Co-written with Steven Bussard
Capturing an investor's interest and evoking his passion for one's venture is crucial to securing funding. So, how might startups improve their pitches to investors by using insights from using classical tried and true storytelling?
Studies at Copenhagen Business School show that the design of a pitch can significantly improve the probability of obtaining funding and Hollywood screenwriters are real experts in turning rough ideas into vivid entertainment.
The best-known template for pitching startups is from "Art of The Start," by Guy Kawasaki. Guy outlines the following ten components for a good investor pitch:
4. Underlying Magic
5. Business Model
6. Marketing and Sales
8. Management Team
9. Financial Projections and Key Metrics
10. Current Status, Accomplishments to Date, Timeline, and Use of Funds
The Origin Story and "Vision Story." are two types of especially useful stories for creating a cohesive narrative when pitching to investors.
The Origin Story
Origin Stories describe the creation of superheroes and organizations. From the Wright Brothers bicycle shop or Steve Jobs and Steve Wozniak creating Apple in a small garage in Los Altos, California, people are endlessly fascinated by how big things got started.
In its most stripped-down version, a story consists of characters with a dilemma, which must find a solution. In Guy Kawasaki's steps shown above, the Problem and Solution steps are tailor-made for origin stories. You can quickly capture the interest of venture capitalists by describing your Problem and Solution as an Origin Story.
1. Kick off your story by describing a real-life problem that caught the attention of the key founder.
2. What was the founder's first challenge, and how was it met?
3. How did the original team come together? College roommates? Through an exhaustive search process or a chance encounter?
4. What were the next challenges, and how were they overcome? In this section of the story, introduce key team members, showing how they contributed to solutions. Use micro-stories to highlight each member's passion and unique ability to solve a particular problem. Demonstrate the strength of the team and how its members work well together, with enough fire in their bellies to overcome all obstacles.
5. Finish your origin story by showing that your team developed a working prototype or detailed design proving a reasonable solution for the original problem.
The rest of the presentation (Steps 4 through 10) describes how you plan to build that basic solution into a profitable company.
A vision story is a brief description of your product or service providing value in years to come. John F. Kennedy's 'Moon Speech,' rallied a nation to put a man on the moon. By Step 10, you will have presented hard evidence and well-considered plans.
Now take a moment to describe a personal vision of how your company's new product or service will make the future better, or, as Steve Jobs said: "Make a dent in the universe." Recall your Origin Story and how a specific event motivated your founder to look for a solution. In your "vision" of the future, see that type of problem occurring again, only this time your product is there to save the day.
A movie is never better than the quality of the story and the story needs substance, or what remains will not be an Oscar winner. A great venture opportunity presented with a lackluster story will lose an investor's attention in ten seconds or less and the game is over. Therefore, go the extra mile and apply the storytelling techniques that have been honed over thousands of years and more recently in movie theaters and on YouTube to put your best foot forward.
Special thanks to Steven Bussard for co-writing and researching this article