By Francis Tay
In the African tech ecosystem, and even in “traditional” business environments, the time it takes a founder to create and land the opportunity to pitch to potential investors and major clients far outweighs the pitch itself.
In my experience working within the ecosystem, it can take weeks of accumulated phone calls, emails, and face-to-face meetings to get some time with a critical decision-maker, with the elevator pitch the only option.
An elevator pitch—also known as an elevator speech—is a quick synopsis of your background, experience, and purpose. The reason it’s called an elevator pitch is that it should be short enough to present during a brief elevator ride.
This reality only heightens the importance of the pitch.
A botched pitch with one group of potential investors may prematurely shut doors with others. Similarly, a poor pitch at the early stage of an investment process with an investor can hamper progress.
So, with this in mind, what should a founder of an early-stage startup keep in mind to prepare a high-quality elevator pitch?
Based on our experiences in the African tech ecosystem working with numerous founders and investors across the continent, below are 5 tips early-stage founders can follow when preparing for that five minute investor pitch.
- “What’s the problem?” and “Why does it need solving?”
When we consider founder applications to join our portfolio, questions that are always at the front of our minds are, “What problem does your solution solve?”, “Who is your target group?”, “Why is this a problem that needs to be solved?” and “Why does this problem need to be solved now?”
If you can answer these questions succinctly and have the detail to back up your assertions, that means your value proposition is clear, and critically, it is clear to a potential investor or client. To repeat a phrase identified with a past U.S. president, if you’re explaining, you’re losing.
- The “How”, benefits, and competition
If you’ve made a convincing case about the problem you’re solving and why it should be solved, the next questions to answer are, “How does it work?”, “What are the solution’s benefits?” and “How does it differ from the competition?”
This is the detail I referred to in tip 1. The problem statement and how your startup can solve it get you to the runway. The “How”, the solution’s benefits and differentiation is when you land the plane. The point about competition is especially important because an investor is always likely to ask, “How does your solution differ from company X?”
- Showing that a market for the service exists
An important moment that really makes an investor curious during a pitch is if you can show them that you have attained traction on the journey towards product-market fit (for early-stage startups). We see traction as the progress a startup makes on the path to product-market fit, while product market-fit is validation that the right problem is being solved in the right way for the right audience and there is proof of substantial repeat usage.
If you, as a founder, can show there is indeed a market for your solution, your solution is sticky, and your early revenue signs are promising, the foundation has been laid for the next step in your pitch – the team that will make it happen.
- Going beyond the founder or founding team
While a strong founder or founding team is a prerequisite for any startup, the first people a startup hires to support the founding team must be a fait accompli to its future success. Investors want to see that you have a team with the experience and expertise to execute your vision.
Furthermore, if the team brings experience from other successful businesses, this is a vote of confidence for investors through association, given the intense competition for talent within the African tech market.
- You believe in your vision. Make sure investors know that
A piece of wisdom I strongly identify with in the ecosystem is when it comes to sales, it doesn’t matter what your job title is. You are always in sales.
This is important to remember because investors know what a sales pitch looks like. They have heard it all before.
A differentiator that stands out to an investor, beyond the business fundamentals making sense, is a founder being passionate about their business. It may sound like a given, but if a founder isn’t passionate about their solution, why should an investor be?
Beyond these five tips, here are a few more pointers that you as a founder may find useful before pitching your startup to an investor or client:
- While a more detailed pitch is expansive, for an elevator pitch, you want to highlight the most important aspects to pique investor interest.
- To keep the audience engaged try to weave in a compelling story.
- Practise your pitch in front of friends, family, or colleagues so that you become comfortable with the material (but not over-rehearsed).
- Make sure your pitch is concise and to the point. Use an investor’s time wisely.
- Be prepared to answer questions. Investors will likely have a lot of questions about your business. Master your detail.
- Be honest. Any half-truth you tell during the pitch will always find a way of coming out. Investors have very long memories.
Francis Tay is Investment Manager Africa at early-stage investor Founders Factory Africa.