Customer pitch vs Investor pitch - TechCrunch40

I was at an Angel Investor group meeting last week where we had several startups presenting, looking for first round funding. I stopped one of the presenters about 20 minutes into his presentation and said "You are pitching to us like we are customers. We aren't customers. We are investors".

Pitching to investors is different than pitching to customers. Investors care about some of the same things, but not to the same depth as a customer. Investors care about management teams, competitive advantages, competition, market size, cash flow, and how you will use the investment dollars.

Entrepreneurs should have two very different pitches for investors and customers. If you are raising a round of financing go to a couple investment conferences and see what works. Put yourself in the shoes of the investor. Try to decide in 10 minutes if you are interested in a company, and keep track of which factors are most important to you as an investor.

The customer pitch needs to be different too,  for technical audiences versus business people. The technical audience wants deep technical content. They want to know how it works, how it integrates with what they already have, and why it is better. The technical people are usually advisors...they don't have budget control and they don't make the purchase decision. But, they can eliminate you from the approved vendor list.

Business people care about solving business problems. They do NOT care about how it is done from a technical standpoint. Business people care about how your product or service will help them provide better products or services to their customers. They care about customers and business. If you are trying to sell a productivity product or service (better, faster, cheaper, smaller) it better translate in some way to customer benefits, not employee benefits. Business people have the budget and usually make the purchase decision

The 10 minute investor pitch can be very effective if done properly. The best presenters cover; what problem do we solve, what are the alternative solutions, why are we better, how big is the market, what have we accomplished so far, a sampling of customers, experience of the team,  how much money are we looking for, and financial projections. Nine slides in 10 minutes. Leave plenty of time for questions. Perfect!!

For most of you this is boring, been there, done that, stuff. But, you would be amazed how many start-ups miss these simple "truths" when pitching their company to investors or customers.

TechCrunch40 Conference - Mike Arrington asked me to be on an expert panel of judges at the TechCrunch40 Conference in San Francisco on Monday. It is an All Star panel. I have no idea why Arrington put me in with these guys...but it will be fun!

I will be watching carefully to see how these companies deliver their pitch. It will be interesting to see how they cover the basic questions above. My favorite question for any startup is "Is this a vitamin or a pain killer?" Vitamins are nice to have, but pain killers are a must have. Being able to articulate why your product or service is a pain killer means you really understand your value proposition, and are well on your way to a working business model.

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Comments

[Robert Hacker]

I think you should write a small app so this post automatically appears in your blog every year on the same date.

[Parag Mathur]

Don,

Very thought provoking post. Love the vitamin vs pain-killer analogy.

[David Casey]

Love the vitamin/pain killer analogy, a perfect mantra to decide which ideas are worth pursuing.

[Don Jones]

Good basics, Don. I'm amazed at the high percentage of entrepreneurs that don't understand the basics of what their audience cares about, especially when the audience includes venture capital types.