Back in February I had the opportunity to spend time coaching participants in the Fierce Founders Bootcamp on how to make a pitch, and then listen to the ensuing pitch competition.
The Fierce Founders Bootcamp is a Communitech program that helps female entrepreneurs refine their companies. On the final day of the camp, the best companies take part in a pitch competition with $100,000 up for grabs.
Taking part was both an inspiring and challenging proposition. Pitching against a clock is hard. Keeping an audience engaged while conveying a succinct story about the company, the founder, and the available opportunity is an art. In short, making a good pitch is a critical skill for an entrepreneur, whether you're a startup, scaleup or gazillion dollar enterprise.
Making a pitch at a pitch competition isn’t that different from the pitch an entrepreneur will make to a banker or venture capitalist. You want to tailor the message to fit the kind of company you are and align that with the financing you’re seeking. Doing so means asking yourself some questions, starting with: Who are you? And what type of funding is your business plan likely to attract?
Some founders with great $20-million dollar ideas (potential for a very successful, profitable business) are spending a lot of time barking up the wrong trees with respect to seeking funding. Venture Capital isn’t always the right solution. Likewise, there are some wickedly smart people with stellar tech and near-product/market fit talking to banks for a loan when they should be seeking a material seed equity investment to keep them laser focused on getting to market.
Venture capital is an important component of a sound technology ecosystem. If your company is attacking a very large, maybe billion-dollar market (like Airbnb, and hospitality and travel), if you have something significantly disruptive (i.e., 10 times cheaper, faster or better), have the ability to execute a growth plan (growth persistence north of 80 per cent), and have the team/skills/pedigree to build and execute, maybe you'll be successful securing late-seed or Series A equity from a VC, and perhaps it's the right path for your business.
On the other hand, if you've got a concept that you're passionate about, if you personally have the pedigree based on your experience in the domain, and if you're executing a plan to dominate a niche space and build a company targeting a $100-million market with all likelihood of getting to $30-million in revenue, that's a great story, one that would make a lot of individual investors salivate.
The point is, the path that you take to finance is different, depending on your circumstances.
In the early days, you'll still likely need equity financing unless you're funding yourself, but you may seek grants, negotiate special terms with strategic clients, and find debt solutions that are willing to share in your risk as you grow. These options don't need monster markets and galactic exits in order to meet their metrics.
The other thing to consider is the location of your business. Different tech hubs have different strengths, and different approaches to building great companies. In case you didn't catch it, Marc Morin (successful serial founder, investor, tech evangelist) delivered a presentation recently about staying true to what we do well here in Toronto-Waterloo Corridor, and not trying to emulate what takes place in Silicon Valley. Marc talks about not trying to be a "tall tree" if you're not a tall tree. Here in Waterloo we punch way above our weight in our modest B-market, VC landscape but, statistically, companies here are unlikely to raise a $50-million Series A. If you don't have a history of exits or relationships with investors, you need to consider where to search for your most likely suppliers of capital.
So. Have a vision for your company. Be realistic about what's happening in your market. Rise above the noise and chart the fundraising waters that are most likely to get you to your destination. Try not to get frustrated as you work through the process. It's a big problem to tackle and even those who have raised a lot of money make mistakes about what type of capital to seek and when to do so.
P.S. Congratulations to all the Fierce Founders Bootcamp participants, and to Ratio.city for taking home the cash prize.
Banknotes is a column offering financial advice to startups that appears on the last Friday of every month.
