Pitch With Proof: How to Win Over Investors
Evidence and clear strategy will show investors that your business can succeed.
Every year, venture capitalists review thousands of startup pitches. Many of these presentations are all hype. They lack substance and are quickly disregarded. You don’t want your pitch to be one of them.
When I was raising capital for my investment firm, Applied Real Intelligence (A.R.I.), which provides loans to innovative early-stage and growth-stage companies, I quickly realized that sophisticated investors care far more about tangible results than big ideas.
Like many founders, I encountered the infamous “chicken and egg” problem of needing to prove success to secure funding but needing funding to achieve that success.
In this article, I’ll share some of the key lessons I’ve learned as both a founder pitching to sophisticated investors and as a funder evaluating countless startup pitch decks.
Whether you’re building a tech startup or a consumer product, your pitch needs to focus on substance, not just selling an idea. Here’s how you can ensure your pitch captures attention in today’s highly competitive market.
What Problem Are You Solving?
One of the most critical sections of your pitch deck is articulating the problem your company is solving. Investors need to know: What’s the pain point and why is your solution uniquely positioned to address it?
Here’s why this matters. Investors want to see a clear path from problem to solution to revenue to profitability. Read that again because if you can’t connect those dots with a compelling story, it will be very difficult to raise capital.
Explain How Your Business Makes Money
Investors should never have to ask, “How does this company make money?” If you can’t explain your business model clearly and effectively, they will lose interest. Start by providing a simple, concise explanation of how your business generates revenue, whether through subscriptions, product sales or another model. Once the revenue model is clear, move to the numbers that matter most.
Investors want to understand unit economics, ideally showing that the lifetime value (LTV) of your customers significantly exceeds your customer acquisition costs (CAC) and the payback period — how long it takes to recover your customer acquisition costs — is reasonable.
Once you’ve established strong unit economics, you need to show how your revenues and margins will scale as your business matures. Be sure to benchmark your projections against similar companies in your industry to provide context.
For SaaS businesses, critical metrics like monthly recurring revenue (MRR), gross margin, retention rates and churn give investors a clearer picture of how your business is performing.
Additionally, savvy investors are paying close attention to cash management and runway, which measures how much capital a company is burning relative to revenue growth. They want to see that you’re prudently managing your cash flow and have the financial discipline to sustain your business. A good rule of thumb is to have enough runway to get you through your next major milestone with a comfortable cushion. Better yet, show a runway to profitability.
The New Priority: Profitability Over Growth
Over the past several years, VCs have shifted their priorities. The days of raising funds purely on growth projections have faded. Investors are now much more focused on profitability, given that many VC-backed companies consumed cash at unsustainable rates, leading to their demise.
Now, investors are laser-focused on cash flow, sustainable growth and business models that can achieve profitability sooner rather than later. Bootstrapped companies, or those that have managed to grow efficiently without burning through large amounts of capital, are becoming more attractive to VCs.
For founders, this means your pitch deck must emphasize prudence over exuberance. Show how your company is either on the path to profitability or has already implemented strategies for sustainable growth. Investors want to see evidence that you can hit key milestones while controlling costs and minimizing risk. If you can demonstrate a strong financial foundation, you’ll stand out in an increasingly cautious VC landscape.
Investors Want to Know: What’s in It for Them?
Throughout your pitch, you should always be answering one question: What’s in it for the investor? Investors see hundreds, if not thousands, of pitches every year. To cut through the noise, you need to clearly communicate what kind of return they can expect and why they should invest in your company over others.
Personally, I look for companies that will be successful without my involvement. A.R.I.’s capital and strategic insights are meant to pour gasoline on a founder’s fire that is already burning brightly. Most investors are similar in that they would strongly prefer to add fuel to a business that’s already showing strong potential, not start the fire from scratch.
Be explicit with your ask. How much money are you raising? What’s the valuation? How will the funds be used? What’s the timeline for the raise and its current status? Do you have any noteworthy investor commitments? Provide clarity, so investors know exactly where you are in your process and what’s expected from them. By the end of your pitch, investors should have a crystal-clear understanding of the next steps.
Refocusing your pitch on what matters most to investors — tangible results, financial discipline and a clear path forward — will significantly improve your chances of securing the funding you need to grow your business.
In the next article, we’ll dive into the most common mistakes that even experienced founders make during their pitches and how to avoid them to ensure your pitch hits the mark.
Zack Ellison, MBA, MS, CFA, CAIA is the founder and managing general partner of Applied Real Intelligence (A.R.I.) and the chief investment officer of the A.R.I. Senior Secured Growth Credit Fund, which provides debt financing solutions to premier VC-backed companies. He previously worked as a loan underwriter, investment banker, corporate bond trader, and fixed income portfolio manager at three firms with over $1 trillion in assets – Scotia Bank, Deutsche Bank, and Sun Life. Ellison holds an MBA from the University of Chicago, an MS in Risk Management from NYU, and is completing his Doctorate in Business Administration at the University of Florida.