Via Forbes : Win wallets first, then hearts. – Andrea Barrica, 500 Startups
Andrea Barrica has seen thousands of pitches in her role as venture partner and “pitch coach” at 500 Startups, a Silicon Valley accelerator and global seed fund. She’s traveled the world, from Ghana to Poland to the Philippines, to help startup founders develop and deliver winning pitches, which have garnered an estimated $50 million in combined investment to date.
We were fortunate to see Barrica in action recently as she coached the latest group of startups – Batch 16—which also happens to be the largest cohort in 500′s history, with 53 companies in total. In line with 500’s commitment to diversity in tech, 26% of the companies in this group have at least one female founder and 32% are from outside Silicon Valley or the U.S.
Calling herself an “Empathy Warrior,” Barrica helps founders figure out what is most interesting about their business—and convey it to investors in less than two minutes. That’s not a lot of time to persuade someone to give you thousands, if not millions, of dollars.
“People don’t pay attention,” she told the entrepreneurs gathered in the sunny common area of 500′s San Francisco offices. “I guarantee you. No one is as interested in you as you think they are.”
Barrica describes a recent Demo Day she attended where founders gave five-minute pitches. Afterwards, she surveyed the audience to see what they remembered about the pitches. As it turns out, the average investor could recall, on average, just two pieces of information about each pitch. ”Everything else was boring,” she says bluntly.
While maintaining authenticity is important, Barrica reminds founders that what matters most to investors is not necessarily what matters most to them.
One of her founders had developed a self-help app targeted at women, but the audience she was pitching was a “bunch of white dudes in khakis” (in Barrica’s words). The woman wanted to talk about why she started her business and why it was so important to her, but Barrica had to stop her: “Nobody cares about that. Nobody cares about you. What they care about is that there’s a huge industry and opportunity here.”
“I always say, ‘Win wallets first, then hearts.’”
Barrica joined 500 Startups in 2015 after co-founding InDinero, a financial SaaS company that’s raised $10 million since it started in 2010. Now she takes what she’s learned as a successful entrepreneur and shares it with others. As a Filipino-American, she has a special interest in supporting women and minorities.
“Women are so anxious of fundraising,” she explains. “There are very few female investors out there, so it’s definitely a challenge they face in terms of telling their story.”
While pitching to investors is not easy, founders can gain an edge by heeding Barrica’s advice, which we’ve distilled into these points:*
Don’t sell the product; sell the opportunity. Tech founders are often really excited about the product they’ve developed, but guess what? Investors don’t care how your product works. Your pitch should not be a product demo. Investors want to know how much money they’re going to make, not the technology behind your product.
Tell a good story: traction, team, technology or vision. Most startup stories fall into one of these categories, and founders need to figure out which story they should tell, says Barrica. “If you have impressive growth, you have a Traction story. If you have a great team with a previous exit or serious domain chops, you have a Team story. If you’ve built interesting technology (read: not a mobile or web app), you have a Tech story. If you have nothing, you’ll probably tell a Vision story, in which case you better bring your personality!” In the end, if you don’t have good traction or an excellent team, the investors probably won’t give you money, says Barrica. It doesn’t matter how big the opportunity is if they don’t think you can execute on it.
Keep it short. Founders should be able to tell their story in 90 seconds – or about 12 sentences. This makes them cut out the garbage and get to the point, fast. “People don’t realize that anything you say after a minute and a half can only hurt you,” says Barrica. “An investor is either going to like you, your story and what you’re doing by a minute and a half, or they’ll hear something they don’t like in the next minute that will change their mind.”
Work on your presentation skills. First, slow down, says Barrica. You’re going to be nervous when you pitch, and nerves will speed up your speaking, making it difficult for an audience to follow what you’re saying. Barrica recommends using short sentences, coming to a full stop after each sentence, and remembering to breathe. Second, engage with your audience. Don’t rely on note cards or slides, which will take your focus off the audience. Slide templates are often boring and clinical anyways, she says. Remember, YOU are the star of your pitch, not your slides.
Don’t be boring. Bring up something interesting as soon as possible, especially if you have a skeptical crowd, advises Barrica. “The most memorable pitches surprise, challenge, delight, educate, and inspire. Some pitches start with a shocking statistic. If you don’t have numbers, mention a team brag, accolade, famous investor, anything you can.” She also recommends cutting out the jargon. Ditch overused marketing terms like “disrupt”, fixing “broken” industries, “revolutionize” and “rock star team, as well as forecasts of any kind beyond YTD.
Decide if you’re ready for funding. Barrica recommends not pitching investors until you have these three things: a solid business that solves a big problem, customers and a great team.
*For more pitching advice from Andrea Barrica, check out her blog post, “Pitch, Please.”
Heather Cabot and Samantha Walravens are co-authors of Geek Girl Rising, a book (St. Martin’s Press 2017) that uncovers the stories of female founders & innovators changing the face of tech.