Bad positioning in your startup pitch

I write new articles and publish them to Substack if you want an easy way to keep up. I hope you’ll subscribe!

Read more product and company-building articles

TLDR

• Read the Sequoia article on pitching
• Define your positioning: target market, metrics, and an MVP to match
• Investors will believe in you through your interactions rather than your deck.

Another meeting

I met with a founder today who is working on a business plan for their pre-product startup. Like many founders, they believe their main objectives are to:

1. Present an overview of their dream product
2. Link it to a large market
3. Request a “typical” amount of funding to build an MVP as their company’s first phase

Oh, and to make themselves sound smart, they think filling the time with details on markets and report data establishes credibility and makes investors more likely to commit.

Step 1: Listen to Sequoia

First things first - There’s a Sequoia article on pitching, and it’s great. It says you need to cover the following in a deck:

• Company purpose
• Customer problems and existing solutions
• Your solution and why it’s unique
• Why now?
• Market potential
• Competition/alternatives
• Business model
• Team
• Financials (if any)
• Vision

Step 2: Position yourself

Over the years, I realize that the easiest way to describe what you’re doing when you first develop a pitch deck is a marketing word:

Positioning

The point of that Sequoia outline and all the other advice out there is to get you to describe how you’ll message the company and product to an audience.

At the pre-seed stage, investors want to hear the same thing customers will hear to determine your viability. You don’t have users or financials, and you probably don’t have much of a team outside the founders.

So your deck focuses on your positioning - why your product will be unique and why you’ll stand out.

It seems easy enough, but folks get bogged down with conflicting messages on how to raise money, so they make these mistakes:

Mistake: Identifying a target market that is too big

TAM, SAM, SOM: Ugh.

You are getting distracted into thinking the larger the number you show, the more likely you are to find an interested investor. When you do this, you indicate your naivete about the space and inability to define a suitable go-to-market strategy.

In most of my meetings, this comes across as a lack of knowledge about the market and a superficial view of the opportunity. After all, anyone could look at the same reports where you got your numbers and say, “I should make a product.”

Even worse, a potential investor will immediately think of the big names in the space and anchor to their customers and offerings as your relative positioning.

Instead, show where you will begin your journey into the market and that this submarket is viable. And that it could lead into the larger market you see. By doing this, you’ll show that you’ve identified an opportunity the incumbents are ignoring and maybe even that there are multiple outcomes and markets that you can enter.

Here’s an example of how this manifested in the founder meeting:

The founder had a process flow chart. It’s a chart that people with a cursory knowledge of the space will know and understand. They fit their product story into the flow with no real change. The simple description was, “We’re cheaper and better.” When you say that, you’re going against incumbents with the money and marketing to keep you from gaining market share.

Mistake: Describing your value through poor metrics

You need something more besides “cheaper” and “better.” If you are cheap, it may mean competitors cut their prices to destroy you. Better… what’s that?

“Better” is where your founder ability to position yourself comes in. What matters to your users and customers? What have you learned from customer interviews and digging into the problem?

By using personal anecdotes and observations, you move beyond the simple consultant-talk mistake from earlier. You’re discussing product and design thoughts that will make you a viable offering. You’re doing the thing where you talk about benefits, not features. And this leads to defined metrics you will improve, and the users will pay for this promise. Hooray!

This founder did the same thing many folks I speak with do: they mention the cost and then say, “The competition is too expensive, and we’re better.” And when pushed, they mentioned an obvious metric like “speed” and said, “We’re faster.” Speed of what?

If you are not clearly defining your metric, you’re allowing the investor to make a market reference based on what they’ve heard, and you’ll lose.

Also: don’t use NPS alone. NPS is bullshit.

Mistake: Asking for money without providing a goal

Now you’ve defined an excellent initial market and metrics that you will improve. Great!

Next, show how you’ll improve the metrics and gain users.

I’m sorry, but you can’t just say “technology,” “AI,” or “viral sharing.” Provide enough specifics to show there is something there worthy of a monetary bet.

You must show what you’ll accomplish when you suggest a round size.

Yes, you’re probably going to hire people. Yes, you’ll go to beta. What’s the point?

You’re building a business, not a science project. What are the goals of the people and the launch?

How will you define success for your users so they’ll pay?

Investors are looking to you as a leader. They want to see someone who can explain a checkpoint that sounds like a good goal. That’s one that will:

• provide insight into the product and traction
• validate the market and whether your submarket hypothesis could be correct
• showcase your team’s ability to build
• clarify where you will go next.

Step 3: Get to the point.

Once you do all this, you might have enough material for 30-60 minutes. That’s the usual amount of time you get in a first meeting with an investor if you’re lucky.

You might think you must fill the time, but that’s false.

The decision-making happens during the discussion about your deck, not while you’re reading your deck out loud.

(Yes, that’s what most folks do. Stop looking at your deck while you’re presenting.)

There are those amazing people who can come in with a slide deck (or nothing!) that shock-and-awes investors into throwing money at them, but the odds are that’s not you. Your deck needs to be good, but the investor will believe in you through your interactions when you deftly answer their questions and show you know your stuff.

Edit your deck and make sure it tells your story - and pace yourself so you can finish with time to spare.

Your story is your positioning

When you review those Sequoia bullet points, you might freak out and see your deficiencies before you’ve even begun. But you must overcome this fear and realize that the beginning is always scary and uncertain.

Everyone has holes in their pitch deck.

But if you focus on what you’re learning and how it will help you position the company and initial product in a noisy market, an investor will likely see you as more than the pitch deck. They’ll see you as someone who can help them place a viable bet in a growing market.