Quit yapping! “If you can’t explain it simply, you don’t understand it well enough.” It’s a quote popularly attributed to Albert Einstein, but good luck finding proof of it. Either way, the quotation gets the whole point of this article across pretty well.
Far too often, founders bombard potential investors with tsunamis of information in their pitch deck, on phone calls, and in the pitches themselves. In some cases, it’s simply an enthusiastic founder that can’t wait to share all of the wonderful ideas in their head. In others, it’s a founder who is igniting a blunderbuss of information to hit every conceivable question that an investor may ask, which really leads to them NOT wanting to ask any for fear of another ear beating. Either way, the message to the investor is the same: INEXPERIENCE.
First, let’s address the pitches and calls. Whether it is social inexperience, or inexperience in pitching, the torrential beak flapping eventually leads to the listeners only paying attention to their internal dialogue and waiting for a break in talking to jump in with a question they actually want an answer to. One thing that has been blatantly obvious and extremely refreshing is when an experienced entrepreneur fields some hard-hitting questions. The experienced and rehearsed entrepreneur has not only expected the questions, but understands every corner of the business so well that they can treat the questions with the minimum effective dose of information to satisfy the investor. It gets right to the heart of the concern in order to move to the next issue at hand with a few brief statements. The clarity and confidence of a founder that can answer with the “right” amount of information is subconsciously reassuring to anybody listening and reinforces the sense of control the team has over their venture.
Hitting listeners with the “minimum effective dose” has another added benefit. The investors will ask more questions. This is good for a couple of reasons. For one, it is more engaging for all parties when there is an open dialogue, which is a big benefit for the investor trying to seek money. Investors won’t invest in something they are not drawn to or engaged with. The other added benefit is the image you create of having “all the answers”. If your pitch only reveals the critical information which is, let’s say, 0.5% of everything you know about the business and industry, then as long as you truly are well researched and prepared, the rest should be easily addressable if the investors want to know. That ability to answer seemingly off-the-cuff on a broad range of questions gives investors the impression of “WOW, we really can’t stump her!”. As uncomfortable as it may be, entrepreneurs should open themselves to broad Q&A from experienced people as early as possible. This prepares you for the inevitable unexpected questions which you want to address immediately to reveal any critical flaws before you embarrass yourself on the big stage.
The other place we see uncontrolled thought vomit is on pitch decks. Just like recruiting managers reading resumes, investors must go through hundreds of applications per year. This means a couple of things. One, is that yours must STAND OUT. How can you make your pitch deck stand out? MINIMIZE THE INFORMATION. Our brains react the same way to an overflow of information whether it’s text or audio. The information is ignored. Just like in a call or Q&A, non-concise points convey a lack of mental organization and clear messaging, both of which are concerning to investors. The problem, solution, and plan should all be a clear, coherent, step-by-step journey down the yellow brick road that leaves the investor wanting to know more. If the entrepreneur is truly compelled, they can include more information in the appendices or separate documents, but for the meat of the pitch deck, it should be enough to convince me that you have identified a problem and uniquely produced a viable solution on which you can execute.
Now allow ME to be concise. “If you can’t explain it simply, you don’t understand it well enough.” Hit the basics, and let the investors take you to the details.
About the Author
Grant Anderson is a business development consultant and engineering student. Grant has covered all areas of development including market sizing, competitive analyses, extensive research, coordinating R&D, and public relations. Grant aspires to create his own technology commercialization firm focused on in-house R&D.