15 Nov Investors help start-up founders make better pitches
The judging was tough and honest at the Elevator Pitch Olympics at this year’s Wisconsin Early Stage Symposium, in which 16 entrepreneurs had a chance to pitch their companies to investors on stage and receive ratings and feedback.
Presentations in this competition are sharply cut off at 90 seconds and have to be tight to gain the attention of the judges — a panel of eight investors who evaluate how likely they would be to take a meeting or read the company’s business plan.
Bayland, with a process for recycling sludge from paper plants into building materials, and NxtMile, with a new design for running shoes for an aging population, gained the highest scores from the judges for taking a meeting and reading a plan, respectively. EarthMimic, with a new recycling technique for biological materials, was the audience choice.
Lack of clarity gained some of the biggest negatives from the judges, who were looking for the market need, potential customers, the kernel of a business plan, competitive advantage and financial basics to be packed into the presentation.
“If you hit all of the high points the investor is interested in looking at… that tells me we’ve got somebody who understands,” said Charlie Goff, general partner at NEW Capital Fund.
Even a presenter who gained accolades for articulating the market need and a technology to address it earned a critique from Robert Okabe, managing director of RPX Group in Chicago, who was familiar with the market and the domination of several large customers. He said the pitch did not address how a small emerging company could break in.
Other criticisms included emphasizing going after too many different markets, a franchise model without explaining why franchising was a good idea, and asking for investment dollars without mentioning what the investment would be used to do and how it would help the company grow.
“We like to hear ‘we need $250,000 to do X,'” Goff said. “Sometimes … it’s because they’re losing money.”
Tom Still, president of the Wisconsin Technology Council and moderator of the competition, likened the session to a Nascar race that some people watch to see the crashes – but here, in a light-hearted way in which the emphasis is on feedback and education for early stage companies looking to make their mark.
Perhaps the most unpredictable factor affecting the judges’ decisions was their personal experiences – a travel-planning-software company gained interest from a judge who had recently been frustrated booking a trip; a running-shoe company gained interest from runners. None of the contestants obviously appeared to target their presentations at specific judges.
And not only did companies have to make a tight presentation for all the judges, but a range of angel and venture investors with different investment strategies were represented.
John Neis represented Venture Investors, a type of firm that typically invests in deals worth several million dollars. He critiqued one investor for a plan based more on personal passion than financial upside, and another for asking for so little investment money that Neis didn’t know how it would help the company grow large enough to lead to a good return.
Other judges represented angel groups that might invest several hundred thousand to over a million dollars at a time, and may look at earlier-stage opportunities.
But all the judges are looking for core value propositions, including not only good product or service but also a good management team and strategy. “You’re selling us on the company. You’re not selling us on the product or service,” Okabe said.
Correction: The original version of this story misstated NxtMile’s business plan.
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