So, you have your business idea. You have come up with a product or service that will change the world – make people’s lives easier.
But a business idea won’t turn into a startup business without effort.
Now, this effort is not just about how many hours of labour you put in. You also need to nurture it with investments.
Because investments will provide you with resources – equipment to build a prototype, tools to market your product, and capital to pay for labour. After all, none can live on Ramen noodles for too long (and even those cost money!).
And so, you need to take your idea and present it to investors who can provide you money.
Of course, you can’t just knock on an investor’s door and go “Hey, I want to make baseballs, give me $500,000”.
First, you need to validate your investment readiness level; develop your business idea to ensure it’s presentable and attractive.
This is exactly what the first section of the startup pitch deck guide focused on – knowing when to move on with the investment pitch.
So, once your business idea is mature enough (i.e. you have The why? The what? The who? The whom? and the How?) you need to write the elevator pitch to make your case to the investor.
And now, you’ll encounter the first and the biggest problem:
Investor attention span is short.
Well, not just investor attention span – we humans have a shorter span than goldfish.
Yeah, just let that one sink in.
Investors face hundreds of investment pitches – the world is full of people with ‘an idea’. They need to filter the 99.7% of bad startups from the 0.3% of good ones.
And they need to do it quick.
Simply put, investors don’t have time or patience to listen to you telling the whole story of your business.
Think about it like this.
You wouldn’t think it’s smart to read a whole book before you make a judgement whether it’s worth reading or not.
Instead, you look at the back – you spend a minute reading the synopsis before you pick it up.
It’s the same with investors. They want a minute-long introduction to the startup and based on this they’ll either show thumbs up or down.
But how can this be done? How to condense your magnificent idea into a minute?
In this part of the guide to pitch decks, I’ll show you just how you can write an elevator pitch.
Not just any elevator pitch either but one that will secure interest and have investors throwing money at you.
You’ll find a elevator pitch template that makes writing easier and examples of pitches that work. To really hone in the point, I’ve also included examples of the bad practices and tips on the worst mistakes you can make when writing a pitch.
So, let’s get started.
The short ride to paradise – using an elevator pitch to grab investors’ attention quickly
OK, so you have to introduce your startup idea in about a minute to an investor to gain their interest and money.
What does elevator pitch really mean?
The essence of an elevator pitch is this:
You give a short 20-60 seconds business pitch to an investor stating what your startup is and why the investor should invest money into it.
It’s a way to distill your startup idea and concept down to the purest form.
Who and what is the startup?
What it is that you offer to the investor?
You can view it like a commercial. You show what your startup does and how it does it, while letting the investor know why it benefits them.
Remember, investors are looking to make up to 10x gains for their investments.
Your pitch can’t just tell why it’s good for the customers – you need to convince the investor that because customers will love you, they will get rich in the process.
Just like a commercial, you need to explain why it’s worth spending money on your startup.
But it’s an elevator pitch…What if there are no elevators around?
No, an elevator is not a requirement for the pitch.
While elevator pitch gets its name from the idea you have to be able to sell your startup in the time in takes an elevator to ride from the bottom to the top, you don’t need to give the speech solely in elevators.
But the whole idea of the elevator pitch is to be prepared for the unexpected.
It’s essential for startups because it gives you a tool to make a potential connection with an investor at any time.
Let’s say you are at a conference for your industry.
Suddenly, there’s a big VC on the other side of the room, browsing his iPhone.
It’s an opportunity – your chance to make a move.
If you have an elevator pitch written, you can walk in oozing confidence and introduce yourself. You can outline your startup idea in a minute, hand in your business card and leave like a champion.
If you don’t have an elevator pitch, you’ll probably walk in and blabber on for five minutes about convergence and problems. You might not even remember to hand out your business card and it wouldn’t matter even if you did.
Because with an elevator pitch you don’t waste the investor’s time.
You walked in and you told all he needs to know.
But there lies the other problem.
How do you know what is all the investor needs to know’?
