Lessons From The ygap Boardroom Pitch

Last week I was on the judging panel for the ygap First Gens 2020/21 Boardroom Pitch.
Nine ventures pitched their businesses, looking for their part of a $25,000 funding pool.
All nine businesses presented well, and there’s a lot to like about each venture.
Since the pitches totalled six hours plus deliberation time, there was a lot to take in and a lot to learn about how to pitch for investment.
These aren’t criticisms, if anything they’re reflective of what the businesses did well.
Here are a collection of observations and insights…

Exit Strategies / Transition Planning
If you run a social enterprise that aims to support a particular community or demographic, and you yourself are not a member of that particular group, you’ll need to come up with a good answer when you’re inevitably asked about transition planning.
I know several great entrepreneurs in this category, who started something to fill a void, but who probably aren’t the face of the business in the future.
This might mean outlining an exit strategy, or the transition to a small group of leaders that include representatives from this particular community.
The earlier you front-foot it, the better.

Replication vs Tailoring
If you run a business that is largely dependent on you or your local circumstances, the big question your investors will ask is “How do you see this growing?”.
It’s not a trap per se, but you have several options and not all of them will work.
Do you want to replicate like a franchise?
Do you want to control the next site?
Do you want to create a slightly different brand to suit the next market?
Do you want to set up different systems to replace what you bring to the business?
Do you want to work with a partner to roll out through their channels?
Again, the earlier you explain your choice and rationale, the easier it is to support your growth plans.

Unit Impact Model & Broad Total Impact
Clever social enterprises can talk about their outcomes/impact in two ways: micro and macro.
The micro is how one customer takes one action and makes one small dent.
We can describe this through a unit impact model, any visual that explains this process for the customer, end user and beneficiary.
e.g. “For every ebook sold, we will plant one tree”.
The macro is how the business as a whole creates change.
We can describe this through broad impact metrics and our Theory of Change.
e.g. “In the past three years we have been able to provide one million meals to people in need”.
This is the equivalent of how an investor understands your profitability: first by understanding how much margin you make from a sale, then estimates the number of sales you can reasonably expect in the next few years.
These take time to create, but they should give you interesting stories and persuasive figures.
If they don’t, perhaps it’s a sign that you’re looking for a better impact model?

Monetising IP: Dollars, Defense, Credibility
Whenever a founder wants to spend money creating or capturing Intellectual Property (IP) as an asset, three questions immediately arise:
1. How much does this cost to create and how much will it be worth?
2. Can this IP be defended? How easily can someone re-create it from scratch?
3. Is this IP valuable in the eyes of the founder, or the eyes of the market?
An investor is offering you money that can be used to buy/create assets.
IP can be an asset under some circumstances, but it can also become worthless or discarded if managed the wrong way.
The presenter’s job is to make the IP look valuable and defensible, while also avoiding unrealistic claims.

Freemium Models
We’ve seen examples of how Freemium models work, and there are more options than you might think.
Freemium can be a great place to start, since it invites users without scaring them off with a paywall.
Here’s my only thing: companies who use Freemium well are OBSESSED with their conversion rates.
iCloud is free, but they harass you several times a day once you use up your allocation.
Spotify is free, but their ads are deliberately annoying and unceasing.
LinkedIn is free, but they try really hard to nudge you into premium features.
Your business lives or dies by its revenue streams, so while a quality product is good, it needs to be paired with a really effective mechanism for turning free into premium.

Financial Graphs In Presentations
My rule for financial graphs in presentations is the same as my rule for using videos:
If you’re going to do it, you’d better nail it, or else you’ve created a distraction that takes away from your core message.
“Nailing it” comes back to three things.
Firstly, it should make a persuasive point about the health and direction of your numbers.
Secondly, it should be a point that can’t be made with words.
Thirdly, it should be visually arranged so that the audience’s gaze goes to the right numbers in the right order, without getting lost or misled.

Choose Your Analogies Wisely
Venture Capitalists are sick of elevator pitches that describe a new business as “The Uber of…” or “The Airbnb of…” or “The Tinder of…”, which have become cliches.
I am not a VC and am not quite as tired, but my concern is that a poor choice of analogy sends the audience down a potentially unhelpful path.
Calling yourself “The Tinder of…” evokes the idea of strangers swiping left and right on other people, flirting, sending photos and having short term relationships.
Perhaps that’s perfect.
Or perhaps that’s not actually your model at all, perhaps you’re more like Bumble or Hinge or eHarmony.
Each of these are slightly different from each other, and there’s room in the market for all four.
I’d also suggest looking at how your analogy chooses to make money – is it through the same revenue streams you intend to use?
Often the parts of the model that are familiar aren’t the ones that made those companies valuable.
i.e. anyone can build a platform like Airbnb’s, but it’s their design, policies, growth hacks and reputation that made them successful.
Feel free to mix and match, but then explain it in your pitch.

Workshop Pricing
A lot of people are surprised to learn about the financial maths of running workshops.
New businesses assume that the aim is to be cheap, and price themselves low in all of their forecasts.
I’d encourage you to ask two questions of your target market:
1. Are they looking for a great workshop or a cheap workshop?
2. How much do other people charge in this field for a great workshop?
As a sole trader, you might be thrilled to charge $400 for a half-day workshop, especially in the early days.
As a business, this $400 workshop will almost definitely lose you money.

This naturally leads to two dilemmas:
1. Are your early adopters the same as your long term market?
2. Are you uncomfortable about charging market prices as a social enterprise?
Both tough questions, but incredibly lucrative once you make up your mind.

