Pitching Your Team to Investors
A couple weeks ago we hosted an event to teach angel investors how to invest in early-stage startups.
As part of the event, Eric Bahn (co-founder and GP of Hustle Fund) shared his five-part framework for assessing a deal.
Here are the five things he looks at:
I gotta admit, I was a little surprised to see that team is the first thing Eric thinks about when he's considering making an investment.
Sure, the other four components are important. But for Eric, team ranks #1.
And even though the event we hosted was designed to help angel investors, it's pretty stinkin' valuable for startups to know how investors evaluate companies during a pitch.
So naturally, I took notes.
Here's what I learned that investors care about when it comes to the "team" part of the pitch:
1. relevant skills + background
Let's say you have an idea for a business that would eradicate Covid.
Obviously this is a pretty intriguing idea... Covid is a big problem and people would almost certainly be willing to pay for a solution.
But, as Eric explains, it doesn't matter how big the problem is if an investor doesn't believe you're the right team to solve it.
So if you want to go into the Covid-eradication business, but your background is in social media marketing... no investor will back you.
But if your background is in developing medicine and your co-founder's background is in bio-medical sales... that's a different story.
So when you're pitching your team to an investor, consider how you can convince her that your team is uniquely positioned to solve this problem.
And that confidence won't just come from pedigree. Going to a fancy school or working at a brand-name tech company won't cut it.
Let's say your business helps musicians build a bigger audience. You should include in your pitch a few sentences about your experience as a musician.
This will show the investor that you deeply understand your customers' pain points. AND that you have connections within the music industry, which will help with customer acquisition.
Let's hit the next learning.
2. your co-founder relationship
Building a company is hard.
There are days and weeks where it feels like nothing is going right. There are nights and weekends when you don't see your family because you're grinding so hard.
Having a co-founder isn't essential... but it can help.
The thing is, co-founders often come with drama.
When co-founders don't work well together, a lot of stuff goes wrong.
They fight about the product roadmap. They disagree on which candidate to hire. They stop including the other in important meetings.
And this drama leads to even bigger problems.
Employees get tired of the in-fighting, and leave for a company with better culture. When employees leave, responsibilities go unfulfilled. Customers notice and stop renewing. Investors see all of this and decline to participate in future fundraising rounds.
So, it's important for investors to feel confident in the co-founder relationship.
They want to know that the co-founders can make decisions together, communicate openly, share the burden of work, and can disagree without tearing the company apart.
So when you're pitching the "team" portion of your company to an investor, show that you and your co-founder are a good fit.
- you worked together closely at your last company
- you put on an event together
- you're hackathon buddies
- you've shipped a product before
Something to prove to the investor that y'all can weather the storm together.
Learn More from Angel Squad Summit
If you want to hear the rest of Eric's 5-part framework, check out the recording from the event.
🔥Hot tip: fast forward to 17:25 to get to the good stuff.