On the outset, selling your startup in a minute is not hard because you only have a minute to talk.
But the more you start thinking about it, the harder the task can seem.
In a single minute, you need to outline your idea in an engaging and coherent manner while also ensuring you show how the investor will benefit from it.
Now, that’s a challenge.
The template of an effective elevator pitch
But challenges are what drive you – an entrepreneur.
And all challenges are worth solving.
To help you, I’m going to provide you with a winning elevator pitch template.
One that is guaranteed to win over investors.
There are 5 components to a winning elevator pitch. The components are all about answering the following questions:
Now, your initial reaction might be to take those questions, answer them and shout “Yay!” to your elevator pitch.
But no. That’s not the way to go about it.
Remember how I’ve told you previously about the importance of storytelling as part of pitching. You need to present investors with a story – something interesting and engaging.
Investors are humans. They don’t just want to sit around listening to boring stories.
If you can evoke emotions, you can raise attention and deeper attention will result in more engagement (and ultimately, investment).
Therefore, the real elevator pitch would follow a storytelling format of:
- Introducing the problem
- Introducing the characters (the people facing the problem, as well as the team behind the startup)
- Introducing the solution
- Introducing outcome of the applying the solution (both in terms of traction you might have had and the bigger potential available to your startup)
If we break the above elevator pitch template into pieces, we can see how it relates to the questions I just outlined above.
Now, that looks like quite a bit of information and it is. So, how do you present it in a clear and concise manner?
Let’s examine the components in terms of the storytelling model I outlined above and which the template closely follows.
So, what’s the problem?
A good business idea solves a problem.
People buy products and spend money on services that help them – whether by cutting costs of something or by making it quicker to get things done.
Good products and services provide value.
Therefore, you need to start your pitch by presenting a problem. This will immediately tell the investor that there is a market there because you are solving a real problem.
It’s the most important thing for an investor to hear – that your product has a market.
It doesn’t matter what kind of product you have if it doesn’t have a market.
Investor interest will be immediate if you start by laying out the potential for growth.
One of the best ways to present a problem and to hook the investor to listen to your elevator pitch is by starting with a question.
A question challenges the listener to pay attention immediately – it makes them think.
Consider the examples of these two sentences that outline a problem:
“Finding the right wine to go with your meal is tricky.”
“Have you had a great meal gone sour just because the wine didn’t enhance the flavours?”
The second sentence immediately makes you think about the topic. You go, “Oh yeah, damn that steak got ruined with the wrong wine once.”
This gives your elevator pitch a hook.
The investor will want to know more; they’ll begin to wonder where you are going with this – heck, they will relate to your problem more.
Consider this example way to start an elevator pitch:
“Have you had bad wine ruin your meal? 120 million wine-drinkers America will face the problem of limited supermarket selections and long delivery services when it comes to pairing good wine with food.”
The introduction does few things. It immediately presents the problem and provides a glimpse of the potential market.
Investors are woken up to the fact that 120 million people drink wine in the US.
You also present them with a problem – slow deliveries and limited selection.
The investor listening to that introduction will get two things out of it:
- An idea of where your startup elevator pitch is heading and its potential.
- A thirst to drink wine…I mean to find out what the solution is.
Who are you and why are you talking about it?
As you outline the problem, you move on to introducing the characters.
Now, you’ve already touched a bit on the customer side.
In my example, the startup pitched the potential market: 120 million US wine drinkers.
But even more importantly, you need to introduce the hero of the story: your startup.
You will provide the solution to the problem, but before you do so, you need to explain why.
The best way to introduce your startup in the elevator pitch is to present a quick overview for why you are doing this. It’s another way of hooking – explaining the birth of your idea through a personal story.
Why are you in front of the investor talking about the problem?
An example way to continue the elevator pitch would be to say:
“We at XYZ belong to the 38% of Americans who drink wine weekly. As someone who was part of Amazon’s delivery development team, I knew delivering goods from retailers to customers shouldn’t take forever.”
