I just passed my two year mark at 500 Startups. The other day, my colleague asked me how many company pitches I’ve personally seen. When we were calculating it out, it came out to about 20k!
To be fair, this number includes pitch emails like this (including a response from my former colleague, Sean Percival).
(In fact, the vast majority of pitches I’ve seen probably fall under this category, and these only take a few seconds to read and archive. This is how you get to see 20k pitches!)
That being said, it’s been quite a ride to see so many pitches in just two years. Here are some learnings and what I immediately think about when I see a pitch:
1. Ideas are a dime a dozen…and it’s important to stand out.
As an entrepreneur, you think your idea is unique. If you’re still in the early stages of your entrepreneur-education/journey, you may even think you need to protect your idea and not share it with anyone. Even if you’re in the later stages of being an entrepreneur, you still feel like your idea is unique or at least maybe there’s only one or two other companies out there like you because that’s what you read about in TechCrunch.
It turns out everyone has the same ideas.
This isn’t a bad thing, but it means that you need to go in with the mindset of figuring out how to stand out. The good news is that if you’re making progress on your business, you can show that you’re executing. Most entrepreneurs overpitch their ideas but underpitch how they’ve been executing (revenue, traction, setting up infrastructure, etc.). This can set you apart because the vast majority of businesses I see at the seed stage are just ideas with no action.
2. Speed matters.
Not only is it important to show what you’ve done, but if you’ve been executing on a fast time scale, then that’s even more impressive. At the seed stage, there are companies who have been around for 5 months and others for 5 years. You are not only being benchmarked on hitting milestones but also on your pace.
This is one of my favorite startup presentations of all time on going fast by Mike Cassidy. Demonstrate that you can pull the trigger on things quickly — whether it is getting customers, hiring and firing employees, or product development. Convey this in your pitch.
3. If you are in a super competitive space, it’s important to address competition upfront.
If you are in a super competitive space — areas like cleaning or food delivery, for example — it’s going to be harder for you than you can ever imagine, even if you are making progress quickly. In these areas, investors are not just seeing a handful of companies doing the same thing but hundreds or thousands.
To give yourself the best shot at getting noticed, you need to do 2 things:
- Demonstrate immediately — not at the end of your pitch — that you are aware that there are other businesses like yours. This shows that you have thought about the competitive landscape, and despite knowing that it’s competitive, you believe there is an opportunity for you to outcompete all other companies.
Being in a competitive space isn’t a bad thing — Google was like the 8th search engine to enter the scene, and they turned out OK — but you need to address the landscape.
- Address where you fit into this landscape. This is about really understanding how you are different from the other players out there.
For example, I was talking last week with a company that is a new type of job board. They showed me their problem slide which said something to the effect of, “There are so many people who are unemployed and so many employers who cannot find good talent…blah blah blah.” Online job boards have been around for a couple of decades and even today is an incredibly competitive space! Everyone understands this problem. So, this is not the correct problem to outline in this pitch. The right way to outline this problem is to tell me why existing job board solutions suck or are ineffective and to be super insightful into the nuances of why this is the case. After that, present a differentiated solution that doesn’t have these same nuanced issues. In some sense, if you are in a crowded space, your job is to say, “The problem is that Companies A, B, and C suck, and here’s why.”
If you can do this, this will help you at least get attention on your pitch.
3. I treat referrals and cold-emails the same (for the most part).
In the beginning, I thought referrals from others would be much higher quality than companies emailing in cold. Sometimes this is true. Often it’s not. It depends a lot on who is giving the referrals. It would turn out that “famous” investors referring companies don’t necessarily refer better companies, and founders don’t necessarily refer great companies either. A lot of founders are doing favors for their friends by putting in a good word. On the flip side, there are some people whom you wouldn’t have heard of whose referrals I value the most.
So, in the end, it’s a bit of a wash, and this is why I think you, as an entrepreneur, can now write cold emails effectively to capture the attention of investors.
4. How people present themselves in pitch emails tell me if I should NOT take a meeting
I use pitch emails as a good proxy for finding the most on-point, sharp founders. Really, I can’t tell immediately who is on-point and sharp, but I can tell who is not. Meandering email copy is not a good sign. Bad spelling and lack of punctuation = also not a good sign. Bad grammar is excusable if you are a non-native English speaker, but if you are a native English speaker, that’s inexcusable. Use a company domain name as opposed to a Gmail, Yahoo, Hotmail, or AOL email address. Otherwise, your business doesn’t seem serious enough yet.
These all seem obvious and not worth addressing, but you’d be surprised just how many pitches have basic mechanical issues. If you are not good at paying attention to detail, ask a friend who is good at that to help you proofread. Getting in the door with your best foot forward is so important because it’s easy for your email to get ignored or lost.
Use bullet points when possible rather than paragraphs. They are easier to read. Bullet the key awesome things about your business. Here are some example bullets:
- Revenue: now at $15k MRR, growing 30% MoM
- Monthly churn is < 1%
- LTV to date is $700; CAC via blended paid channels is $250
- Pilot customers include Samsung, MSFT, and Oracle
- CEO previously founded a marketing tech company and sold it to Marketo; CTO previously worked as a software engineer at Google X; have worked together for 2 years
If you are sending a deck, refer to this post, “The ideal email deck.” Your email is just to pique interest in getting a meeting, not to get an investment.
There are a ton of other learnings from having done this job for the last two years, but these are the things that come to mind when I see pitches.