Today, we’re discussing an exercise to help you tremendously nail your pitch and conversations with VCs.

No matter where you stand and how senior you (think you) are, you should go through this exercise.

You should do it before you start drafting the storyline of your pitch and also much ahead of creating any slides for your deck.

Actually, we’re talking about two exercises:

1. What are the most compelling three arguments of your investment case?

If you would only have three bullet points and nothing else to convince an investor about your case, which three arguments would you tell them? In other words, what are the three most compelling arguments in favor of your case? You need to be crystal clear about this – most founders are not.

I challenged many founders raising substantial Series A rounds with this question, and if it catches them unprepared (as it does in most cases), you feel their uncertainty about those three most compelling arguments from the get-go.

The three most compelling things about your case are highly individual: For a serial founder, the fact that (s)he has built and sold companies successfully before, can be a great top argument. For a deep-tech team, that compelling top argument might be that they did research on their topic for years and have unique insights and experiences others don’t have.

For other startups, it’s a market that is growing like crazy and providing amazing opportunities that are just opening up now. Or you’re in a market with big incumbents that neglect a target group that comes with huge potential.

Or your product has super exciting engagement metrics, way above the industry average.

Again, as a founder, you need to be crystal clear about the most compelling three facts about your case – first for yourself and then to able to convey them to others. More about the latter below.

2. What are your three strongest competitive moats?

A “moat” refers to something that creates defensibility for your case, a competitive advantage, an entry barrier for others.

VCs want to invest in startups that can’t be replicated easily. VCs even fear investing in a startup and then a bunch of other startups come up and easily do the same.

This question is closely related to the first one as a strong competitive moat is in itself a very compelling argument in favor of your case.

Here again, what qualifies best as a top three moat depends on your individual case:

It might be a proprietary technology with its own IP that is hard to replicate.

For others, it might be that they already have strong brand awareness in a certain niche, work with leading companies in that niche, and have a product with strong lock-in effects, so it would be hard for a new competitor to enter and conquer that niche.

For some, it’s the team, e.g., because they have worked in the industry for many years and know the industry/domain better than anyone else.

In some areas, regulatory achievements can be a strong competitive moat, like an NHS approval in health tech. Many other industries only allow you to sell to customers when you go through regulatory processes that can sometimes take years – if you successfully complete them at all. That could be an immense moat.

You need to get crystal clarity about your top competitive moats.

But why? You did the exercises. You thought about all the options for your top three most compelling arguments of your case and the top three competitive moats. You nailed them down to your top three in both categories.

First of all, this exercise helped you to gain clarity. And you’ll leverage this clarity now in two ways:

A. Your storyline, deck, and pitch

The storyline you’ll draft for your pitch needs to hammer your top “most compelling arguments” and top moats into the brains of the investors. Instead of overwhelming them with “nice-to-have information” with a lot of details that don’t help to make the investors more excited about your case, you need to do everything so that they leave your deck or pitch and know exactly the three most compelling arguments about your case and your strong competitive moats.

This is a communication challenge. When you yourself are unclear about the most compelling facts, you’ll draft a story that doesn’t stress them, and the investors will leave your deck and pitch with random facts about your startup that might not be the most compelling ones.

You have it in your hands – you can control which impression will stick with them. You have the remote control. You need to bake your most compelling points into the DNA of your pitch deck and presentation.

B. Investor Conversations

You’ll (hopefully) get into many conversations with VCs. Nowadays, many VCs read your deck in advance and don’t ask you to deliver a pitch presentation at the beginning of your initial meeting.

Thus, the impression you make during those conversations is crucial. As crucial as your deck and pitch.

It may feel appealing to “just have a conversation”. Because it’s much more natural to most founders than a formal pitch situation. And it has advantages. But you need to be conscious of a huge disadvantage:

If the conversation is just about the VCs asking questions and you answering them (which is the reality in most cases), you’re completely dependent on the VC’s questions. You need to hope that they will ask questions that will allow you to answer with the most compelling key factors about your case.

But often they don’t, because they don’t know it better. They don’t know yet what’s most compelling. So they may ask you questions that will lead to only mediocre answers or answers that simply don’t increase the excitement of the VC.

That’s why you need to use the conversational remote control. You need to control these conversations. As a fundraiser, it’s your job to get into the topics that will trigger the biggest excitement on the VC’s side.

And for that, you need to be aware of the most compelling facts about your case and your top moats.

So, never enter a VC conversation without having them top of mind. Then, try everything to leverage them by steering the conversation towards them. This is not much different from PR interviews. Communication trainers train interviewees, among other things, in how to reframe questions so they can deliver the best answer.

You have a co-founder who has done years of deep research in your industry and the VC doesn’t ask you about the background of your co-founders? Drop it where it makes sense in the conversation.

You’re smart, you’ll find the right time without sounding awkward. In other words:

Don’t do

VC: “It’s so hot today”

You: “Yeah, my co-founder was also sweating. He has, BTW, done six years of deep research in (xyz)“.

Do

VC: “(Competitor Name) seems to do something very similar to you. How do you differentiate?”

You: “First of all, we’re building our solution on a completely different fundament. The founders of (Competitor Name) are new in the space and are, from our perspective, making some very fundamental mistakes in their approach (…you can elaborate). My co-founder Dirk did deep research in the area of (…) for more than six years and has insights, nobody else has (…elaborate).”

Here is another way to look at it:

You’re most compelling three arguments and moats are your biggest joker cards. Know them, and then drop them. Use them wherever it makes sense in a conversation. Hammer it into investors’ brains. Repetition doesn’t harm here, by the way. We learn through repetition.

So, what are your joker cards?