Is Pitching a lie?
Everyone agrees convincing investors requires a story and the CEO needs to be the chief storyteller. We look for a central character, the CEO, to drive the story and we want there to be some tension and emotional content to get the audience to empathize.
In essence, fundraising is a narrative investment process.
The pitch is the preferred tool for delivering the narrative. The entire pitch can be a story or more likely the pitch will incorporate a piece of storytelling. Indeed, people’s stories or experiences are more interesting than their opinions. As a result, venture capitalists invest primarily on the basis of the team, the vision, and the founders’ ability to tell a great story.
While creating a story is not creating a startup, taking the story angle is very human. Stories are central to human development and human interactions. The human brain is wired to give stories a major role in the development of the human mind. People organize information in a story format. A great story will always trigger the right empathy, including getting investors to agree to invest.
This dynamic has turned the startup world into a pitching contest, and entrepreneurs and investors often confuse building a startup with creating a story. Everyone portrays the importance of storytelling, however, building a startup is not an act, it’s mostly execution.
Pitching can feel fake
A pitch is what you need to say to get money. Some founders are not at ease with the process and feel like they are being pressured to lie to present a rosy picture. For example:
To present an ambitious startup, founders are pushed to sound more grandiose than reality.
A pitch covers key topics, some without answers, so founders are forced to come up with answers, which sometimes are made up.
Pitching is an actor’s game, and CEOs are not actors and don’t want to be, they are doers.
Exaggerating small successes can also seem odd.
Most of the time, startups start on the basis that the founders want to get into entrepreneurship, and not out of a vibrant passion for something. Putting a story on it is stretching reality; it’s like putting lipstick on a pig; it does not make the pig sexier, it’s still a pig.
As a consequence, the pitch is often perceived as a tool that’s needed to fundraise but not necessarily connected to the startup hard reality. Basically, it’s about trying to create a beautiful story. A story is not the truth, it’s still a story, it’s good marketing; most stories are fictional.
However, if you cannot tell a story you won’t raise money. If your startup is just a project with a product and there is nothing “human” or “epic” in it you won’t raise money.
Use storytelling to inspire without being delusional
Storytelling is not going away. It is what triggers emotions after all. However, it cannot be fake or lame. Here are a few tips to create a credible story.
Make sure you and your story are genuinely connected
Don’t start your story by telling the audience that you got into a certain situation that led you to an epiphany. Things like: “I was in a bar and we wanted to share the bill with my friends and we had to process each credit card, so we started Tap-share”. That sucks, really. It has to be something that feels real to you. It’s because you really care about your purpose that you might succeed, at least you won’t give up easily. It’s the founder's purpose fit that makes the story believable.
Do not pitch a small story, be ambitious
Ambition is everything. You might be way off, but it’s because you’ve decided to climb Mount Everest that you‘ll be an inspiration. You might not succeed, but you are likely to go much further than if you had decided to climb the local hill nearby. Being ambitious is not delusional is just setting the bar high.
Create a story that people can emphasize with, be inspiring
Your purpose needs to convey something worth fighting for. The reason for your existence must inspire you, your employees, your customers, and potential investors. It needs to portrait a better world if you achieve your vision.
Go beyond the story, provide evidence
If you are only story-driven you risk being misled into believing your own fictional world. Introduce facts into the story.
The best recipe for a pitch that does not seem artificial is to combine storytelling and data. Early on storytelling will dominate, and over time, data will take over. But we need to see both.
When we talk about data, everyone thinks of revenue, hard numbers. Data is more than that, it’s facts that show that the startup is moving forward. Every week something has to happen. What you need to incorporate into the story are tangible signs that your narrative is starting to take hold in the marketplace.
Numbers of course
Numbers don’t lie. If you can share revenue, retention, and growth numbers, do so. Be selective, you need one primary metric and two to three secondary metrics, that’s enough to assess the startup’s trajectory.
Real customers experiences can materialize your vision into reality. Incorporate customers into the narrative. It does not have to be thousands of clients. We need loving clients, even a few, even one. Customers are validation of your vision and help create excitement around your ability to execute.
Show you are headed in the right direction, share milestones. It may be overcoming a technical hurdle in the product or technology. It may be a great hire, a significant person who validates the value of your startup. It can be anything that shows you are starting to exist and be noticed.
A story creates a logical sequence. It helps put things together, it defines the culture and the vision. Data is proof that your story is not fake. So be a good storyteller but tell a story that we can believe.