I am writing this as the fall semester wraps up at Boston University where, as an adjunct professor, I teach a course in entrepreneurship. I end the class by having the students present an “investor pitch” to a panel of faculty and investors. It’s a great exercise for helping students learn what matters and what doesn’t when selling an idea.
Some of those lessons are worth sharing here. Because whether you are an entrepreneur seeking funding for a new venture, or a nonprofit seeking support for a fresh initiative,at some level, we are all in the business of “pitching.”
Finding the Big Idea
For many entrepreneurs, inspiration comes from observation — noticing issues in everyday life where something doesn’t work quite right or make sense. Maybe someone notices people going to great lengths to develop a workaround. Maybe there are unsolved problems that occur repeatedly.
According to a story I heard (it may not be true), a bicycle repair person noticed a number of customers coming into their shop with bicycles damaged in strange ways. They learned these customers were riding their bicycles on hiking trails rather than on roads. It occurred to this repair person that a more solidly built bike might be better for this purpose. And thus, the first mountain bike was born.
Another common source of inspiration is the combining of ideas across markets. My friend Sung mixed gaming with oral care and came up with a gamified toothbrush for kids that encourages them to brush for the right amount of time.
Whatever the inspiration, it all starts with an idea. However, as my students soon learn, coming up with the big idea is the easy part.
Bringing it to Market
Turning an idea into a viable product or service — let alone a viable company — involves many steps.
Is there a market? Are there enough target buyers to support the time, money, and effort required to develop a solution?
How serious is the problem? Sometimes, the things that annoy us greatly are not that significant to others. And so while there may theoretically be enough people to purchase the product or service, do others think this is a problem worth fixing?
Beyond getting a verbal confirmation to that question, it’s best to create a way for people to demonstrate their interest. The most common approach is to create some form of Minimal Viable Product (aka MVP) that enables people to react… or not.
One great example of a low-cost MVP was done by students who created a service called Wanderu. They envisioned a KAYAK (service that helps you find low-cost flights) for buses and trains — particularly between Boston and New York City. Rather than build out the service, they instead bought some Google AdWords to capture people searching for that trip. Clicking through their ad took you to a landing page that explained the service wasn’t live yet, but you could enter your email address to be notified when it was. This is not the same as making a purchase, but it is one level higher in demonstrating interest than simply answering a question in a survey.
What will it take? This step is big enough to require its own newsletter. But suffice it to say it involves a lot of research and estimation (educated guessing) about steps required, what things cost, how you would get the product or service built, how you would bring it to market, how prospective customers will learn about it, and more.
Having done all that, you need to determine how much funding is required to get started and how you might raise that funding. You might bootstrap if the need is small (e.g., self-fund or use credit cards); tap friends and family for small, initial steps; or approach angel investors if the idea has the potential to be very large.
Making the Pitch
The “pitch deck” refers to a brief presentation that makes the case for investment.
In my class, I restrict the time to 10 minutes or less, since that is close to what an angel group might permit. And it’s a good challenge: delivering a concise message that explains the problem, demonstrates its potential, shows you have the team and the product/service needed, and makes the case for why an investment will help both you and the investor succeed.
This means having a tight focus on what matters, ignoring the rest. There is a tendency in these things to cover too much ground, leaving less time to be clear about the specific problem being addressed and how.
The purpose of these pitches is not to convince investors to invest on the spot (real life is not like Shark Tank). Rather, it’s to create enough interest among investors that they want to learn more and schedule a second meeting.
Reflections
Several of these lessons apply to many other situations (entrepreneurial or not) where you are trying to convince someone to support your ideas. A few final thoughts…
- Validate. Make sure your idea is not something only you and a few others consider worth addressing.
- Clarify. Be specific about execution. It is far harder to garner support for a conceptual idea than one where a clear path to implementation is defined.
- Engage. Tell a compelling story, one that enables people to understand the magnitude of the problem and the value of your solution. If you can capture their attention, they will invite further discussion.
The goal of the first pitch is to get to further discussion… but the goal of that is to gain support and/or funding.
