In June 2023, ten investors discuss their investment thesis and provide tactical advice for nontechnical founders seeking investment. The article, titled How to Pitch Me, reveals the key factors that investors consider when evaluating startups and choosing where to invest.
According to the investors, the tech industry is not a meritocracy, and success is directly correlated to the size and strength of the network. However, it is relatively easy to connect with reputable investors, as most firms have email addresses and contact forms on their website.
The main reasons for startups failing to get off the ground generally boil down to three things, which investors refer to as the three C’s: capability, capital, and customer acquisition.
With deal flow down across the board, investment tactics such as applying fake time pressure to get a VC to make a quick decision no longer work. Instead, investors want to see genuine momentum and guard against being influenced by short timelines and the participation of other investors.
The investors also provide ballparked salaries for pre-revenue startups, discuss the pros and cons of using pitch memos vs. full decks, and recommend questions that founders should be asking investors during pitch meetings.
Respondents to the survey included investors from Madrona, Cake Ventures, and Struck Capital. All ten participants shared their investment thesis and provided tactical advice for nontechnical founders seeking investment.
When it comes to investment opportunities, the investors are looking for Series A, B, and C startups across B2B software, cloud infrastructure, AI/ML, fintech, e-commerce enablement, climate tech, and AI. They are also interested in companies working on non-white collar work, healthcare jobs, service workers, and other non-office careers.
The investors prefer warm introductions but are open to cold emails from founders building companies that will be accelerated by demographic change. They look for founders with a big idea that can scale into a massive business, the ability to consistently execute, and the resilience to get the business there.
Founders should ask investors about specific sectors and stages they are investing in, the track record of the firm, and the talent, marketing, and biz dev help that an investor’s firm and personal network can bring to bear for their company.
In terms of pitch tactics, the investors prefer an engaging back-and-forth discussion around specific questions they are interested in learning more about. They will review a memo as long as it provides a full story and gives them an understanding of the business.
Finally, the investors recommend the book Chip War by Chris Miller and the TV show Succession for those looking for inspiration.