Here you are doing two things:
- You introduce the startup: XYZ (of course, a made-up name here!)
- You explain your expertise in solving the problem (you worked in a delivery department at one of the biggest companies in the world – you let the investor know you are aware of the delivery and retail industry)
Of course, your expertise can show in different ways. You could have been a wine farmer or you might have worked in a wine importing business. It could also lean more towards the technology side; perhaps you’ve developed a retail app before that was a success.
The key is to introduce the startup (name matters!) and to give a glimpse of your own qualifications in terms of solving the problem.
Here’s the solution to the problem
And so, the focus shifts towards the solution.
While investor interest will require a proper problem (and therefore, big market potential), investors are also looking for a good idea.
Following your previous comments, you could continue by saying:
“But what if you could have quality wine delivered to your door within 2 to 3 hours? Introduce XYZ – the app to browse wine recommendations and with just a few clicks get them delivered to you fast ”
Your solution is simple and it reiterates the customer pain-points you mentioned at the start.
It also includes another hook.
It asks a question about the possibility of receiving wine in a few hours – it paints a picture of “what if” and then delivers the punch line that “yes, we have done it”.
The focus here is to give a one-sentence introduction to your solution.
What does it do?
At this point of writing your elevator pitch, you might fall into one crucial trap: making it technical and difficult to understand.
To overcome this, you need to be able to condense your startup into a single sentence – perhaps even a word.
Think like you are explaining the product to someone who knows nothing about the industry.
Don’t treat the investor like a child “now, sit down and let me explain things to you”, but don’t also assume they know everything.
Getting the solution right is especially crucial for tech entrepreneurs.
Your solutions are often complicated – a use of big data to create data networks that connect the business to artificial intelligence and provide a solution to language.
What? HUH? NO!
Consider the example above. The sentence says it clearly:
The customer wants to find the right wine to go with a specific meal. They use the app, which suggests them wines and then allows the customer to buy the wine and get it delivered within a few hours.
So, make sure you carefully think what your solution is – the way it works and how the customers will use it.
There’s another aspect you must nail at this point:
Showing what your solution’s unique value is.
Why does the solution matter?
Perhaps more crucially, why does it separate you from the other solutions?
For example, you might focus on the functionality of your product/service:
“Our app is user-friendly, the whole process from pairing wines to ordering them takes just four clicks.”
You might also point out to how it differs from the competition:
“Unlikely other grocery apps, we can deliver within 3 hours from order.”
The focus here might also be on the real value you provide for the customer:
“Customers can enjoy quality wine without paying a premium price and enjoy a restaurant level experience. No need to pair your rich red wine with fish again – you can always find a good white wine to enhance the flavour.”
Here’s what is going to happen when the solution is unleashed to the world
Finally, you need to move to nailing down the pitch:
Telling the investors about the potential benefits that are in it for them, if they were to invest in your business.
Remember, investors are not excited about knowing how revolutionary your product or service will be.
They choose to invest because they know you will provide them with hefty returns.
Although you use the problem and the solution to create interest, you need to focus a part of your elevator pitch to the benefits the investor will gain by investing in you.
As I mentioned earlier, there are two ways to do this:
- You mention any traction you’ve already had with your product/service.
- You paint the vision and the potential for the investor to see.
Now, the first point will require your startup to have some traction. Perhaps you’ve already sold the product/service, you’ve had industry experts comment on it, big retailers are on board and so on.
For example, you could say:
“200 national vineyard and 50,000 eager customers agree with us and are on board.”
It might also be that you’ve had a big angel invest in your business already.
“Peter Thiel just invested $200,000 in XYZ, helping us build a prototype to present at the national wine festival next month.”
The key is to put a figure on how you’ve already grown and grown fast. You need to make the investor feel like they need to move fast in order to be part of this revolution.
You hook them with interest.
However, not all startup elevator pitches take place when you have real traction. Saying 10 of your closest friends are interested is not really worth mentioning.
