How To Nail Your Pitch With the STAR Pitching Principle
Many blog posts have been written about the key ingredients of a good pitch deck. In general, the data and KPIs that investors like to analyze are rather well-known in the startup world.
Yet, even startups that have compelling pitch decks and a promising trajectory sometimes struggle to fundraise. The underlying reasons can be manyfold, but one observable pattern is that after countless hours of drafting a polished deck, some founders seem to underestimate the difficulty of mastering the actual pitch conversations.
Now, what does it take to nail the first investor call? In my opinion, a home run pitch can be boiled down to four core principles, which I am coining as “The STAR Pitching Principle.”
A pitch should be:
S - Structured
T - To the point
A - Appealing
R - Rapport-building
None of those principles are rocket science. However, staying on top of them can be quite challenging when trying to condense all relevant fundraising information into a 30-45 min pitch. So here’s how you can implement the STAR Pitching Principle and wow investors at your next pitch meeting.
Be “structured” in fundraising conversations
Use your pitch deck to structure the conversation
I’ve experienced it countless times: You begin the fundraising call with a personal intro, and when you describe how the startup idea materialized, you almost immediately segway into discussing the business. Suddenly you’re halfway into the pitch, jumping within minutes from problem to solution to market size; sometimes also in a different order.
Here’s a general recommendation: Always use your pitch deck in the first fundraising conversation. Of course, it’s tempting to assume the investor has studied the deck before the call and to jump straight into Q&A. However, the reality is that investors screen pitch decks for an average of 2 minutes and 47 seconds, according to data from docsend. One way or the other, not using the deck means you’re not leveraging the best tool to demonstrate that you can pitch your startup in a structured way, supported by strong visuals and based on a logical storyline. Even if the investor is already familiar with your business, it’s worth using selected slides to cover focus topics, whilst skipping others.
Structure your deck and your arguments well
Of course, your deck only adds value if it’s well-structured. Consider using “trackers” on top of your headlines or “divider slides” (e.g. “market”, “competition”, “roadmap”) to make it super clear what section of the pitch you are covering.
At the same time, try your best to make your comments as easy to follow as your deck. It always leaves a good impression if founders break down their comments and Q&A replies into a few key arguments. Much easier said than done, of course.
Don’t get reframed. You are the owner of your storyline.
Investors are like everyone else. When a burning question pops up, there’s a strong temptation to get it out straight away. Hence, as a founder, you can easily be confronted with a question that’s not related to the pitch section you’re covering. In such a situation, it’s intriguing to follow the “I got you covered” impulse and jump to the slides that address the investor’s question. If you do that, typically a follow-up question about an adjacent topic pops up, and before you even notice it, the investor has hijacked the structure of your pitch.
Don’t let that happen to you. If you get a question that takes you out of the structure of your pitch, try to cover the question on a high level in one sentence and tell the investor that you will address the point in detail in a later part of the deck. That way, you demonstrate that you take the question seriously, but don’t lose ownership of the structure of your storyline.
Be “to the point” in fundraising conversations
Use a light, concise pitch deck
Your deck should not be a 40-page fact book. It should be a concise 10 - 15 slide deck that helps you tell a convincing story. You should be able to talk through your entire deck within 20 minutes.
That does not mean your fundraising material should lack depth. You can consider adding an annex of backup slides to your deck to which you can jump during the call when helpful. One way or the other, you should prepare a data room that allows investors to dig into more details after the first call (a helpful blog post on how to structure a data room was published by A16z here).
Focus on key messages
The challenge in a pitch is to break down complexity and bring across a number of key messages that resonate with the investors. Make sure those messages are prominently expressed in the deck, for example, by using slide titles that are not descriptive (e.g. “market”), but convey a statement. Strategy consulting firms like to call those titles “action titles.”
At the same time, make sure to clearly articulate your key messages during the pitch conversation. The more you have internalized them, the less likely you are to get derailed during the pitch because you can move the conversation in and out of the various points that you want to make, or circle back to them after going into more detail.
Most founders are able to pitch their business within 30 minutes. That is, if there are just a few questions. Sometimes founders happily take each question and elaborate in length until they (and the investor) realize that with five minutes of time left, only 50 percent of the pitch has been covered. This risk is even more pronounced with multiple investors in the call.
Avoid falling into this trap. If detailed questions slow you down too much, flag that you want to be mindful of time. You usually get a telling reaction. The investor might want to place strong emphasis on a specific topic. In that case, you should double down on that topic whilst keeping other pitch sections shorter. Or the investor might hold back and let you continue your pitch. In any case, it will be appreciated if you proactively manage time.
Finally, if you’re regularly struggling to end your pitch on time, it’s a good indicator that it should be even more concise and digestible. As a rule of thumb, it makes sense to plan the pitch shorter than the call length (e.g. 20 minutes in total) to leave space for the initial conversation and Q&A.
Some founders try to have an answer to every question. When they feel caught off guard, they start improvising their arguments, blurring the lines between facts and speculation. Or they embark on lengthy monologues to distract from the actual question. None of those tactics will convey the feeling that as a founder your statements are to the point.
