Artificial intelligence (AI) is now most probably among the trendiest tech niches out there. This implies that there are many bright tech enthusiasts out there with very bright ideas trying to persuade Venture Capitalists to fund their businesses. That, however, may prove to be among the most complicated tasks, aside from all the coding and programming.
Writing a winning pitch is time-consuming and demands an in-depth understanding of the psychology of a potential investor. It’s worth underlining that only 0.05% of startups actually get funded by VCs.
So what are the essential components of a powerful pitch for an AI startup to help you increase your chances of being considered?
Yes, giving your pitch a proper structure is an important task, but there are other vital things we wanted to share with you. We want to focus on the little tips and tricks you can take advantage of during your pitch.
Michael Dolbec, the Senior Managing Director of GE Ventures, once said: “We fund valuable outcomes, not science projects.” Your main goal is to convince your potential investors that your business will bring value to the world. To do that, you need heavy artillery.
Humans are social animals. The way we act is deeply rooted in this feature. We create bonds with other people we don’t know on a regular basis because our brains are fine-tuned to relate to our peers. Deep inside, we know that there is wisdom we can extract from another person’s accounts. This is why we are so passionate about movies and novels — we identify with the protagonists.
This isn’t just mere speculation, however, stories do have a remarkable effect on the human mind. According to a study by hbr published in 2013, intriguing narratives have shown to elevate oxytocin levels in the human body, which is an essential feel-good hormone. Typically, oxytocin levels will increase after pleasant social interactions, such as handshakes, pats on the back, cuddles, and so on.
Consider structuring your startup pitch as a story. This will allow you to sound more convincing and relatable — qualities that are absolutely imperative when it comes to being persuasive.
Remember Michael Dolbec’s quote about funding valuable outcomes? Let’s try to zoom into that. While many investors are interested in things like sustainability and ethics, it’s safe to assume that most are interested in the value that your product can provide to the end-user, which can then be quantified in handsome returns.
Your pitch should place emphasis on a set of fundamental ideas:
· You understand the market, the clientele, and their needs;
· You have the necessary means to reach out to your clientele and market your products/services;
· Your products/services provide your clientele with value;
· You have what it takes to change the Status Quo;
“While your pitch will, at the end of the day, revolve around data and analytics, these aspects pertaining to the value you provide are the crux of your presentation.” — Jonathan Norwood, BA at Pick The Writer.
There are many investors that place a lot of value on a strong team and consider it the central factor in their decision whether or not to fund the business. When working on your Team section of the pitch, consider focusing on the following aspects:
· Use actual photos of your team members — this will allow you to make your company relatable and approachable;
· Indicate each team member’s title, qualifications, and position in the startup;
· Indicate your team’s prior experience that is relevant to the project at hand;
· Don’t hesitate to include the advisors and the consultants that have guided you through the project;
It’s essential also to consider that investors aren’t that impressed with a homogenous team of tech specialists with royal pedigrees, especially if your team lacks seasoned marketing or sales professionals.
The reason is simple — more diverse teams are much more likely to overcome all the challenges associated with growing and scaling the company. While building a great AI-based product is by no means an easy task, it isn’t worth much if it can’t be properly monetized.
This is territory that needs to be trodden carefully, you’re entering the investor’s world, and you’re about to start speaking their language. Therefore, it’s essential to have your numbers in check. This part of your presentation is dedicated almost exclusively to showing your potential investors that there’s an excellent opportunity for a huge return.
Make sure that your numbers come from multiple and reputable sources. More importantly, underline the size of your market and its projected growth over time. Focus on the size of their potential return based on the explosive growth that the Artificial intelligence sector is going to experience.
Another essential aspect of your outline of the market is that investors often expect you to be a niche or segment leader, which implies that you own the lion’s share of the market. To do that, it’s essential also to emphasize the durability and longevity of your income stream.
You’ve talked about your team’s past, you’ve talked about its present, you have to touch on the future as well. As we mentioned previously, it’s essential to provide your potential investors with the projected growth of your startup over time, but also how the company will have to change over time in order to dominate the market. Provide them with a detailed description of the milestones associated with these changes.
This complex and complete timeline will provide your investors with a cohesive image of the business’s and the product’s evolution. In effect, this will result in a much more persuasive presentation, convincing investors that this is a coherent and viable plan.
To make your plan even more persuasive, it’s always a good idea to have some precise dates when certain milestones are due. Be explicit about the nature of the benchmarks too. This will allow making the progression of the business more intelligible for the investor, especially if they aren’t all that versed in the field.
There are many critical things that need to be covered during an AI startup pitch, but at the end of the day, there’s a set of questions that you need to answer if you want to go the extra mile. Here are a few of them:
1. Is AI really at the core of your product’s value?
2. Do you have a reliable, proprietary data source that is also scalable?
3. Has your team built any actual technology?
4. Can your product be considered sticky?
If the answer to all the questions is affirmative, it’s essential to underline that to your potential investors.
An excellent pitch will most certainly maximize your chances of getting funded. However, it’s essential to make it enticing and persuasive. To do that, you need to understand what investors are expecting of you and your business.
It’s important to underline that even if you don’t get funded from the first time, you’ll amass valuable experience worth millions of dollars that you can then apply again and again until you succeed.
Here’s a short recap:
· Tap into storytelling. It makes people relate.
· Focus on value. It’s what matters to investors.
· Your team matters a lot. However, don’t focus too much on technology and also underline your team’s qualifications in marketing and sales.
· Provide an in-depth analysis of your market and your place in it.
· Give a detailed description of your growth over time.
Credits — Helene Cue
Helene Cue is a passionate writer and editor who explores a broad spectrum of topics that revolve around marketing and tech. She currently works as an in-house writer at Supreme Dissertations. Her pieces are always captivating and informative.