How to pitch a startup is a key skill for all founders, and something all founders need to practice constantly. On April 18th, 2018 we hosted our first ever HHL SpinLab Investors Day in the Leipzig Zoo.
Normally for our Demo Days, we host them directly in the SpinLab and conduct a 1/2 day event where our current class can pitch and hopefully make some great contacts.
For our sixth class, we wanted to mix it up a bit, so that we can continue to grow ourselves as an accelerator, and provide value for both our startups and our guests who attend our events. Thus the HHL SpinLab Investors Day was born.
For this round, we organized the event in cooperation with the HHL and essentially combined their International Investors Day with our Demo Day into an all day program held at the Zoo. The event itself held keynote speeches and panel discussions from from renowned experts in the region who actively work in the fields of technology, innovation, and investments.
For a first time event, we consider the event a complete success! We had attendees from all over Germany, representing over 60 various companies and investment firms.
We got a lot of great feedback on the event, and a lot of people were happy to report that they learned something new. From our side, everything went smooth and we’re looking forward to organizing similar venues for classes in the future within our startup accelerator program.
Startup pitches were certainly a main component of the event.
The main focus of the event was truly to give our attendees a detailed and in depth view into the changing investment landscape in the country, but with that, comes seeing what the latest advancements in the startup scene are, and how that is developing as a whole. There were three main pitch segments in throughout the day.
- The best of Central Germany. Here we extended the offer to non-SpinLab startups to apply to pitch at our event. We found five very promising startups who are all currently operating in the German states of either Saxony, Saxony-Anhalt, or Thueringen.
- Who wants to work in VC? Of course we couldn’t forget about Leipzig’s promising educational landscape, and we wanted students to have a great opportunity here as well. We took applications from students finishing their studies who had interest in working in a VC firm. The best 3 were selected, and got to pitch in front of our audience and tell them why they would be a great candidate for the next open position.
- Pitches for the 10 startups for the current SpinLab Class. This is where our current class really got to shine in front of the crowd, and introduce their products, what they need in terms of financial support, and the visions that they have.
One of the most interesting aspects of the startup pitches, is that the attendees were actively voting on who would win best pitch in each respective section.
The winner of the central Germany pitches would win a 1500 Euro award, and the winner of the SpinLab pitches would win a 5,000 Euro award. Pretty nice little bonus for having the best pitch of the evening.
Startup pitches: What's need to make them strong?
I’m a sucker for speaking in front of crowds. It’s something I really enjoy doing, even if I have no idea about what I will talk about, spontaneous is also something I can manage to do most of the time. I think it’s a good skill to have under many different circumstances, is something that has helped me quite often in my professional life.
Pitching as a startup founder, however, is in a slightly different category, because at the end of your pitch, you’re typically asking people for a whole lot of money.
What that means, is that if your pitch is 7 minutes long, the first 6.5 minutes need to be so powerful, so informative, and so strong, so that when you finally say “And to further our progress we are currently raising (Insert High Money Amount Here)” you don’t get met with weird looks and disgruntled faces.
Remember, if you are pitching in front of investors (from a pure technical standpoint, please make sure your pitch is a PDF lol), they have heard similar stories 100 times already, you’ve got to continue to reinvent yourself and stay relevant, interesting, and above everything else, unique.
The guy in the middle of this picture is LeX Tan, and we're going to tell you how he pitched his startup perfectly
LeX (middle) is the CEO of motionscloud, one of our class 6 startups that is focusing on the InsurTech sector. Now if you find them online, their site is beautifully setup to describe their product in detail, but in a nutshell, LeX and his team are on a mission to streamline the insurance claims process using deep learning and artificial intelligence.
So please, go check out their site when you’ve got a moment, but for the focus of this article, we will be looking at LeX’s pitch in detail, and talking about what he did that made his pitch great, and resulted in him winning the competition of the evening.
1. Extremely clear portrayal of all involved users.
From a story perspective, LeX completely nailed this. A lot of startups get pretty stuck with how they should manage their verbiage.
If the verbiage and messaging is too tech-y, or just overall too confusing, you run the risk of people not fully understanding what you do, and when they do not understand what you do, they are surely not going to be investing in you. In LeX’s pitch, he talks about the two main users:
- The end consumer. Of course when we have a situation that requires us making an insurance claim, the last thing we want to do is mess with paperwork and wait for long amounts of time to get relief. It is clearly illustrated how the end user can immediately take pictures of the situation, and immediately submit all necessary information, pictures, and videos to their insurance company to show what the current damages are.
- The adjusters From the insurance company side of things, is it extremely easy for them to call the customer back, and further inspect the damages to start the process of formally filing the claim.
There is no gray area at all when it comes to understand what the product does, and how each respective user in the product can be involved with it.
2. You don’t have to do anything else to get access
While this next point goes more into good product design and customer experience, it is still extremely relevant.
A pitch takes all factors into consideration, how good of a speaker the founder is, how relevant the market is, how good the team is, and in this example, how many barriers to entry there are.
When I say barrier to entry, I mean how hard will it actually be for people to adapt your product? Motionscloud’s product works on all current mobile devices, and it works natively inside of the device’s browser. What does that mean for the end user?
