7 Factors That Make Or Break A Six Figure Startup Pitch
We’re cofounders of a global incubator and seed fund, so this should come as no surprise: We listen to a lot of startup pitches. A lot. Whether we’re attending one of 1776’s own Startup Showcases or judging a Challenge Cup competition halfway around the world, we hear hundreds and hundreds of pitches each year.
Next week during Challenge Festival we’ll be hearing 80 pitches from startups that have a lot on the line—the chance to be named the global Challenge Cup winner and a shot at a share of $650,000 in capital. These are no ordinary startups; they’ve each already proven they can pitch by winning one of 16 regional Challenge Cup competitions around the world. So, in a field as intense as this one, what separates the Global Finalists from the rest of the pack? The answer can mean the difference between taking home a six-figure check and heading home empty handed.
To the untrained eye (or rather, ear), the results of a pitch competition also can often be hard to understand. Why is it that the startup that receives the loudest applause often doesn’t win?
The answer lies in what happens off-stage. Before the startups ever hit the pitching spotlight, the judges have been pouring over industry research, reviewing company traction, seeing demos, and holding private interviews with each company. The judges enter the competition armed with a host of information that the audience doesn’t have. Though we definitely consider audience enthusiasm for each company, we also know that we’re the ones—not the audience—who have $650,000 on the line.
Still, it’s possible to start thinking like a judge or investor when listening to rapid-fire pitches. Here are seven factors we’ll be looking for when we judge the four Challenge Festival industry semifinals, as well as the Global Finals, next week.
Since we are investors, our top priority is to identify which companies have the most potential to garner significant returns in the future. This means that, in the pitch, the startup should highlight how it is serving a big market and that it has a clear path to driving revenue and maximizing growth. In the end, we need to see how we will get venture scale returns from our investment
Potential to change the world
At 1776, we believe the term “world-changing” is more than just a buzzword. In fact, it’s the basis of everything we do—and a primary driving factor behind the startups we add to our portfolio. Startups’ pitches should focus on the core problem an entrepreneur is solving; we’re interested in the “pain point” a startup has identified, and we want to see how the company is truly going to innovate and disrupt a market, not just tinker around the margins.
It’s no good if a company has an amazing product and no one to use it. That’s why we specifically look for startups that have early traction—and lots of it. You’re going to hear us asking these questions: Has the company proven out their hypotheses? Have customers responded positively to the product? Do the data show that the company’s growth is trending upward? But the underlying question is simply is: Are people using—and paying to use—your product?
We want to know how a company is thinking about its business and if its team members can articulate what they’ve learned through the process so far. A strong founder has the ability to effectively utilize feedback from the market, advisors, and others. Then they use what the feedback they’ve synthesized to iterate on the product, or to pivot entirely if something isn’t working.
This also means we want to see entrepreneurs thinking critically about the teams that they’re building. Who’s advising the company? What critical role will be the next hire? Although one’s own experiences and the personal backgrounds of any of his or her cofounders are important, having the right team to surround them as the company grows means everything.
Execution and distribution
If all the preceding factors are solid, we then look at the company’s execution strategy—specifically in terms of who, what, why and how. Who is the target customer, what is the specific need a startup is solving, why does the customer see unique value in your solution and how will this company reach them on scale?
For example, an education technology company needs to be prepared to explain their target customer—is it overwhelmed teachers? Students in classrooms?—as well as their plan to reach the customer—is it through schools at the district or state level, or via individual teachers? The answers to these questions are a practical demonstration of how this company will win and how we will see returns on our investment.
The competitive advantage
Perhaps this goes without saying, but before we make an investment in a company, we want to know who else is out there. The first question is basic: Who—if anyone—offers a competitive product? And if so, why is this startup’s product unique—and better?
Of course, we’d love to hear that the startup in which we could invest offers a wildly superior product; in some cases, that’s even better than hearing that there are no competitors at all. For example, it’s great to hear that a startup has a truly novel idea—but it could be bad if that means other have failed at a similar business due to the lack of market.
Use of regulatory hacking
Lastly, we look at whether or not a startup is taking advantage of opportunities to “hack” its way to success. We call this concept “regulatory hacking,” and it means using an interesting market dynamic or regulatory policy to one’s advantage, in order to disrupt an entrenched industry. After all, many major corporations in regulated spaces actually benefit from the status quo—and they’re not going to react lightly when a startup comes in with a plan to change things. Thus, we’re looking to determine whether or not a startup’s team has a good strategy in place to navigate, circumvent or engage certain policies within its industry.
These seven factors influence our decision-making process as 1776 co-CEOs and as Challenge Festival judges. When we sit there in the front row, we’ll be thinking through all of these things during every pitch and during the judges’ conference afterward. The Global Finalists—and eventually the Global Winners—will be the ones with the best answers to the hardest questions.