The elevator pitch – a description of the essence of your business’s strategy that you are able to share within about 60 seconds, or the time to go up an elevator – is critical for startups to develop. This article explains the benefits of having an elevator pitch strategy, beyond securing financing.
Imagine that you have just run into the perfect investor for your business, in an elevator. They are trapped – and you have the time it takes to go from the ground floor to floor 60 to convince them to invest in your firm. That is the essence of an elevator pitch – a very brief summary of your business, why it is important, and why you are uniquely positioned to make it a success.
Of course, most investment decisions do not occur in elevators – but the importance of chance encounters, and having a very limited window to create interest in your company is critically important. Busy executives get pitched to all the time, and unless you are able to make a convincing impression quickly, you will likely fade into the background, and get the ‘that sounds very interesting – I wish you the best of luck’ response.
The role of an elevator pitch in creating interest
The key thing to recognize with an elevator pitch is that its purpose is not to ensure that all the minute of your business plan is described. Instead, its role is to generate interest in your company, product, or service to help you get the connection, the follow-on interest, and hopefully the subsequent meeting to allow you to present your business in more detail.
To help create that next meeting, you should convey the market opportunity, as well as what is unique and different about your company, as succinctly as possible. The ideal is to convince someone in only a sentence or two that what you are working on is important, and that your firm is well-positioned to capture this opportunity.
Why is this an interesting opportunity?
There are some ideas that the moment you hear, you can see it as an important area – ‘why didn’t I think of that’. Many though will require some more elaboration to justify, potentially illustrating what in the environment has changed that you are now able to take advantage of. For example, why is this an increasingly important area, or why is this now feasible while it has not been before. Essentially you are looking to convey the importance of the opportunity while indicating why it has not been done before.
Why are you well suited to be able to execute on it?
The second component to convey is how well suited you are to be able to execute on this particular area. Coming up with a great opportunity is rarely sufficient – if you have spotted it, so too may many others. Unless you can quickly convince others that you will be the successful one, it can be hard to gain support.
Illustrating why you are likely to be the ones who can execute may involve:
- Your background and experiences: Do you have a particularly strong knowledge of this particular area that will well position you to execute.
- Current progress: What are the achievements that you have had so far in developing your technology, product, or services.
- Existing track record: Are there customers that have committed to the product and services
- Other backers: Do you have the involvement of other established individuals or financial backers.
The role of an elevator pitch beyond gaining investors
Beyond getting investors, being able to succinctly describe your product and services, as well as how you are able to execute on these areas, can have significant benefits in interacting with other important stakeholders. These can include:
- Customers: Ultimately you will want to convince customers to buy your products – and especially for early customers, they may be taking on some risk associated with whether you will be able to deliver on your promises, or remain in business sufficiently long. Having a convincing pitch can help gain their buy-in.
- Potential employees: Startups are risky, not only for you, but also for potential employees who face greater employment uncertainty. Being able to convince them of the prospects of your firm can increase the likelihood of getting their willingness to join your firm.
- Other entrepreneurs: Other individual founders can be a great source of advice and referrals. Being able to convey your ideas to others, and gain interest, can be a value stage in building a reputation as someone with good ideas and worth getting to know further.
Struggling to define your business?
If the task of defining your business, the opportunity that you are capitalizing on, and why you are well set up to execute on the opportunity, seems daunting, then the importance of tackling this issue head-on is maybe especially important. Ultimately being clear on these issues is a more fundamental area than simply gaining investor involvement – it can underpin the success of your business.
Having a hard time succinctly define describe these areas is an important sign of needing to reflect on your business and market opportunity, which may in turn lead to more precisely identify the importance of the area that you are focusing on (or to adjust accordingly), as well as to begin building up resources that increase the likelihood of your success.
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