They do not need to download a 3rd party application.
That may sound like a small thing, but in reality, that is huge. Think about it, if you’re panicked because your sink started leaking, the last thing you want to do is download an app, create a profile, have password problems etc.
Nope. You just want to pick up your phone or tablet, start the apps you’re already familiar with, and get connected to someone who can help you.
Smart investors know that barriers to entry can make or break the scalability of the startup, so very big props to LeX and his team for developing a product that mitigates that risk.
3. The audience research was clearly done
The SpinLab team sees a lot of pitch decks. I mean, seriously, a lot. Sometimes I actually have nightmares about pitch decks when they’re bad (or when they have compatibility issues because they are a .pptx).
There are a couple slides that we will almost always see in a pitch deck, some that come immediately to mind are:
- The team slide, which will inevitably contain one ridiculous picture from one of the founders.
- The competition slide, which will inevitably show the pitching startup’s logo in the upper right hand corner.
- And lastly, the TAM, SAM, SOM slide. For those unfamiliar, those abbreviations mean Total Available Market, Serviceable Available Market, and Serviceable Obtainable Market respectively.
While an important slide, again, investors see this slide ALL. THE. TIME. LeX did something powerful here, and went an additional layer deeper. He made it exactly clear that his product is NOT there to replace claim systems, and he makes it very clear why -> because that would take years to do.
"We do not replace claim systems. That would take years."
He makes it known to his audience that his goal is to attack the one weak spot in the claims system process that is currently enormously flawed.
This instills an amount of confidence from the audience into the presenter, because it really shows that the founder is laser-focused.
That founder knows exactly where his opportunity is, what his limitations are, and how he can capitalize on it. Again, from a pitch perspective, and actually all perspectives, this is an extremely important thing to show for you and your company.
4. That good old value proposition.
Again, as sharp as knife here, not too many things to add! The product can reduce claims processing times from 10 days to 3 hours.
Additionally, every year in the EU there is about 150 Billion Euros in claims paid out, and up to 15% of that goes to claims processing costs. That is a huge amount of time and money that is being wasted due to outdated procedures and operating conditions. Motionscloud found that weakness, and is going in for the solution.
If you’re a founder that cannot speak clearly to the value proposition of your startup, you need to find that and incorporate it into your pitch deck.
If you have no idea what that is yet, it means you’ve got more research to do before you pitch in front of someone, whose opinion of your pitch could make or break the future of your company.
5. Saluting the good old days
For me this is more of a personal thing that I really liked in his pitch. There was a part towards the end where he starts talking about the ripple effect of his product, in other words, how the experience can be wider spread.
Of course, there’s the entire digital / social media presence that exists in 2018, when we love OR hate something, we tend to take this opinion online in some fashion.
However, LeX also pays homage to those who may not be so tech savvy, and simply acknowledges that those who do not have social media profiles will tell their family and friends about how they love the product.
I appreciate the fact that this was even brought up, because I haven’t heard that mentioned in a pitch deck in quite some time. The truth is, even with all the digital stuff, word of mouth marketing is still absolutely one of the most prominent and powerful forms of marketing in existence (albeit extremely hard to measure haha).
If you want a prominent display of this, think about Airbnb and Uber. Now giants in this whole community sharing scene, but earlier they never had aggressive marketing campaigns, and social media came way later. They simply launched a great product, and people just started talking about it. Done.
6. The ACE up his sleeve
So we’ve talked about this pitch quite a lot by now, but if there is one single thing that I completely believe got LeX to win this competition, it is these words:
”We have paying customers, pilots, and long term contracts. Today we are serving customers in the US, in Germany, the Netherlands, Austria, and recently we just closed in the Middle East. This morning, we just closed one customer in Asia.”
And with that, I firmly believe LeX sealed his fate in winning the competition.
We’ve said it in many different mediums, and many different times, but the single biggest thing you can do to win over an investor in Germany, is to validate your idea with either paying customers, customers in the pipeline, or in the case of motionscloud, BOTH.
To top it off, he took it to the next level by showing he already had paying customers in multiple countries. It shows signs of drive, it shows the dedication of the founder, but most importantly, it shows that the product is indeed profitable.
7. Wrapping it up in a nice little package.
This final point is also a bit of a personal preference of mine, but it is something I really enjoyed hearing at the end of LeX’s pitch. Now normally, when we get to the end of the pitch, the founder will summarize things, and simply state that they’re excited to talk to people to hopefully further relations. LeX changed that every so slightly, and ended with:
"If you share the vision, please come to me, we would love to talk to you."'
If you share the vision… I love that. Just that small little twist of words at the end to catch the audience just a little bit off guard. Just to throw a little bit more of that old school entrepreneurial vision into the pitch. Truly a nice little cherry to put on top of the pie and the end, and present it to crowd.
You didn’t think we’d write this post without the pitch, did you?
Lots of good stuff being discussed here when it comes to pitches, so hey, why not go check out LeX’s pitch for yourself below?
There you have it fellow startups around the world. If you follow these tips, maybe you’ll also one day win a pitch award, or two, or three. Just keep these points at hand, and take your pitch to the next level.