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So you made it into the room. The room where decisions happen. Where financing is secured. Careers are made. Legacies begin. Wait, this is that room, right?
By the second or third meeting with investors from a firm, you’re going to a conference room, where a few people are going to sit around a table and welcome you to speak to them for a few minutes of your life. Your job is to show them that your company has a great story and the substance to back that story up.
Getting your pitch deck and pitching skills in great shape takes a lot of time, a lot of effort, and a lot of free beer or pizza for the friends who were kind enough to listen to you practice and give you feedback. We discussed designing your pitch deck and practicing your presentation earlier; this section will cover what you need to know about delivering the pitch in a meeting with investors, including some details about what to expect in the room, how to respond to investor questions, and some pitfalls and red flags to avoid.
Before You Go In
Schedule to meet investors in person. Though technology allows founders to meet with investors over video (and this is a good thing!), if it is possible for you to meet investors in person, do so. Certain things are easier to communicate when you’re all in one room, and your physical presence can make you human to them.
Pick the right time. Your audience will have the most attention and energy in the morning, within the first hour or so of the workday. Whenever possible, schedule your presentation in that time slot. Avoid presenting directly after lunch or in the last hour of the day.
Bring the right team. For an early meeting with one investor, only one person (the CEO) from your team should attend. At later meetings, have two or three people attend so that one can deliver the spoken presentation and one can operate the technology in the demo. This will also help show potential investors that you have an ability to build a strong and complementary founding team.
controversy Opinions differ as to whether you should switch speaking roles among multiple members of your team. If you can do so smoothly and logically, switching off gives everyone a chance to contribute equally and can make a favorable impression on your audience.
Dress appropriately. There are no hard and fast rules here, but remember that the entire purpose of this meeting is for you to be judged, so dress like it. You’d have to wear something outrageous for this to make or break a deal, but get points wherever you can. A suit would be overkill, but dress like this matters to you.
Be on time. Be 15 minutes early.
Get set up correctly. Getting there early means you can connect to Wifi and make sure you’ve turned off all notifications* on your laptop before you connect it to the projector.
Sit, don’t stand. If all of your investors are sitting down, then the most powerful position in the room is the one at their level.
If possible, sit to the right (the viewer’s left) of your presentation. Because people read left to right, they’re going to look from you to the deck and not the other way around. In this way, you are in control of the narrative, rather than the deck being in control of you.
Say yes to a drink. When they offer you water or a drink, say yes. Having something to hold can stem your nerves, and you can take a brief break for a sip if you get flustered.
Don’t panic. Do not expect that you’re going to get through everything you’ve prepared. Investors are going to interrupt you with questions, and you may end up spending more time on one or two of their concerns or interests than you had prepared. But that’s why you prepared. Remember, whatever you don’t get to you can send them in a follow-up email.
If something goes wrong technically, fill the time with some prepared anecdotes or use the gap to ask questions. Don’t apologize or talk off the top of your head to fill the space.
Be energetic and real. As mentioned earlier, emotion is a key component of connecting with your audience. While the content of your story plays a large part in establishing emotion, an enthusiastic, sincere delivery matters just as much.
Be confident. That’s kind of terrible advice, right? Let’s rephrase: Read our section on displaying confidence for tips on your pitch performance. Confidence may be the single most important factor in the pitch meeting at the early stages. Investors are measuring whether you have the faith in your ability and the leadership skills it takes to attract talent, build a customer base, appeal to the general population, and, in general, succeed. If your confidence is starting to crack, those tips will help.
Be memorable. There are a number of ways to keep your presentation in your listeners’ minds after you leave, as we discussed in Designing Your Pitch. Don’t forget to start and end strong, and repeat key phrases about your product, throwing in a soundbite or two.
Believe what you’re saying. You can’t genuinely convince someone of the value of your product if you don’t believe in it yourself. Before you go in, repeat your secret to yourself. Remember that you’re the person best positioned to solve the problem you’ve chosen.
Gauge the reaction of your audience. One of the most important reasons to look up while speaking is to read signals from your audience that indicate how you’re doing.
Look for nods, smiles, note-taking, eyes drifting toward the clock, and other visual cues. You can use these cues in the meeting to shift attention or emphasis, and after the meeting as feedback on how to improve or where to expand.
Make it a conversation. Occasionally—or more often, depending on how your audience is responding—take a break from your deck to ask questions, solicit feedback, and get your listeners involved.
Answering Investor Questions
Every question is an opportunity to share your knowledge. Investors do not want you to fail; they’re asking questions that they’re interested in, or because they want to give you a chance to show them what you know. If they didn’t care about your company, they wouldn’t engage with you at all. Remember, no one is trying to frazzle you on purpose. That’s an urban legend. But there are VCs who are extremely assertive, and they do this every day, and it’s probably pitch day, so they’re seeing two or three companies come through, and they just want the information to make a decision. They’re not trying to trick you; they’re trying to get down to businesses.
important When investors interrupt you to ask questions, smile and say, “I’m so glad you asked that.” Having this line in your pocket makes you look flexible and prepared for anything, and it also gives you a little time to think about what you’re going to say.
