Expert Advice on Successful Pitching
Tech Industry Guru Tim Armstrong Shares His Wisdom at VentureClash 2017
One of the highlights of the VentureClash 2017 live pitch competition was a fireside chat with Oath CEO Tim Armstrong moderated by WNPR business reporter Harriet Jones. To a captivated audience of entrepreneurs, investors and industry veterans, Tim delivered down-to-earth guidance on how to craft winning pitches and what it takes to be successful thereafter.
The following questions and responses are excerpts, paraphrased in some cases, from Harriet’s interview with Tim.
HJ: How important is it to participate in pitch competitions? Is it a make it or break it for entrepreneurs?
TA: For companies seeking investors, pitch competitions are the single greatest way to sharpen your skills. Of the countless pitches I’ve heard over the years, the most compelling entrepreneurs are great at one thing—they’re able to succinctly describe the gap they’re filling in the market. And this is a skill that comes with practice. Of course, pitch competitions are super high-pressure—you have a room full of smart people, which can be very intimidating. But I would encourage every entrepreneur to get out there and participate, because win or lose it’s probably the best way to tighten your pitch and improve the way you present your story. Competitions also force you to deal with the outside world, as opposed to reinforcing your inner world view within the confines of your team. Also, the feedback you will get is invaluable. Even if it’s disappointing to hear, it will help you refine your idea. Above all, you should remember that for every “no” you get, you are one step closer to a “yes.”
HJ: What are the elements of a good pitch?
TA: One of the most important elements of the pitch—and this is a nontechnical factor—is how you personally handle yourself. I definitely take notice of the tenor of the interactions between the team members and how they behave. No matter how great the idea, I find that the way you treat others—whether potential investors or even their assistants—is indicative of how you will manage your business. The other vital element is the sharpness of the gap you are filling. I want to hear the word “gap” in a pitch along with a statement that you personally understand how to fill it. I also want to hear that you are not blind to your weaknesses. You should be confident enough to be honest about the two or three biggest challenges you will face. And I would also add a general comment that you want to connect with like-minded investors. If potential investors don’t buy into your vision, it probably will not be a good fit.
HJ: As an angel investor yourself, when a small company makes it through the pitch stage and you take the next step to “look under the hood” of the company, what fundamentals are you looking for?
TA: I’m especially interested in tailwind businesses that have tapped into an opportunity for disruption on a large scale. Conversely, I tend to steer clear of headwind businesses, or those that are basically seeking to innovate within a business that will likely decline over time. I’m also drawn to businesses that bring an unfair advantage in terms of their product, service or business model, but I also want to see that they’ve already thought ahead to stage two—beyond their core idea. I like to see that they’ve thought through the future evolution of the business throughout the entire food chain, so to speak. And I particularly favor business ideas, whether B2B or B2C, that come from people who have personally experienced the issue they propose to solve. There is no greater way to understand a situation than having been faced with it yourself.
HJ: Is having personal passion for your business idea important?
TA: Yes. Being passionate about your business is vitally important. For one thing, when you have that level of excitement and enthusiasm, people are drawn to you and your ideas. Also, that passion is what will keep you going when you have tough challenges to resolve. Weathering difficult times actually helps you build a moat around your business. And once you learn how to get through issue after issue, that’s when you end up with a strong and sustainable management team and culture.
HJ: What role does innovation play when you’re thinking about mergers, acquisitions or expansion?
TA: Innovation is the lifeblood of both entrepreneurs and big companies alike. To ensure ongoing success, businesses must remain on a course of perpetual innovation. In the absence of innovation, businesses lapse into a state of commoditization—often the beginning of the end for an otherwise vibrant company. Innovation is the only way out of that cyclone. Your focus should always be on finding more and bigger problems to solve—breaking the glass at the front end of innovation. In fact, the number-one job of large-company CEOs is to be constantly moving from commoditization to innovation. For entrepreneurs, even if you have a great idea, it’s highly likely that two years from now your idea will have to change and augment. If you look at many of the greatest companies of all time, the ones that remain powerhouses today, they all started by offering one thing and then innovated, innovated, innovated.
HJ: One of the great things about VentureClash this year is that we have so many big partners like The Hartford, Travelers, Sikorski and other great Connecticut names that are looking for relationships with these small companies. How does that ecosystem work between big companies and smaller ones trying to innovate?
TA: Getting venture capital from large companies requires a different skill set than dealing with VC firms. The best advice, which is far too often overlooked, is to be sure that your idea fits with what the company is doing strategically. The mistake that many startups make is to think they have to guess what those strategies are, when the information is readily available by simply downloading and reading the company filings. In those documents, the CEO will specifically state what’s important so you can craft your idea into that wheelhouse. You should also be sensitive to the notion that your idea might be disruptive to the company you’re pitching—so it should be presented for its synergistic potential. There are three things I look for when acquiring a smaller firm:
- Commitment to stay—If the founder plans to exit, I won’t buy the company. I am interested in the idea and the entrepreneur—many large companies require both in an acquisition.
- Desire to grow the business—I’m not interested in businesses that are content to remain small. You have to be willing to use our “guns, money and steel” with the goal of realizing significant scale.
- Pirate spirit—I want entrepreneurs who will keep their intensity and ambition alive—people with the drive to cut through bureaucracy and complacency to get the job done.
HJ: One of the key objectives of VentureClash is to bring businesses to Connecticut. What do you see as the main strengths of Connecticut as a place for companies to call home?
TA: There is a perception that Silicon Valley rules the roost, but Priceline is a great example of a Connecticut company that is one of the single best global internet companies in the world. Vineyard Vines is another example of a Connecticut company that has achieved tremendous success from a foundation of little more than two brothers with hope in the American dream. There are many benefits the state has to offer, including:
- Highly educated people—many with advanced degrees from top local universities including Yale, Wesleyan, Quinnipiac, UConn and others.
- Prime northeast corridor location—a particularly attractive zone from an engineering standpoint and also ideally situated between Boston and New York.
- Superior quality of life—vast natural resources including miles of beaches, biking, hiking and ski trails, acres of lakes, plus hundreds of top schools and many quality restaurants and impressive museums.
Six Pitches Win Venture Clash 2017
From a field of approximately 300 applicants from 20 countries, nine finalists were chosen to participate in the VentureClash live pitch competition at the Yale School of Management on October 20, 2017. The $1.5 million top winner was FRISS, based in the Netherlands—a provider of state-of-the-art insurance fraud detection solutions. The two second-place winners, each receiving a $1 million investment, were SCADAfence, based in Israel—a cybersecurity firm, and Vouchr, based in Canada—creator of an innovative online gifting tool. Three companies will also receive $500,000 each: Buzzmove, based in the United Kingdom—an online-booking platform for moving services; Davra Networks, based in Ireland—a complete Internet of Things platform; and EAVE, based in the United Kingdom—the developer of next-generation hearing protection and communications technology.