How to Sell Your Startup to a VC: “Maslow’s Hierarchy of Pitching”
Over 50% of the startup pitches I hear are set up to fail, but by making one simple change, they could be set up to succeed. Almost a year ago, I wrote the “7 Dos and Don’ts of Pitching Your Startup to a VC”, but this advice is premature unless you first put your pitching goals in the right sequence. Think about the process of getting a VC over the finish line as working your way up a hierarchy of needs.
Maslow’s original Hierarchy of Needs is a model of human motivations where people first act to fulfill their basic physical needs, like food and shelter. Once those needs are satisfied, they take on higher-order motivations such as prestige and accomplishment. What’s absolutely critical here is that needs at a lower level must be completely satisfied before moving on to a higher level.
I believe there is a similar hierarchy of needs for a startup pitch, and if founders don’t nail the basics, VCs won’t pay attention to their loftiest ambitions. This hierarchy of pitching is informed by the pitches I’ve made while running a startup and later raising capital for Ubiquity Ventures as well as the thousands of pitches I’ve received as a VC investor. I now believe that there is a strict Hierarchy of Needs that a founder must satisfy in sequence to see the successful outcome of investment and partnership.
1) Shared space — Come together in person or via video conference.
- Fulfill: Be on time (set up and ready to start talking at the scheduled start time). Test out your presentation tech whether trying your HDMI dongle to plug in or starting the Zoom with the link in the calendar invite. Have your pitch deck and demo videos already open. Ensure your co-founders have already arrived.
- Neglect: Arriving late due to getting lost (physical) or needing to install Zoom (digital), technical issues with plugging in to a conference room/laptop battery dying/finding the right version of your deck, waiting on co-founders, etc. This is the foundational level so issues here ruin the rest of your meeting. This need may sound remedial but over 25% of pitches neglect some part of it.
2) Basic understanding — What is your product or service?
- Fulfill: Communicate your product’s features and impact in simple words, avoiding business jargon or high-level framing. For example, “We’re building an app to help construction teams complete their construction projects more quickly.” Communicate the small, immediate-term vision without worrying if an idea is too small. Save for later the broader vision which is part of a higher level need.
- Neglect: Using too many of these words: synergy, collaboration, platform, etc. Trying so hard to communicate a huge idea that your audience doesn’t know what your product actually is today. All too often, this is where most pitches end up.
3) Excitement — Are customers or experts saying “wow“? What signals convince you this is going to work?
- Fulfill: Identify a specific customer category and persona. Communicate both the logic of why your product ought to help a typical customer as well as real quotes/excitement from a real customer/prospect that you’ve interacted with. Communicate your own connection to and passion for this problem area.
4) Greed — How do you measure success and how fast will you reach it?
- Fulfill: Explain a simple framework for the metrics relevant to your startup (e.g. users, ad views, monthly subscribers, API calls) as well as the more common metrics of revenue, gross margin, and profit. Communicate both a near-term, highly-specific, bottoms-up plan as well as a longer-term, less-specific, top-down plan.
- Neglect: Eroding credibility with math mistakes, poor labels (having to read/decode “239422” is not as fulfilling as “$239K”), including artificial precision ($24.96 billion in 2028).
5) Dreamy future — Inspire a mutual vision for the future of the product or service. This leads to investment and partnership.
- Fulfill: Communicate your longer-term product roadmap. Hint at some crazy ways that you could grow 10x or 100x larger. Reinforce that your team is extremely uniquely qualified to dominate this sector.
Starting with the most basic need of “shared space,” it is essential that you fulfill each need one after the other, as this will create a strong foundation from which you and a VC can come to a place of mutual understanding. Don’t start with a 15-minute monologue about your background without a shared understanding of your product first! Put in the work to make VCs care about your startup and win them over by methodically ascending Sunil’s Hierarchy of Pitching.
Are you a founder of a seed-stage startup in the smart hardware or machine learning sectors? Let’s talk! Leave a comment or get in touch with Ubiquity Ventures.
Ubiquity Ventures — led by Sunil Nagaraj — is a seed-stage venture capital firm focusing on early-stage investments in software beyond the screen, primarily smart hardware and machine intelligence applications.