achieve finesse. It is similar to recounting a realistic and powerful narrative with all the essential elements that can grip your audience, in this case, the VC investors. Being realistic and to the point helps in accentuating the various features, design details and attributes to convey the verity of your ultimate distinguishing factor that can help you make or break your pitch—your product USP. Be comfortable in extending your pitch in whatever format available, whether elevator pitches, formal investment proposals, or through informal interactions. Be ready to make a pitch anytime, even when you are not anticipating, as an occasion may dawn anytime. It’s all about believing in your startup idea and if you are driven enough to live and breathe your vision, you are bound to attract investors.

Though attaining funds from VCs is difficult, there’s always a bankable opportunity to realize your funding ambitions. Keep honing your pitching skills and know where to improvise upon the laid-down conventions. Through long-term practice and due diligence, you will find that obtaining seed funds from investors isn’t that hard, even in a post-pandemic age. Believe that!     

 

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