In this post we summarize a lecture by YC Partner Kevin Hale on how to package up your idea and communicate it to an investor. He shares his tips on how to craft your pitch in a clear and concise way that effectively grabs your audience's attention.
Startup idea is a hypothesis for why a company will grow really quickly.
A hypothesis consists of three parts: Problem, Solution and Insight.
The Problem should be popular, growing, urgent, expensive, mandatory and frequent.
Solution is important but start with the Problem not the technology.
Unique and unfair advantage is also called insight. 5 types of insight: founders, market, product, acquisition, monopoly.
How to impress investors
Good Investors use Optimism to sell themselves. The key elements they are primarily looking for are Idea and the Team.
Clear ideas are the foundation for growth. Make ideas legible, simple and obvious with slides.
Things to avoid:
- Ambiguity
- Complexity
- Mystery
- Ignorable Elements
Great pitch is conversational, meaning you can explain it to your family. Has no Jargon. No preamble. Reproducible.
Investors should understand who is the customer, what are you making and what is the problem (also called Nouns).
Good examples
Airbnb
"Airbnb is the first online marketplace that lets travelers book rooms with locals, instead of hotels."
Dropbox
"Dropbox synchronizes files across your/your team's computers"
Notes:
- Do not go deep into details
- Nouns are covered
Should You use X for Y ?
An example of the idea: Y is building X for the next billion internet users.
What to consider when using the model:
- X is a household name, successful name
- Does X want Y
- Huge market
