When it comes to raising capital for your startup, I’m sure you’ve heard enough about the value of storytelling for one lifetime.
If instead you’re looking for some practical strategies that you can use when crafting your pitch, then you’ll really love this blog post.
It’s a simple rundown of the factors that matter most to investors along with a simple checklist that will help you ensure that your pitch is a memorable one. We’ve pulled this collection of thoughts from some of the best startup founders and investors in the industry, so you can rest assured that these insights will help you stand out.
Start By Getting Access To The Right Investors
To pitch your mobile app, you first must find the appropriate people to pitch to.
It’s easy to get caught up in the excitement of the happily-ever-after fundraising story:
Step 1: Startup has idea.
Step 2: Startup sends email.
Step 3: Startup pitches app.
Step 4: Startup gets money.
Step 5: Startup succeeds.
In reality, there are only a few founders in the world who have the reputation, credibility and established network to make those five steps happen seamlessly. In most cases, there is a lot more work between Step 1 and Step 3 than this happily-ever-after story may lead you to believe.
Paul Graham, founder of Y Combinator, one of the most successful and original startup accelerators, describes the fundraising process like this:
Fundraising is hard in both senses: hard like lifting a heavy weight, and hard like solving a puzzle. It’s hard like lifting a weight because it’s intrinsically hard to convince people to part with large sums of money. That problem is irreducible; it should be hard.
Fundraising is not as easy as the headlines and many podcasts might make it sound. Successfully fundraising for your mobile app requires some hard work and a deep understanding of the fundraising process. As a starting point, you need to know how to get access to the right investors for your mobile app.
Some investors receive hundreds of pitches each week, so it’s on you to make your pitch stand out. One way to do that is to get an introduction to the investor from someone they know or trust.
Across the tech industry, there’s a very firm belief that an introduction is the best way to make a connection. If you’re still building a professional network, don’t worry — you can still wrangle an introduction with a bit of legwork if you know whom to call. Mark Suster, founder of VC firm Upfront Ventures, points to a list of people who can give you access to investors:
Startup-oriented corporate lawyers: VCs work with corporate lawyers all the time, so establishing a relationship with them can pay dividends. According to Suster, most of the best early-stage corporate lawyers run in the same circles as the best VCs. It’s a great fit because in many cases, the first investment a startup makes is with the lawyers incorporating their company and divvying up stock.
Startup-focused recruiters: Recruiters are social by nature, but they also have a great network, from members of the startup community to the VCs and angels that back them.
Portfolio companies: One of the best places to start with an introduction is a VC’s portfolio. If you have a CEO using your product, and their company is funded by a VC who aligns with your interests, reach out to that CEO and build a relationship. Most VCs list their portfolio companies directly on their websites, so it’s not that challenging to figure out who’s connected to whom. At the same time, don’t reach out to Mark Zuckerberg to make your intro to the folks who helped his seed round—reach out to an early-stage founder or someone who is already in your network.
Entrepreneurs in general: Founders who have raised money in the past likely connected with a handful of investors in their pursuit. Leverage a site like LinkedIn or AngelList to see whom your connections in the entrepreneurship world are connected to, and don’t be afraid to ask for an introduction.
In addition to these recommendations from Mark Suster, here are a few other people who may be able to give you introductions to investors:
Former colleagues and peers: If you have a connection—be it a former co-worker or the friend of a friend—who worked with a VC in a past career, they can act as a great starting point for making your introduction.
Other investors in the industry: While investors are competitive people, they are also very collaborative. Many startups have multiple investors and as a result, those investors have established relationships through board meetings, networking events and more. If you’re already in good standing with one or two investors, don’t be afraid to ask them if they know anyone else who might be interested in learning more about your app.
Get Investors Excited About The Key Points Of Your Business
In an essay about convincing investors that your startup is worth investing in, Paul Graham writes:
Most investors decide in the first few minutes whether you seem like a winner or a loser, and once their opinion is set it’s hard to change. Every startup has reasons both to invest and not to invest. If investors think you’re a winner they focus on the former, and if not they focus on the latter.
That’s why it’s so important to get those first few minutes right.