A good founder admits unknowns. Such admissions are a sign of credibility and reflection. Investors don’t expect you to be able to predict every element of your business three years ahead. If you don’t have the answer to a question, say so. After that, you can offer an educated guess, discuss options, or simply self-confidently say you will only know until time X or until you have done exercise Y. This approach saves you time and creates trust.
Make your pitch appealing
Pass the bar test whilst pushing the VC buttons
“[...] something really important happens when you’re at a bar,” says Nicole Kahn, senior project lead at IDEO. “You use really direct language. You make sure that what you’re saying is entertaining and engaging. You don’t quote tons of data. You don’t use overly corporate language –– except maybe in air quotes.”
With that in mind, work on a storyline of your pitch that would pass the bar test. Make sure it’s easy to understand and engaging. Test if it resonates with people who are completely unfamiliar with the topic.
In order to further spice up your story for the VC audience, double down on the parts of your business that you believe will particularly excite VC investors. Maybe it’s the traction? In that case, 30 percent month-over-month growth should not be presented like a boring mathematical curve function.
Show people that you’re excited about your achievements! Or maybe you’re still pre-launch and you’re most proud of the team. Or you’re excited about the massive, uncontested market opportunity that you’re tackling. Whatever the key points are, put them in the spotlight.
Take people on a journey
Stories are usually more memorable than facts. A great pitch usually contains a healthy dose of both. For your pitch conversations, think of “put me in the room” anecdotes that provide investors with a tactile sense of experience. Take them on a journey, and create a bit of drama.
These anecdotes can come from personal experiences (usually most powerful), employee experiences, or client experiences. What matters is that the investor can envision the setting and feel the conflict, challenges, or surprises that the protagonist is facing. Consider using visuals to make your anecdotes even more memorable (more on this concept hereidea-scouting).
If you come up with a really powerful story and your fundraising conversations advance to IC stage, the investor might even start using your anecdotes internally rather than just presenting a dull internal IC memo.
Combine passion and high ambition –– the magic formula
People that are passionate about what they are doing are more likely to succeed. Hence, it’s easier to get inspired by you as a founder when you seem genuinely passionate about your business.
At Speedinvest, we often speak to founders who are tackling B2B problems that most people have never heard of and would certainly not get excited by. Yet the founders of these startups tell fascinating war stories about the problems faced in their respective industries. Having lived through the pain, some of them become almost messianic about their mission to disrupt the antiquated ways of working in their industry. Such enthusiasm can turn everyone into a fan of even the most ‘dull’ topic, investors and employees alike.
Passion for your domain is crucial even if you’re not an industry insider and your startup idea is the result of an unemotional, systematic idea-scouting process. If you combine the passion for your business with a high level of ambition, you have a key ingredient for business success, as well as fundraising success. Often, founders with a borderline naive level of ambition are the ones who are changing the world. So this is definitely a trait that VCs are looking for.
Conveying passion and ambition also requires a certain energy level. Take this into consideration when setting up your fundraising schedule. If at 6 pm, after a long day of fundraising conversations, you feel like collapsing on the sofa rather than topping off your day with another VC pitch, that’s a good indiator that you need to adapt the timing of your VC calls.
A lot of fun has been made of the herd mentality of VC investors. Unfortunately, there is some truth in this stereotype. Fear of missing out is probably the most vulnerable point in most VC’s ambition to take investment decisions based on clear assessment criteria.
Therefore, in case you’ve received term sheets or you see investors progressing extremely fast in their due diligence efforts, mention the momentum you’re having. However, don’t overdo it as this can put people off. And never, never ever lie. In most cases, it will backfire big time.
Build a rapport in your pitch
A funding round is more than a transaction. It’s the beginning of a long-lasting personal relationship between you as a founder and your investor. Therefore, a pitch conversation should not be purely focused on an exciting pitch and a productive Q&A session. A great pitch conversation gives both parties first insights into the character of the counterpart. A small personal anecdote, some non-transactional chatter, or simply a fun comment can go a long way.
After all, investors not only seek high dollar returns for their investments, but they also enjoy good personal relationships with their business partners. Imagine an investor has two deal opportunities on the table that seem similarly exciting after the respective due diligence processes. Let’s assume both founders are great, but one has remained transactional throughout the process, whilst the other has built up a personal connection with the investor since day one. Guess which deal the investor will push harder in the investment committee?
The same logic applies vice versa. If you as a founder receive two term sheets from preferred funds, you will most likely pick the fund based on personal preference for the respective person leading the investment.
Last but not least, the way a founder interacts with investors is typically a proxy of how other business relationships are approached, such as relationships with potential customers and hires. In all of these interactions, building a personal rapport can make a difference.
To sum it up, if a pitch is structured, to the point, appealing, and has a strong foundation for building a rapport with investors, you’ll significantly increase your chances of fundraising. If on top of being a good pitcher, you pass key due diligence points (traction, market size, competitive positioning, etc.), then investors will prioritize your deal above all others.
Mastering the STAR Principle requires practice. A lot of practice. But it’s worth the effort because it will make your pitch stand out. As a small piece of assistance in assessing your pitch, I’ve created a little scorecard below that you can use.