Every startup that intends on securing investors’ funding absolutely needs an elevator pitch. The ability to provide a compelling pitch and follow it up with a persuasive presentation separates funded entrepreneurs from their cash-poor counterparts. You never know when the perfect investment opportunity may present itself within an elevator, at a cocktail party or when meeting your friends’ acquaintances.
Less Is More
You want your elevator pitch to be short, simple and genuine as possible. Refrain from using technical buzzwords and including every detail about the product. In fact, you don’t really need to comment on the product during this stage. Your sole objective is to make listeners stop whatever they’re doing and say, “Tell me more.”
Here is a fine example of an elevator pitch for a product within the electric vehicle business: “The electric vehicle industry is similar to the automobile industry in 1898. We’re on the edge of a significant transformation. If you think electric vehicles will have a considerable share of the truck industry in the next decade, we plan to be standing at the correct side of that fault zone. The heart of these vehicles are going to be a propulsion system and powertrain controller. Our company has designed, built and installed them. Every electric truck is going to require a product similar to ours. Do you have time, now or at a later date, to discuss this technology further?”
If the investor takes your bait and decides to hear more, you need a well-written business plan or executive summary to substantiate your claims. The best elevator speech will never result in your business acquiring funding, unless you can also provide a believable and analytical executive summary detailing how an investment in your startup will make your investors rich. Draft a coherent, persuasive business plan or executive summary that, at the very least, outlines:
- The problem your firm addresses
- The scope of the market your firm operates within
- Your startup’s competitive advantage
- Realistic financial projections
- Description of your team
- Exit strategies
Investors’ Exit Strategy
An exit strategy for investors is probably the single most important portion of most business plans. Entrepreneurs tend to have an array of motivations regarding their individual businesses, from making the world a better place to bestowing a legacy that will take care of their children. Investors focus on how they can make the most amount of money within an immediate to moderate time frame, usually between three to seven years. Prepare to answer investors’ questions regarding them getting their money – and then some – out of your business. Consider how to monetize your startup in the future through a larger company’s acquisition of your firm or licensing agreements, not just a scenario in which your firm undergoes an initial public offering.