Engineering Your Pitch: Insights From A Cornerstone Angels Meeting

Last month, I had the privilege of sitting in on a Cornerstone Angels meeting after the entrepreneurs seeking angel investments had made their business pitches and had been excused from the room. This gave me valuable, behind-closed-doors insight into what angel investors really want to hear in a pitch.

While the ideas and teams of the startups seeking investments that day were diverse, the common thread concerns that surfaced from the investor side of the closed-door meeting were similar and applied to the majority of the start-ups. Here are some insights gleaned from those investor concerns that can be applied to any pitch.

1. Don’t try to include every detail in your pitch.
Including too many details can convolute your business model and leave investors sifting through details to find your core. Investors are looking for a pitch with key information, but they’re also looking for a coherent story. The angels and their team perform due-diligence research before investing, so they’re used to gathering some information themselves. It’s important to tell a clear and compelling story in your 10-minute pitch. Let investors gather the details after you have them hooked.

2. Show that essential partners are on board.
It’s rare that a start-up can disrupt established markets on their own. This means most businesses need key partnerships to get the ball rolling. If your idea hinges on support from another institution, it’s important to show that they’re on board to help. Showing that you have identified essential partners is important to investors, but investors also want to see these partnerships actively being built.

3. Be clear about your IP strategy.
Investors want to know how you plan to protect your novel solution. Having a first-mover advantage (FMA) often isn’t enough to protect your business. A clear intellectual property (IP) strategy assures investors that you have a defense plan in place. Aside from defense, patents can be critical assets for an exit. If your plan is an acquisition, the last thing you want investors asking is “How will you get acquired?”

4. Angels bet on the "jockey" more than the "horse."
With 90% of start-ups failing, investors know they aren’t always betting on a winner. Some venture groups are starting to use big data and statistical models to identify winners. Until these models are proven, most investors still go with their gut. Angels at the Cornerstone meeting said a strong team is the most important metric to gauge success by. The angels also said that ideas, "the horse," pivot and change, but only a strong team, "the jockey," will see it through to success. While important team dynamics are hard to pin down, investors seem to be looking for experience and a good dynamic between co-founders.

5. Engineer your pitch by asking its end-users
A successful start-up asks their end-user what they want, then engineers a solution accordingly. But end-users aren’t the only ones to consider if your business needs investment capital. Investors are like the end-users of your pitch. Your product should delight the customer and your pitch should engage investors. As an engineer, this is probably my biggest takeaway from the Cornerstone Angel meeting: You can engineer a pitch that will delight investors—but to do that, you need to ask them what they want to see.