You practiced as much as you did so that you won’t get thrown off topic when someone interrupts you to ask something that’s a few slides away, or maybe that’s not in your deck at all. If this does frazzle you (“Let me get through this one thing!”), they’re going to judge you negatively. Don’t say, “You’ll see” or “I’m getting there.” Answer their questions when they ask. If there is a slide that is deeply correspondent to the question, like, “Who’s the team that’s building this?,” you can skip forward to that slide (if you know exactly where it is). But otherwise, just answer their question directly, and if you have rehearsed, you won’t get lost. You’ll know what you still have to share and how it connects to what you’ve been forced to share maybe a little earlier than you thought you would.
If you’ve done your homework, you should be well-prepared for uncomfortable questions or critiques regarding your numbers or methodology. When you practiced your pitch, we had you approach every claim you made with the most common investor question: “How do you know that?” If you did the work to answer every “How do you know that?”, you have nothing to fear from investors poking holes in your pitch.
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danger If, despite your best efforts, you end up faced with a comment or question for which you’re not prepared—something you don’t know or that could put your company in a negative light—don’t lie. (And do not say, “No comment.”) Your story needs to stay authentic to be credible. If you don’t know the answer to a question, own up to it, but be sure to follow up with an answer over email. Remember, no one is expecting you to have all the answers at the early stages. Telling an investor how you might go about gathering the data or research necessary to answer their question can be among the most impressive things you do in a pitch meeting.
If you simply need more time to answer a question, take a sip of the water you accepted when you got there. Even if you heard clearly, you can ask them to repeat the question just to give you more time to think.
Closing the Pitch
Don’t leave things open-ended.
It’s very likely that the investor will say something like, “How can we be helpful?” You should be prepared to respond to this with something other than, “By leading our round.” Let them know that you’re trying to fill a position, you need office space in whatever part of town, or you could use an introduction to a possible mentor. Get the investor to do some work for you.
You might not want to ask, “Are you ready to invest?” You want some time to think through the meeting and figure out whether you want to work with them, and being too direct might put some investors off. Instead, ask something like, “What’s your process for making an investment decision, and when can we expect to hear from you?” Or, “Are there any red flags that are causing you to hesitate about investing? If so, I’d love a shot at explaining how we think about them before you make a decision, whether that’s here or after you’ve had some time to discuss and think about it.”
NDAs. If you’re going in for a meeting in a seed round, don’t ask for a non-disclosure agreement before you pitch. Doing so is generally seen as a sign of naivety and is not likely to reflect positively. Seed funding backs an idea. You don’t have anything of real value to protect at this point. If you’re new to the startup world or Silicon Valley, you might be scratching your head right now saying, “Ideas do have real value; that’s why intellectual property exists as a concept!“ While that sounds right on the surface, it is common knowledge among technologists that it is the execution of an idea that is the hard part. Two teams with the exact same idea are likely to produce two very different products.
Naming other investors. Don’t share names of other investors or firms you’re pitching to. When an investor asks what other investors have shown interest in your company, don’t tell them. If they call those investors and find out they plan to pass, it makes you look bad. If everyone decides they’re interested, they might work together to make you a less significant offer than you otherwise could get.
Overcommitting on timing. When an investor asks you about your timeline, you don’t want to commit yourself to a specific deadline. Focus on creating a sense of scarcity by phrasing your answer generally, as Chris Dixon advises: “We’d like to wrap this up in the next few weeks.”
Lying. Don’t lie. And don’t slip into weaker deceptions like misleading statements or key omissions. You don’t want to set expectations that you may not be able to fulfill. Hype is good, but lying isn’t, and exaggerations can make you look unprofessional.
Ignoring feedback. Do your best to evaluate the validity of feedback from investors. Don’t interrupt or talk over investors or critics. Don’t be so dogmatic about your product or vision that you won’t consider the views of others.
Getting trapped. Investors should push you with thoughtful questions, but if they’re asking a long series of “gotchas” or trying to trap you, something’s not right. The best investors are asking questions to clarify their understanding and help make sure you’ve told them everything you know. They expect and want you to have the answers. If someone in a meeting is aggressively pushing you to fail, that is not normal and you probably won’t want to pursue that relationship. (Don’t worry! This probably won’t happen!)
importantIf investors are disengaged, looking at their phones, or whispering to each other while you’re talking, they’re not respecting you or your time and you probably won’t want to work with them.
Do We Have a Deal?
When a firm is ready to make a deal, the next steps can range. In the second or third meeting, you delivered your formal pitch. You’ve asked questions, and so have they. You’ve told them what you’re expecting on a good deal and what you want for a valuation. You could get an email summarizing these numbers, with a few bullet points and a simple message, “If you guys are in, let’s add lawyers.” Usually, though, you’ll get a call. If things have been going really well, it could be 30 minutes after the partner meeting. “Hey, it’s us, we’ve decided we want to invest. We’re going to send you a term sheet. We think we’ll do $3M on a $12M pre. Once your lawyers check out what we send, let’s schedule a time to go through it.”
If you’ve been performing strongly and have received a few term sheets or have had serious meetings with a few competitive firms, you’ll want to say something like, “I’m expecting to hear back from Greylock in the next few days, so when I get word I’ll be ready to go through everything.” When you get a term sheet from a competitive investor, you can go back to other firms you met with, whether or not they have offered you a term sheet yet, and start to generate some leverage for negotiations through FOMO: “Greylock just sent me a term sheet.” Now the investors are going to be clamoring to make you a good offer.