Pitch Clinic: 8 tips on how to upgrade your pitch to LPs
Fund managers (“GPs”), especially VC investors, get pitched to all the time. They can tell very quickly what a good pitch is and what isn’t. However, many GPs struggle when it comes to pitching their own fund.
During my career as an LP (folks who invest into PE and VC funds) I’ve listened to over 1,000 pitches from both emerging and established fund managers. Now we run our own pitch clinics for GPs at AccelNorthPartners. This week, I was part of a panel with select LPs at the AVCA 2021 Conference, where we heard pitches from a number of emerging fund managers, and gave feedback on their presentations.
Here are my 8 top tips which I shared with the participants. These are relevant to all GPs looking to pitch to commercial LPs:
1. Know your prospect’s needs and how you can address them
Over 90% of fund managers (my estimate) do not begin the conversation by asking the person across the table (or the screen) about how they think about private markets, how they think about [name your sector or geography, etc.], or the kind of exposures that the LP is seeking to add to their portfolio and why they decided to take the meeting. When meeting time is tight, tailoring your pitch to their interests is crucial.
Moreover, most GPs — I’ll even say 95% — focus the entire conversation on what they do, not why an LP should invest. You don’t have to convince an LP that what you are doing is sensible; you need to convince them that it is one of the 30 best ideas of the 1,000 ideas they saw this year.
2. Build rapport and sell stories
People invest in people. Even more so in the Zoom-driven world, I see GPs take insufficient time to build rapport and bring out their human side and find commonalities with LPs. LPs listen to pitches all day long. Stand out by being the girl or guy they really liked.
Use stories and anecdotes — what is the story behind what made you start the fund? What is the story that led to an investment in company X? What is the story of the person or firm which was affected by Problem A which your portfolio company now solves?
3. Have a mission statement
“I’m looking to make a lot of carry” is not a mission statement that LPs want to align on. But “In 20 years’ time, I see a world with only cars with zero carbon emissions” or “I see a world where everyone in Africa has access to affordable healthcare” — are much more align-able. I believe almost any fund can have a strong, positive mission statement.
4. Impact alone isn’t enough
Impact investing is on the rise. The size of the market grew by an astonishing 42.4% in the last year and so did the amount of impact fund managers. This also led to a proliferation of ‘impact-washing’, either GPs who couldn’t explain well how they specify and measure impact, or they tried to hide a bad track record under the impact guise. LPs see through it on both accounts. Your proposition has to be commercially viable, and the impact needs to be measurable.
5. What is your secret sauce?
”We have the best team” doesn’t cut it. Noone comes to an LP and says “we have a terrible team but we hope to get lucky very often”. Stick to things which you can put into specific frameworks, and measure. And use (relevant) statistics. “We see #x deals every year, which, according to Database Y, is the most anyone sees in our segment. We are then obsessive about selection, and only invest in [2]% of the deals we see”. Be crystal clear about where you are differentiated and back it up with analysis.
6. Don’t forget to talk about the team and track record
All too often, emerging managers in particular get carried away by why their strategy is exciting, or their approach is novel. Anybody can come up with a Powerpoint with a smart in-theory idea, and most LPs aren’t in the business of being seed investors for a ‘great fund idea’. What is also important is to show that there is a great team which is complementary and cohesive. And what LPs can hang their hats on in terms of relevant experience of sourcing, selecting, adding value and exiting companies (if you don’t have an already established end-to-end track record). Carefully explained team and track record slides, can hugely help reduce perceived risk of an up and coming manager.
7. Signalling within the pitch
No matter how good your pitch is, particularly if it’s more than 20 minutes, an LP is likely to drift into their thoughts at some point. They’ve already decided that either they like you, or they don’t like you, or they like you subject to the track record slide. Help them along the way, by clearly articulating where you are in your pitch and what’s to come next.
8. Cut out filler words
“Um”, “err”, “y’know”, etc. Once you notice it as a listener, it’s really hard to let go of. Especially if you use one filler word a lot. You almost stop listening to the pitch and start counting the number of times that word is used. If you don’t know what your filler word is, record and listen to yourself, or ask a colleague or spouse. Apparently mine is “really” in the middle of a sentence.
At said conference, each of the GPs who pitched walked into most of the traps that I outlined above. I hope this post inspires and informs, and supports my personal mission of “Getting to Yes”, for many great fund managers out there, who fall into articulation traps!
Contact us here for more advice on how to best prepare for your upcoming fundraise.
About Us: AccelNorthPartners helps private equity and venture capital fund managers, and fast-growing companies, prepare for institutional fundraising, helping in aspects covering strategy definition and articulation to product development, and pitch & diligence material creation to upgrading teams, systems, policies, processes and ESG. Our team of ex-LPs and GPs help our clients get pitch-ready, diligence-ready and market-ready.
Photo Credit: AVCA and Andrea Piacquadio from Pexels
