Online luxury shopping community ideeli.com just banked $3.8 million in funding from Kodiak Venture Partners and angel investors after company founder Paul Hurley soft-launched his site in May 2007.
Not knowing Hurley’s approach to his investors’ appetites, nor what it actually was that intrigued them, I’m nonetheless reminded that ultra-upscale markets and the luxury brands aimed at them fare pretty well in all kinds of weather. Nothing is recession proof, of course, but people with the most money and best taste seem to not be hyper-sensitive about economic downturns. Luxury goods also make for a logical pitch: ideeli.com is betting that fashionistas have no problem making big-ticket purchases online. Why should they?
Still, the most effective pitch to separate investors from their money, and put where it can promise a high return, remains the same no matter what the product or market. A winning pitch sells five things to your prospective investor(s): your team, your market, your idea, the business model, and how you’re going to spend the money you’re asking for.
1. Sell your TEAM. Who are the key members? Have they done startups before? What are their credentials and accomplishments? What is their functional expertise? What is their prime responsibility within the venture for which you seek funding?
2. Sell the opportunity your MARKET presents. State the problem (need) that exists in your space. Quantify it as the context for your product. In other words, describe your product in terms of the marketplace for it.
3. Sell your IDEA. Exactly how does your product, and only your product, fill the need that exists as you've described it in #2 above.
4. Sell your BUSINESS MODEL. Detail your beliefs and assumptions as to why your rationale is valid. Be candid: show how you've thought it through, even revealing where your weak spots might be.
5. Ask for the MONEY. Specify how much it's going to take to deliver what you believe will best exploit the market opportunity you've identified. Show how everyone will enjoy a robust return on investment.
Finally, here is my own "sample sequence" for a PowerPoint pitch that addresses these five elements:
1. Your mission as a company.
2. The market need you saw that was unmet.
3. Your business opportunity (the "need" demonstrated)
4. Your vision of how this product meets the need.
5. Your company strategy (partners? co-developers, etc.?)
6. Your product strategy
7. How you'll implement the product
8. Your credentials -- and the milestones you've met so far
9. The future market opportunity (how #2 above is big and growing)
10. The product/technology plan: an irresistible opportunity
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