Therefore, you need to emphasise the vision and the potential for your startup.
You need to outline what you believe will happen when customers get their hands on the product/service. What benefit will you bring? How will you change lives?
“Our vision is to ensure everyone enjoys quality wines enhancing food. We want it to be affordable and accessible because enjoying wine shouldn’t be difficult or costly.”
You could also outline the future possibilities for the startup:
“The organic wine production has grown 15% to 20% in recent years and so we aim to ensure the pairings favour local ingredients.”
You do two things there:
- Show the potential for growth and opportunities for taking the startup beyond its initial focus.
- Highlight the potential market and its size.
Indeed, you want to make sure you present more of the potential.
You’ve already outlined the market size for the investor. But you could throw in more figures:
“The US wine industry made an estimated $39.8 billion last year, growing by 5%, a great opportunity for XYZ.”
The point is to select figures that reinforce the growth potential.
Telling the investor, you’re targeting a growing market and an industry that is doing well in terms of revenue.
You are saying, “your investment will help us take a chunk of those profits and hand them back to you”.
Now, to go back to adding those crucial hooks to your pitch, you could also present the above like this:
“Did you know the US wine industry grew by 5% last year? Consumers are spending more on high-quality products and they are becoming more knowledgeable.”
The question helps to pace your pitch and gives the investor food for thought – a fast-growing industry; now, that means money!
For the VC, it’s also important to know just how you are planning to make money – especially when you aren’t yet churning it from paying customers.
You essentially want to include a mention of your business model.
“Our customers pay a monthly subscription fee and the wineries and retailers that sign up with will pay a 2% commission on each sale.”
In this example, I have mentioned that the app gets a 2% commission from each wine sale and the customers pay a monthly subscription fee to keep the costs low.
For your startup, the business model might be ad revenue, one-off fee, pay-as-you-go services and so on.
The key is to find a short way of incorporating them – they are almost like a buzzword for the investor because it helps them understand your money-making opportunities better.
Engaging the investor to come on board
While those are the key components to a good story, an investment elevator pitch will require one extra ingredient: a call to action.
It’s important to end with something that makes it easier for the investor to engage with your startup going forward.
This doesn’t need to be anything special. You can simply say:
“If you’re interested in hearing more about our plan, here’s my business card. Feel free to contact us at any time.”
You can also even say you are free to meet up the next week or point out to a conference you think the investor is going and which you’ll be attending as well.
The key is to remember to give your startup’s contact details – you don’t want the pitch to go to waste.
So, after we put these components together and tweak them, our pitch would look like this:
“Have you had bad wine ruin your meal? 120 million wine-drinkers in America will face the problem of limited supermarket selections and long delivery services. We at XYZ belong to the 38% of Americans who drink wine weekly and as someone who was part of Amazon’s delivery development team, I know delivering goods from retailers to customers shouldn’t take forever.
But what if you could have quality wine delivered to your door within 2 to 3 hours? You can with XYZ – the app to browse wine recommendations and with just a few clicks get them delivered to you fast. Our app is user-friendly; the whole process from pairing wines to ordering them takes just four clicks.
200 national vineyards and 50,000 eager customers agree with us. Our customers pay a monthly subscription fee and the wineries and retailers that sign up with as will pay a 2% commission on each sale. We’re part of the industry that last year grew by 5%.
If you’re interested in hearing more about our plan, here’s my business card. Feel free to contact me at any time.”
The good and the ugly; Real-life examples of elevator pitches that made investors open their wallets or scream “get the hell out of here”
Now, the example elevator pitch above is not for a real business.
While it follows the examples of good elevator pitches, its focus was just to provide you with a tangible look at the template. To make the template feel more real and approachable.
Most startups don’t let the world know their winning ways.
However, some elevator pitches out there have actually managed to win over investments.
And these offer great lessons to learn and highlight the importance of storytelling and getting the above points into your pitch.
You can find more examples at SMEPals.com.
Of course, there are also examples of bad elevator pitches.
