Raising capital for any venture is a difficult task. During 2012, Sydney-based venture technology incubator BlueChilli was presented with over 2,000 pitches. We asked BlueChilli’s Joe Kiely what he likes and deosn’t like in a pitch.
Over the past 12 months, we saw a lot of pitches. Some were weird, some were wonderful and, yes, some were absolutely wacky as well.
All in all, it was a really healthy mix. But, at the end of the year, only about 1% of these – or about 20 – made it to the start of the development process.
The numbers and the conversion rate may help people who are pitching to BlueChilli or any other incubator or investment firm this year understand the odds.
You need to do something to stand out in this crowd and win funding.
Let’s see what they had in common. All had an idea and many of them overlapped.
This tells us a couple of things.
Ideas are not everything
Obviously, the idea is important but it is rarely unique.
The idea will only be as good as its execution. We have seen many people come through that had a great idea but unfortunately hadn’t spent enough time getting their “pitch” fine-tuned.
Conversely, there were people who had not fully formed their idea but had that instant ability to convince us that they had the skills to take the concept successfully to market.
It is also important to note that all the projects that have started have had a transaction at their core and the founders have had intimate knowledge of their markets/domains. The founders could see the problem, the potential solution and how to sell/pitch that solution.
Now, I am not advocating that everyone who comes through has to have a polished presentation ready to go. But there are a few fundamental components that we really do need to see in someone before we can start to make any decisions on investing in them.
Here’s what we like in the pitches.
- In the “pitch to us form” on the website, share as much information as you possibly can. That will help us make a positive initial evaluation. First impressions count.
- Demonstrate that you understand the problem you seek to fix.
- Make it clear that you understand the marketplace you will be operating in.
- Get some initial validation.
- Clearly explain how the transaction is going to work for all three customer groups that we always talk about.
- Show that you believe enough to back the idea with your own cash.
Here’s what we’re not too keen on.
- Skip the part about global domination. Start on the MVP. Our process is designed for scale. If the foundation is good and the business fundamentals are sound, the rest will follow.
- Don’t base your business plan on intangible transactions or use unrealistic forecasting. Identify the transaction and test the market. Prove it to yourself before showing us the evidence.
- Please do not ask us to sign an NDA. We can’t help you if you don’t let us. Keep in mind that our entire business model is based around building other people’s businesses, not taking their ideas and building it ourselves. We are one of a number of resources in the startup community and if we cant help you, we may know someone who can.
- Don’t get disheartened if we don’t “get” your idea straight away. Suggest refinements, market validation or offer to talk to another organisation. Collectively, we have decades of startup experience. Use that to your advantage.
- Finally, please try to avoid using “Maybe,” “If” and “Or” in your pitch. (Indicates a lack of conviction. If you don’t believe, how can we?)
Every business has to start somewhere and, with BlueChilli companies, that starting point is always a “sale.” That “sale” can be you pitching to us, to other potential investors or to your first customers but it is always a sell.
Sell yourself! I promise we’ll respect you in the morning.
Joe Kiely is the sales director at BlueChilli, a startup incubator and self-styled “venture technology” firm with offices in Sydney, Melbourne and San Francisco.