Here is What VCs are Looking for in Your Startup Pitch

10 months ago . 3 min read
MG
Here is What VCs are Looking for in Your Startup Pitch
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As a venture capital and private equity investor, I’m often asked what I look for in a pitch. It’s not a fresh, innovative idea or business model. And it’s not a competitive advantage, a large market, or a capable team—those are all obviously important, but they’re not the thing I’m looking for.

From startups seeking a seed round in Jakarta to companies going public in New York, one truth is constant: investors are looking for the right story.

What do I mean by “story”? Joseph Campbell, the scholar most famous for writing The Hero with a Thousand Faces, studied the idea of a monomyth. Across myths and millennia, Campbell argued, humans have been drawn to the same kinds of stories with the same themes, archetypes, and personas. He called it The Hero’s Journey, or the structure that most every story we like follows.

A hero leaves behind his or her comfortable environment to embark on an adventure in an unusual and dangerous territory. There, the hero encounters enemies and overcomes a tremendous challenge, winning a prize that the takes back to the community—a prize that severs for the good of all.

Look for the Hero’s Journey and you’ll see it in Iron Man and Star Wars, Lord of the Rings and Harry Potter.

The same principle holds true for investment pitches as it does for movie scripts: there’s a structure to which people will respond. The details of each story—or pitch—will obviously differ, but this core structure, this Hero’s Journey, will remain the same.

I call the key points of this structure the Three P’s of Pitching:

- Place: Although the Place is tied to the country in which the company competes, it is not entirely or even necessarily a physical area. It is a market, likely a large one, but where the condition could be better. There’s a problem that hasn’t been solved. This is where the Hero finds themselves at the beginning of their journey.

Look at how ojeks were used before GO-JEK. The ojek market was, and is, huge. It’s used by many people every day. Founder Nadiem Makarim noticed that would-be ojek customers wasted time searching for drivers and drivers wasted time waiting for customers. The environment was functional, but far from ideal.

- Promise: The Promise is how the company will address the problem and transform the status quo. It’s the adventure part of the story. How are you going to improve the Place?

For GO-JEK, the Promise is a technology platform that would permanently and profitably erase the friction between ojek drivers and customers.

- Person: The Person is the animating force of the story—the team looking to create the positive change. The Person is the Hero of the journey. And, like any good hero, they should have the right background (i.e., credibility) to make us believe they’re capable of delivering on their promise.

Nadiem Makarim, GO-JEK’s founder, was a frequent user of ojeks and understood the market. Makarim also had the business and academic training from institutions like McKinsey and Harvard.

The Place, Promise, and Person are all discrete aspects of the story, but as with GO- JEK, they reinforce and amplify each other powerfully. They should be the pillars of your pitch.

The misconception is that investment pitches are simply about the numbers. But people use stories to understand the world—and investors are no different. We hear about incredible products or brilliant business models regularly. Great stories are much rarer— and more compelling.

Now, go out a be a hero.

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Matthew G. Badalucco

I am a Partner of Turret Capital, a healthcare-focused VC/PE fund. I am passionate about private market investing and have analyzed industries and transactions across Indonesia. I have developed my expertise by working at established investment firms and venture builders including Catcha Group, Citadel Investment Group, and Sandell Asset Management. I hold an A.B. with Honors from Dartmouth College, an M.B.A. from MIT, and an M.P.A. from Harvard University.


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