Make It Easy For People To Say “Yes” To You
Maybe this is just me, but at every pitch event I’m invited to, I want every person who steps on stage to do well.
I want to like them.
I want to like their business.
I want to find things to praise, and find excuses to introduce them to others in my network.
The question for the presenter becomes “How can I make it easy for you to say ‘Yes’ to me?
This changes how you structure your story.
You’ll want to understand the criteria, bring in all the data points the judges need to understand, then arrange
them in the order that makes the most sense.
This isn’t TED, you don’t need a “big reveal” or a punchline.
The startups that win cash prizes are not the ones with the best backstory, they’re the ones that we can say ‘Yes’ to, and we can’t do that if you omit vital parts of the model.

Product/Brand Names
I reckon there are three types of product or brand names.
1. Excellent names that are clear, catchy or clever.
e.g. Nespresso, LinkedIn, Puma, Ultraboost, The Boring Company, Tiffany, Strategyzer, Hello Sailor, or the TV station called Dave.

2. Basic shell names that are neutral, which you bring to life through your brand work.
e.g. Uber, Apple, Michael Kors, Amazon, Spotify, Tesla, a lot of the popular tech companies.

3. Terrible names that annoy the reader or which undermine your credibility.
I feel bad giving examples here, but small businesses are notorious for it.
Samsung’s Bixby and HP’s Sprocket come to mind, as does anything that’s really close to an unfortunate word, or a normal word that you’ve made hard to spell.

Yes it’s subjective, but I bet you’ve seen it for yourself.
Generally speaking, most of the bad ones come about by trying to make an excellent one, which is harder than people think.
My advice is to either work with a branding agency, or pick a nice neutral one and then work hard on making the name stand for something.

Market Share Explanations
Literally everyone can claim that they conservatively estimate they’ll win 1% market share.
This is still ridiculously hard to do.
Just because 1% sounds small and you used the word conservative doesn’t make it a foregone conclusion.
Instead, break down what the business will need to look like to make this possible.
e.g. To get 1% market share, we’d be operating in three locations, serving 600 clients per month per site.
At least now we can picture what 1% looks like, and we can compare that with the quality of your Value Proposition and Key Resources.
It’s not that I don’t believe you, it’s that I don’t have enough evidence to be able to believe you yet.

The Good Reason and Real Reason
To paraphrase JP Morgan; behind every decision are two reasons.
The good one and the real one.
At the risk of sounding cynical, this is particularly true for social enterprises.
We want our customers to make good choices.
We want them to make purchases that reflect their values.
And yet…people are liars who don’t like to admit their true preferences.
They don’t actually want healthy food, they want their favourite foods but without the calories.
They don’t actually want Fairtrade supply chains, they want their favourite products guilt-free.
They don’t want to change their behaviour to help the environment, they want us to make it easy and enticing to switch to green produts and services.
I don’t like that this is the case, I wish people had the willpower and courtesy to do “the right thing” with their purchases.
If you build a business that expects customers to go out of their way to do “the right thing”, you’re going to be serving a very small community.
A better question might be “how to we entice customers who aren’t making good choices to do the right thing out of self-interest?”.

Positioning Matrices And That Empty Top Right Corner
There’s this cliché in positioning, where a founder makes a 2x2 chart mapping their competitors.
Like clockwork, they’ve cleared out the top right corner of the diagram, where their new brand sits unchallenged.
I get why people do this, but they’re missing a crucial truth:
Nobody is persuaded by self-declared positions.
You don’t get to put yourself in that top right corner, the market does, and you can’t build a reputation on what you’re intending to do.
Instead, I’d suggest bringing data and testimonials from credible groups that explain why you’re that much better than the rest of the market on these two axes.

What Do Your Customers Want To Buy From You Next?
One of the best questions for product innovation is “what do our customers want us to make next?”.
More of the same?
Companion pieces?
Services to go alongside products?
Products to go alongside services?
Education?
Collaborations?
Enter entirely new fields?

Seth Godin has this great example:
“If Nike announced that they were opening a hotel, you’d have a pretty good guess about what it would be like. But if Hyatt announced that they were going to start making shoes, you would have NO IDEA WHATSOEVER what those shoes would be like. That’s because Nike owns a brand and Hyatt simply owns real estate.”
Nike’s customers want more Nike, whereas Hyatt’s customers stop thinking about them the moment they check out.
What would be your signatures in these new products and services? 

Explaining The Idiosyncrasies Of Your Niche Field / Community
Investors might not be overly familiar with the idiosyncrasies of your niche field, but they’ll probably understand it if you briefly explain it to them.
They probably know a lot about a lot of industries, and will be able to quickly draw parallels with other fields to get a sense of where you’re positioned and what customers find desirable.
e.g. If you’ve ever gone to a shopping mall on the other side of the world, you’ll quickly understand who each new brand is “equivalent to” back home.
My suggestion is to script a 60 second explainer of your industry as a whole, then another 60 seconds on the big players and where you fit.

Winning Customers Hand-To-Hand
Although we have excellent new online tools for finding customers, there’s something to be said for winning customers hand-to-hand.
A great example of this is Sara Blakely, the creator of Spanx who spend several years selling her new style of “shapewear” herself in department stores.
It’s inefficient and hard work, but it gave her a detailed understanding of her customer, how they made decisions and what mattered most.
If you’re struggling to grow online, it might not be that you need a different platform or marketplace, but rather more opportunities to pitch to customers.
It rapidly refines your Value Proposition, improves your Customer Journey, and elicits great testimonials and quotes that you can’t get from Instagram.

Congratulations to the businesses that won the funding, it was well earned.
I look forward to working alongside several of these founders and future cohorts of the First Gens program.