Pitching a startup to potential investors is widely regarded as one of the most challenging tasks for any founder. The recent conclusion of another successful Demo Day at Y Combinator, where over 200 companies were guided in refining their pitches, underscores the universal dread yet critical importance of this process in a startup’s journey. This article distills key insights and practical tips gleaned from Y Combinator’s extensive experience to help founders excel in pitching, particularly those who are pre-product market fit.

1. Be Concise and Easy to Understand

The cardinal rule of pitching is clarity. If an investor doesn’t grasp what your company does, they won’t fund you. Your pitch should be devoid of jargon and buzzwords, focusing instead on straightforward language that anyone can comprehend. This is not about dulling down your message, but about making it accessible. For example, when pitching Airbnb, one could say:

• “Airbnb lets any home or apartment owner rent out their property online.”
• “We collect the payment online and take a 15% fee for every booking.”

Pair this with a tangible example:

“Imagine you are a waiter in Washington D.C. during the 2009 Obama inauguration, with every hotel room booked. You could earn $3,000 by renting out your apartment on Airbnb, covering your rent for the next few months.”

This example is specific and relatable, making it memorable and clear. The specificity allows the investor to visualize the scenario and understand the value proposition without any ambiguity. It’s critical to strip your pitch down to its core essence: what you do, who benefits, and how it works.

2. The Importance of Your Team

Investors want to know who they are backing. Your team slide should highlight key members, their roles, and their significant achievements. Avoid long-winded stories; instead, focus on concise, impactful points. If your team includes someone who has worked on the Mars Rover, mention it directly:

“Our CTO developed software for the Mars Rover at JPL.”

Linking your personal experience with the problem your startup solves can further establish your credibility. This shows that your team has not only the technical skills but also a deep understanding of the problem space. When discussing your team, ensure to cover:

• Roles and responsibilities: Clearly define who does what.
• Relevant experience: Highlight past accomplishments and why they matter.
• Personal connection to the problem: If your team has a personal stake or unique insight into the problem, make this known.

Your goal is to instill confidence in the investor that your team is uniquely qualified to execute on this vision.

3. Demonstrating Traction

Traction shows progress and potential. It’s not just about revenue or user numbers; it’s about demonstrating momentum and efficiency. A common mistake is showing weak or irrelevant traction. If you’re pre-launch, focus on significant milestones you’ve achieved:

“We built an iOS app and within one month, it’s in the hands of 100 beta testers.”

Avoid fake traction like advisor surveys, and if you have no real traction yet, it’s better to omit this slide than to include weak evidence. Instead, focus on what you have achieved and why it’s impressive:

• Early milestones: Even small wins can be significant if they demonstrate progress.
• User feedback: Positive feedback from early users or beta testers can be a powerful indicator of potential.
• Development progress: Highlighting the speed and efficiency with which you’ve moved from concept to prototype can impress investors.

If you lack traction, be honest about it and shift the focus to your team and unique insights.

4. Articulating Unique Insights

Unique insights are what set you apart. They demonstrate your deep understanding of the market, the problem, and your innovative approach to solving it. For Airbnb, a key insight was the necessity of processing payments to build trust between hosts and guests. Your insights should be specific, backed by data or real-world examples, and genuinely non-obvious.

When articulating your unique insights, consider the following:

• Why now? Explain why the market is ripe for your solution.
• Non-obvious learnings: Share insights that are not immediately apparent to others but crucial to your business model.
• Supporting data: Use data points to validate your insights and make them more compelling.

For example, “We discovered that processing payments ourselves increases trust and transaction completion rates by 30%,” is far more impactful than a vague statement about improving trust.

5. Calculating Market Size

Market size calculations are not just about big numbers but about demonstrating your expertise in the field. A bottoms-up approach, explaining how many potential users there are, how much you can charge them, and why, is far more compelling than quoting general industry reports. Comparisons to existing products can help contextualize your figures.

Here’s how to approach market size:

• Bottoms-up calculation: Start with the number of potential customers and multiply by the amount they will spend.
• Comparable products: Reference similar products to justify your assumptions.
• Market dynamics: Explain any trends or shifts in the market that make your solution particularly relevant now.

For example, instead of saying, “The market for online rentals is $100 billion,” say, “There are 1 million rental properties in the US, and we estimate capturing 5% of this market, with an average annual revenue per property of $1,000.”

6. Making the Ask

Always ask for the money directly and clearly. Surprisingly, many founders forget this crucial step. Outline exactly how much you need, what milestones you plan to achieve with the funds, and how this will drive your company’s growth. Avoid focusing on hiring specifics; instead, link your ask to tangible goals like revenue or user acquisition milestones.

Your ask should include:

• Amount needed: Be specific about how much funding you require.
• Use of funds: Explain how the money will be used (e.g., product development, marketing, scaling operations).
• Milestones: Clearly outline what you aim to achieve with the funds within a specific timeframe.

For instance, “We are raising $1 million to expand our engineering team, launch our beta product, and reach 10,000 active users within 12 months.”

7. Engaging Presentation Style

Your pitch should not feel like a monologue. Engage with your audience, encourage interaction, and be prepared to adapt based on their reactions. The more an investor talks, the more they convince themselves of your idea. Use simple, non-distracting slides to keep the focus on your narrative and not on the visuals.

Here’s how to keep your presentation engaging:

• Interactive elements: Encourage questions and dialogue throughout the presentation.
• Visual simplicity: Use clean, minimal slides that complement your spoken words rather than distract.
• Adaptability: Be ready to pivot your presentation based on the investor’s interests and feedback.

For example, if an investor shows interest in your market analysis, dive deeper into that section and engage them in a discussion.

Conclusion

Pitching is both an art and a science. It requires a balance of clear communication, strategic storytelling, and direct engagement. By focusing on these key elements, you can craft a compelling pitch that resonates with investors and significantly improves your chances of securing funding. Remember, clarity and simplicity often win over complexity and flair.