Guest Post: Pitching to Investors: A Lean Startup Perspective

(Andy Cars, founder of Seedcap and Lean Ventures, helps startups with strategy, business development, lean startup and fundraising, and large companies create and execute on their innovation strategies. If he’s not busy helping startups and enterprises, you can probably find him on Twitter and LinkedIn.)

Much has been written on how to pitch to investors. There’s also plenty of resources available on Lean Startup. But how about pitching to investors from a Lean Startup perspective? Perhaps not so much.

Lean Startup is both a method and a mindset. If you are a Lean Startup practitioner it makes sense that your Lean Startup mindset should also to some extent carry over, or at least be noticeable, when you pitch to investors.

So what do I mean by this? Essentially, Lean Startup is about learning and not pitching. It’s about designing and running experiments, measuring data (both qualitative and quantitative) and using that as an input when deciding your next move. What you try to avoid is listening too much to your gut, or the HIPPO (Highest Paid Person’s Opinon) and then hope for the best.

Screen Shot 2015-10-20 at 5.49.36 PM

When you ask an investor “what is the most important to you when you invest”, the answer almost always comes back as “the team”. We’ve all heard the old saying:

“I’d rather invest in an A-class team with a B-class idea, rather than a B-class team with an A-class idea”.

 

a class vs b class startup teams lean startup

Photo by ChrisL_AK

But what does this actually mean? Many would say that the team has to have “relevant experience” and that it’s good if they have “worked together before”. Others will also add “integrity”, “coachability” and “high EQ” as important factors. Still others think “stubbornness” is the most important.

I too am an investor. Too me the most important aspect for choosing the right team in an early stage venture where uncertainty is extremely high, is their validated ability of applying Lean Startup and leveraging the technology that is out their to do pretotyping and data analytics.

Rather than the team pitching me their 5-year excel projections and perfectly chiseled plan, I want to hear about the last messy experiments that they’ve run and their lessons learnt. How do they go about designing their experiments and how do they measure data? Spare me the 10 minute pitch about the rosy colored long-term vision of the future. Show me the little facts you have and how you go about building your business on a day-to-day basis. What has been your focus? What have you learnt? What will be your next experiment?

And that’s what this video is about: Pitching to investors from a Lean Startup perspective.

Hope you enjoy it and looking forward to hearing your comments.

Everything is an experiment.

4 comments

  1. JanL says:

    Great video by Andy! Recommended video to learn some of the principals of Lean Startup. Lean Startup is a mindset which should be at the center of every new product or service. Learn from experimentation and fail often.

  2. Diego Jm says:

    Really interesting video!

    It’s difficult to find good advice when you want to pitch investors and it’s easy to fall in most of the traps that are analyzed in the video.

    I really like the actionable advice that he proposes to avoid this traps so you can build a much more compelling pitch for investors.

  3. Fran says:

    Thanks for the article. Wow.. Great tips. I completely agree as the last few months for us was a massive learning curve. It’s really about testing the marketing and adjusting our practices to match those that have been proven which so far meant that we have to think and act quickly. Our product is becoming more market ready and we are ready for the next set of challenges.

  4. Great article and thanks for sharing the video. Really love how he breaks it down so simply. It’s essential to get the message across in a simple yet compelling fashion and he definitely practices what he preaches.

    Thanks for posting!

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