The Top 3 Things I Look for in a Startup Pitch

The Top 3 Things I Look for in a Startup Pitch

Mr. Wonderful here –

If you’ve seen an episode of Shark Tank (or StartEngine’s Pitch Competition, for that matter), you know there are three things I look for when hearing a startup pitch: 1) Articulate the opportunity in 90 seconds or less. 2) Explain what it is about you that can take this great idea and execute on it. 3) Know your numbers.

I make it a point to eviscerate any founder who can’t do these three things – and every other startup investor should too. Here’s why:

1) Articulate the opportunity in 90 seconds or less.

I want to understand what it is that a founder does, why it works, and why it’s such a huge opportunity in under 90 seconds – under a minute is even better.

In the early days of a business, every founder’s first and most important job is sales. And I need to know that they can pitch prospective clients before I invest. After all, if an entrepreneur can’t quickly explain their service to me, how are they ever going to explain it to customers?

2) Explain why YOU can execute on this great idea.

Ideas are a dime a dozen but execution is hard. When I hear a pitch, I need to understand what is special about the founder or founding team that qualifies them to make their startup dream a reality. 

• Do they have experience with a competitor? 
• Have they tried a similar venture before?
• How do I know they won’t jump ship at the first roadblock?

Whatever that X-factor may be, the entrepreneur has to articulate it. Even if you think they’re sitting on the next unicorn, without the founder pushing the business forward, I guarantee it will never get off the ground.

3) Know your numbers.

Little sucks the air out of a pitch like an entrepreneur who doesn’t know their numbers. 

• How big is the market? 
• What are the margins? 
• What are the customer acquisition costs?
• What’s your lifetime value? 
• What’s your best acquisition channel?

Founding teams that don’t have the answers to these questions deserve to be in hell in perpetuity, and smart investors know to put them there. Understanding the numbers tells me that the entrepreneur knows which are the right channels to pour the gas on, where they need to go next, and that they’ll spend my investment dollars wisely. If they can’t do this, I’m out.

These three attributes are present in every pitch that I fund – not some of the time, all of the time. And you can bet that they’re present in just about every other capital raise. Why? Because any good Shark can smell blood from miles away.

Kevin O’Leary is a paid spokesperson for StartEngine. View the details here.