Executing the raise: The pitch process


From your first pitch meeting to receiving your investment funds, there are many steps in between. This article will prepare you for the pitch process, and show you where you have the opportunity to speed up the process by coming prepared.
Once you’ve started filling your calendar with investor meetings, you might find the pitching process moves quickly compared to all the prep work you did. 

For most founders, pitching is a very active stage of fundraising. Pitching your startup is a continuous process, and not a singular step. You’ll constantly refine your pitch (and your pitch deck) based on feedback. Lastly, keep in mind that every firm is unique, so while most will follow a similar process, the nuances from one firm to the next could be significant.

Pre-pitch prep

Practice, practice, practice your pitch! Ideally with investors in your personal network who will give you valuable feedback.

While investors are often on the cutting edge of “what’s next” in tech, they’re also humans just like you, and find familiarity in brands and trends just like the rest of us. It sounds cliche, but ‘The Uber of X” or “The Netflix of Y” is a quick and clear way to communicate value to an audience that is overwhelmed and short on time.

VCs are also, in large part, biased toward the positive. They want to believe in you; they want this to work out. They live and work in a highly competitive business with absolute peak FOMO conditions. It’s in their best interest to make a good deal.

By putting yourself in the shoes of your potential investor, you can head off potential questions or concerns — and put yourself in a stronger position — from the outset.

Your first pitch meeting

You may not have a lot of time during this very important first meeting, but this is the moment that you’ve been preparing for. 

In your first pitch meeting with a VC, you’ll:

·       Present your pitch deck and/or your investment memo.
·       Field questions from your potential investment partners.
·       Get to know your potential investors and help them get to know you.

Your pitch should be a compelling story. Defining the story arc — that is, your narrative including market opportunity, product and team — should be 80% of the work you put into building a successful presentation. 

Work your way from market opportunity, to urgent market need, to why your product is the right solution. Don’t get lost in the weeds describing your product in minute detail. Instead, highlight key successes and outcomes, and draw attention to your fantastic team and why it’s perfectly suited for the mission at hand.

We cover the process of building your pitch deck in another article , but here are some other thoughts to keep in mind about the actual delivery of your pitch:

  1. The first five to 10 minutes of a pitch are absolutely critical to focus attention. 
  2. Get to the wow factor before opening the floor to objections or questions.
  3. Help your VC audience by anchoring in the familiar while also surprising and delighting them with one or two truly powerful ideas or insights.
  4. With few exceptions, keep your pitch deck length to 12-24 slides.
  5. Do your homework on the attendees. If possible, it can be useful to divide them into champions, influencers, detractors, decision makers, etc.
Investors will likely have questions and comments after you deliver your pitch. A key thing to remember here is to handle any objections or questions with confidence. Listen carefully, respond to the best of your ability, and promise to deliver additional information or clarification if you’re unable to do so at that very moment. Then follow through.

Be sure to write down every question you receive, as well as overall feedback. That will help you prepare to address every question at future meetings and pitches, and eventually develop three punchy, bullet point answers to the most frequently asked ones. Even better, address them before they come up, in your “risks” section.

Follow-up pitch meetings 

If you make it past the first meeting, you’ve made it to…more meetings! 

In the meetings you have with VCs after the initial pitch, you’ll meet more people from the firm — like other partners or the investment committee. All of these people will be vetting you and your company from various angles. 

Be prepared for more questions and more conversations. This is a good opportunity for you to dig into what their firm's process is, as well as identify the key decision makers in that process.

The post-pitch meetings can take a significant amount of time, so do your due diligence on each firm you’re talking to. You will be choosing your investment partners as much as they’ll be choosing you — and you’ll be “married” to whoever you choose for a good long while. It’s important to select investors who are well aligned with your values and your goals. 

Term sheet, negotiation, and signing

Once an investor decides they’re interested in funding your company, you will negotiate terms with their firm. You’ll work together to finalize the terms and conditions of the investment in what’s known as a term sheet.

The term sheet provides a framework for moving forward, and includes information like:

·       The amount of the investment.
·       The investing partner’s ownership stake.
·       The startup’s valuation.
·       What securities are being offered.
·       Any special provisions, like board seats or veto rights.
·       Rights and protections.
·       Expected return on investment.
·       Milestones that must be met for the investment to progress.

Once the term sheet is satisfactory, you as the business will sign it. This is a critical document, and it will minimize surprises down the road for both the founder and the investor — however it is not a binding agreement.

Due diligence (for all parties)

After the term sheet is signed, the investment team will go through their own process to cross-reference and check that nothing is missing, misreported, or false. This involves accounting and legal teams and can take up to a few weeks, though that timeline is typically shorter if your startup is well-prepared for due diligence.

This is the time for you to complete any due diligence on your end as well! We hope you haven’t gotten this far without thoroughly vetting your potential investors — but if there is any other due diligence you need to do, now is the time. Because the next step is …

Sign the legal documents and receive your funding

After due diligence, and pending any changes that need to happen with the term sheet, you will close the deal by signing the final legal documents with the VC firm.

You may get close to the final stages and find that things aren’t working for one reason or another — but don’t get scared. You can go back, refine the term sheet, and try again. 

Once the legal documents are signed, this is when you’ll finally see the money come in. You’ll be happy to know that this usually won’t take long since the preferred method for most VC firms is to wire-transfer the money. 

As a guideline of what to expect, the time between signing the term sheet and seeing money in the bank usually takes an average of about four to six weeks if there aren’t any hiccups. But this can happen faster if your startup is organized and prepared for due diligence, and if a venture capital firm is quick to move. 

A little back and forth is normal when executing a fundraise

It can take several tries before a startup successfully obtains funding, and you may have to meet with many VC firms in order to get there. You may need to adjust your pitch depending on the feedback you get. 

A typical startup funding timeline comes with a lot of caveats — which is why it’s important to understand your budget, your runway, and your business’s operational needs so that you don’t run out of money before investment funds make it to your bank account.

To sum it up, the pitching process involves:

·       The first pitch meeting.
·       Many follow-up meetings.
·       Negotiation to agree on a term sheet.
·       Due diligence (for both your startup and the VC firm!).
·       Signing legal documents.
·       Annnnd finally, receiving investment funds.

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