This is the second of many articles in this series, you can read first part here.
I once had a food startup pitch to me. The pain-point, they said, was that people weren’t being able to get food at home seamlessly, to solve which they were creating a platform to aggregate restaurants online. Seems legit? Not really. PainPoints Everywhere.
This seems trivial, but the level of specificity with which the problem and your solution is communicated to me is critical to a good pitch. The clarity helps me quickly evaluate your business model with the right lens and ask you relevant questions. The last thing you want is me thinking you’re trying to create an everyday meal service while what you’re really doing is aggregating gourmet restaurants. It also tells me how smartly, and the level of detail in which, you’ve thought about the problem.
Do’s
Start off with stating explicitly the exact problem in 1 or 2 simple sentences
Keep this simple. I personally recommend what I call the Disruption Component Analysis or DCA approach for identifying and communicating the pain point. DCA is simple – write down each step of the process and then all the things that could go wrong i.e. pain-points at each step, along with why they exist. Your solution will then match to one or more of these pain-points. It’s best to lay this out on a slide in the form of a process flow.
Follow up by explaining where you/someone you know felt the key pain-point(s)
The inspiration for you to solve this problem is important for me. A (short) anecdote here is helpful. This helps me connect with the problem better as I may have experienced something similar. This is also particularly important as it helps me visualize a problem I might not have faced ever.
Tell me how this is a large enough pain-point
Market size, is probably one of the most important factors in deciding the feasibility of investment. This is probably because market size can hugely limit or expand a VC’s returns. Recognize this and talk about the market size. However, please be cognizant of the relevant, addressable market size eg. If you’re trying to create a marketplace for gourmet food, don’t tell me the market size of then entire Indian food industry.
Finally, tell me the businesses adjacent to yours
A quick line to acknowledge, yet differentiate yourself from, competition is advisable upfront. As soon as I hear a pain-point, I immediately start thinking of business models trying to solve adjacent problems. Now it’s not advisable to get into competition this early on in your pitch. But, I saw one entrepreneur handle this very well. He proactively anticipated this and said “I know what you’re thinking – that X and Y do something very similar but while X focuses on solving A and Y on B, I focus solely on C. Let’s go deeper into that later on though” X, Y being adjacent businesses and A, B and C being pain-points he had identified very clearly early on.
Don’ts
- Make blanket statements like “Food delivery is a problem for everyone” or “It is almost impossible to get a cab today” without specifying why.
- Spend more than 2 minutes on the anecdote – like I mentioned for the introduction – I will appreciate it but this will eat into your precious pitch time.
- Overstate the market size by including the size of adjacent pain-points not core to your model.
- Get into competitive analysis immediately – just stick to the one line.
Best Practice
I recommend creating a process flow using DCA on a slide and then pointing out the exact problem statement using that as an anchor slide. In case of new processes being created, use adjacent processes to show the need for this new process.
Recommended time
For a 60 minute pitch I’d allocate 5-7 minutes for communicating the pain point which should include your anecdote and any follow up questions. I’d recommend another 3-5 minutes for walking me through the market size.
This is the second of many articles in this series. For complete series watch this space.
[Disclaimer: The thoughts and opinions expressed herein belong to the author and do not necessarily reflect those of Bessemer Venture Partners or any of its affiliates (“Bessemer”) or any other organization the author may be linked with. Specifically, the material here is written on the author’s own time for his own reasons and Bessemer has not reviewed or approved the information herein. Any discussion of topics related to Bessemer or its investment activities should not be construed as an official comment of Bessemer.]