The ones that make the investor run – probably before the elevator even hits the top floor.
For example, watch this unfortunate elevator pitch by toksta*:
The pitch doesn’t really tell what the investor would get out from the investment. It doesn’t make you interested or excited about the prospects.
All the pitch provides is information about the product – but this isn’t a sales pitch for the customer but a pitch to get investors part with their cash.
Now, another example of a horrible and real elevator pitch comes from Christopher Witt.
He once sat next to a person at a conference (a perfect opportunity to engage people with your interesting startup) and the man missed his opportunity to pitch himself or his idea by doing the following:
When Witt asked the man what he did, the man replied: “We design and manufacture stuff that people use.”
That fails to deliver either of the two aspects of an elevator pitch:
- It doesn’t tell what the problem is or what the solution is. Heck, you don’t even know what the startup is called.
- It doesn’t say what benefit it provides; you don’t know what the customers get and you certainly don’t know what a potential investor might benefit from the startup.
Just don’t go and screw it up
Those were pretty horrific examples, am I right?
But let’s quickly break down why they were bad. What specifically is something you need to avoid when writing your elevator pitch?
Don’t use jargon
I’ve mentioned before that your elevator pitch must be coherent, concise and approachable. For this reason, you can’t add jargon.
Think of it like this:
You’re talking to an investor about a product or service they might not have previous knowledge. Yes, they might know the wider industry, but they might not know the difference between Java and C+.
Jargon filled language doesn’t sound fancy. Normal English will be sufficient.
The left-side example is clear and easy to understand, while the right-side sentence is full of mindless jargon that probably doesn’t say anything to the investor.
Don’t forget to customise to your audience
It’s important that your elevator pitch answers the question “what will I benefit as an investor for investing in your startup?”
Therefore, you need to focus on keeping your listener – the person you are pitching to – at the heart of the story.
Why does this matter?
Think about the commercials you remember – the ones that you paid attention to were the ones you felt connected with.
You don’t pay attention to children’s commercials if you have no children and you’re 40. But you do start listening when they talk about travelling and you’re planning for a holiday.
Investors will listen to the pitch if it matters to them.
When you are writing the pitch, think what the investor will want to hear.
For a VC, the key is in the growth opportunities – so you need to highlight the market potential and your ability to grow fast.
Of course, the key to understanding is that VCs might have different ways to invest.
Some will want to be more hands-on, while others might invest at a later stage and therefore, expect you to show more traction.
Put yourself in the VC’s position and answer these questions for a more tailored speech:
- What kind of investor am I?
- What is my previous expertise in the industry?
- What kind of investments have I made in the past?
- What drives my investment decisions?
Don’t turn it into a list of functions/achievements/features
Following on the above point, the key is to avoid turning the elevator pitch into a list of functions, achievements or features of the product or startup.
You need to spend half of your pitch just explaining the benefit to the investor.
Yes, you need to outline the solution, but you shouldn’t spend all of your 60 seconds explaining how the app works.
You don’t need to explain at this point what different functions you offer to the customer – the investor doesn’t really care.
Your focus must be on:
- The problem,
- The solution in a nutshell,
- The qualifications that make you the best to provide the solution, and
- The reason the investor will benefit by investing in your company.
Moving beyond the elevator pitch
Using the above template, you can put an elevator pitch to good use.
You make that first introduction – the connection that gets the investor interested.
What if the investor still doesn’t care?
You get back to the drawing board and you think why the investor wasn’t into it. It’s not always about the pitch, sometimes you’ve made the wrong investment match and your pitch just isn’t interesting because the investor doesn’t care about the sector – plain and simple.
Of course, as you might know delivering a great pitch is not just about the content. You also need to think about the presentation.
Later on in the startup pitch deck guide, you can read about the presentation and how to nail it down to a tee.
But before we do, start jotting down your elevator pitch.
Are you one of those that like to re-write or do you think about it in your head until you got it perfected?
What are the other situations you can think that might be useful for an elevator pitch?