Shake hands. Make eye contact. Come prepared. Be enthusiastic. And recognize that the person on the other end of the table is just that: another person. Once you’ve tackled those basics of making a good first impression, deliver a presentation that transfers the excitement you have for the app over to the potential investor.
A common question founders ask when building a pitch deck is what key points they need to include. Over the years, we’ve seen plenty of startup pitch decks with many variations in terms of flow, and we’ll be the first to tell you that there’s absolutely no concrete formula that will guarantee success. That said, here’s a formula recommended by the folks at Sequoia Capital for startups looking to pitch them:
- Company purpose: Define your company in a single declarative sentence. This is harder than it looks. It’s easy to get caught up listing features instead of communicating your mission.
- Problem: Describe the pain of your customer. How is this addressed today and what are the shortcomings to current solutions?
- Solution: Explain your eureka moment. Why is your value proposition unique and compelling? Why will it endure? And where does it go from here?
- Why now? The best companies almost always have a clear why now? Nature hates a vacuum—so why hasn’t your solution been built before now?
- Market potential: Identify your customer and your market. Some of the best companies invent their own markets.
- Competition: Who are your direct and indirect competitors? Show that you have a plan to win.
- Business model: How do you intend to thrive?
(Side Note: Keep in mind this tip from Reid Hoffman, founder of LinkedIn and partner with Greylock: “The general rule is one business model drives the business. It’s tempting to list multiple revenue streams because you’re trying to prove that you will be big.”)
- Team: Tell the story of your founders and key team members.
- Financials: If you have any, please include.
- Vision: If all goes well, what will you have built in five years?
At the end of the day, we recommend using these 10 elements in your pitch deck in some variation, but it doesn’t always have to follow this sequence. In fact, the order in which these slides go is one of the most commonly debated elements of a pitch deck. Some investors like to see the team slide up front and centre while others prefer it to be at the end of the deck. Some people argue that your company purpose should come through when you explain the problem your customer has and the solution you’re bringing to the table.
But we believe there’s one other key element your pitch should include.
Build A Quality Prototype & Share It With Investors
This pitch deck from the folks at Buffer has been widely circulated over the last few years:
You can see that all 10 elements listed above appear in this deck in some variation, but the product is also included. The pitch shows screenshots of their app, and at the time, Buffer had an online presence that could be easily accessed and tested.
Product isn’t highlighted in Sequoia’s list, but it’s an element that can help you stand out. For early-stage startups, building a prototype that paints a clear picture for investors is 10 times better than describing an abstract concept or idea. When it comes to building a prototype for your mobile app, there are a few options on the table:
- Develop the mobile app on your own
If you have the skillset to build your own mobile app that can act as a working prototype in a short period of time, it might be your best option. Investors love technical founders, so if you’re technical enough to bring an app to life, it will help you in your pitch.
- Build a team of full-time developers and product designers
If you have the resources to hire developers and designers, it’s possible that bringing in a team to help you create your app is the best bet. Keep in mind that building a mobile team that operates in-house isn’t cheap but does give you the chance to begin creating a culture that will thrive for years to come.
- Hire an app development company
If you have an ample budget but don’t have the confidence in your own skills to lead the project, an app development company can help you get on the right track. Hiring an experienced app agency gives you access to a wide range of developers and designers while also keeping your equity. We’ve created a guide that highlights what you should know before hiring an app agency—be sure to check it out.
DOWNLOAD THE GUIDE TO HIRING AN APP AGENCY
The best approach for prototyping your mobile app will depend on whether you have the capital, time and skills to bring an app to life. Whichever approach you decide to take, ensure that you have considered the pros and cons and the impact that this choice can have long term. If you pick the wrong partner, you might find yourself back at square one in just a few weeks, and if you try to develop the app without the skills required to do it, you might be three years into the build before you’re able to produce a working prototype.
Wrapping Things up
So there you have it: Everything you need to know to ensure that the fundraising process for your mobile app goes smoothly. You can use these tips to help you find the right investors (here’s a list of some of the top mobile app investors) and deliver a pitch that is sure to connect with them in a meaningful way.
If you’re looking for an easy-to-use checklist for crafting your pitch, click here to download these tips in a simple format. And if you’re still itching for more information on how to create a great pitch for your mobile app, get in touch—we’d love to learn more about what you’re building and how we can help!