Most presentations are designed to persuade funders to invest in the startup. This is why most of them are quite predictable and boring. This is also one of the reasons why founders find it so hard to raise money – all the pitch decks start looking the same, and they put the poor investor to sleep. The founders don’t take the trouble to differentiate themselves from all the other startups who are pitching for the same limited funds from investors who have a limited attention span.
While most startup pitches will have a slide which talks about their weaknesses and threats as part of their SWOT analysis; as well as one about the risks, and how they will mitigate them, a really smart founder could use a completely different way of pitching.
The Anti-Pitch
He should use what I call the anti-pitch – which is a slide deck about all the reasons why the investor shouldn’t be giving you money.
Now, this may sound counter-intuitive, but the truth is that any time you pitch to someone, you always encounter resistance. The first thing the investor thinks of is: “How and why should I say no?” His default option is no, because it is much easier for him to say no, and this is usually what he will do 99% of the time.
By starting off on a different foot, you are reducing his resistance by disarming him with your frank and forthright approach. By exposing your weaknesses upfront, you are increasing your chances because you are differentiating yourself from all the other pitches which he has heard. If nothing else, your unconventional approach will intrigue him, so he is much more likely to start paying attention to what you have to say – and this is half the battle won, because you have now got him to engage with you.
Highlight why your company may fail; what can go wrong? What problems are you likely to encounter as you grow? Can you do a pre -mortem for why your company may go belly up? What don’t you know as yet, and how do you propose to use the funding intelligently to find out what the unknowns are?
Investors are problem solvers, and if you let them know what the gaps in your business model are, they will actually be happy to help you fill them. This is a great way of getting them on your side, and they are much more likely to be favourably inclined, because now they have a sense that they will be able to contribute to your success. Rather than their using their intelligence to finding holes in your thinking, this tactic can help you to tap into their expertise to strengthen your business plan!
This approach also shows that you are coachable and are willing to listen to inputs.
Why Investors Will Love The Anti-Pitch
Are you worried that if you point out your flaws, this will turn investors away? Please don’t underestimate how smart funders are. These are the same objections and questions he’s going to ask in any case, so why not present them up front?
The risk of failure is the elephant in the room, so it’s best to address it and get it out of the way.
A thoughtful investor will actually be impressed that you’ve thought about the possibility of failure, and are thinking proactively about what you can do to reduce that risk.
After all, the best way of succeeding is preparing for failure, and then taking all the steps you can to make sure that you don’t fail. This is the classic invert strategy that Charlie Munger loves: “Tell me where I’m going to die, so I won’t go there.”
Instead of figuring out what we should do in order to succeed, it’s sometimes easier to avoid failure, so that we end up reaching our goal. You need to zig in order to zag!
[This post by Dr. Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]
