The legend of the “elevator pitch” began when a screenwriter got into an elevator with an unsuspecting Hollywood studio executive. Knowing they had a limited amount of time to impress the executive, the screenwriter seized the opportunity and pitched their idea. Using just a few but impactful words to wow the exec, the idea was green-lit.
For small-business owners, formulating an elevator pitch can be helpful in raising money and also understanding the fundamentals of their company. When asked about what they do, some business owners default to trying to describe their companies through the 5 Ws—the who, what, where, when, why of their companies. Crafting an elevator pitch, however, forces them to master what they do in easy-to-remember language ready to be shared whenever someone asks. Through the process of formulating that language, business owners can learn a lot about who they are, how they stand out and where they’re going.
What is an Elevator Pitch?
Business owners traditionally put together an elevator pitch when they're looking for venture capital to grow their business. But it's also helpful to have so employees, customers and vendors can use it to quickly describe what your company does and how it adds value.
In its simplest form, an elevator pitch should answer “What pain does your company solve and for which niche set of customers?” In other words, why will specific people pay money for you to solve their problem instead of using other solutions? In this way, the elevator pitch can help employees understand the company’s mission and why they show up every day to work. It can also set an aspirational target for what your company wants to accomplish in the future.
Ron Saharyan, co-founder and managing director at Profit First Professionals says his elevator pitch is this: “We help business owners pay themselves first and have enough cash for Uncle Sam regardless of their liabilities. They need to focus on profit.”
When an elevator pitch is used to raise capital, the company must think of it as the 30 second summary or 'hook' to get an investor interested in hearing the entire pitch deck.
David Weiss, a fitness trainer in New Jersey tells prospective clients that “I can help you reach your fitness goals, improve your health and increase your confidence forever in half the time you’re now spending at the gym.”
And Justin Lackey at Good Cents Bookkeeping, Inc. keeps it short: “We are better than your current bookkeeper.”
How to Create an Elevator Pitch
Start formulating your elevator pitch by stating a big problem your company is solving. People want to invest in large unsolved problems because these companies can scale.
Next, state which customers you're solving this problem for. (For investors, this needs to be a big targeted addressable market so again the company can grow.) Then discuss your unique sellable solution to the problem and the success your company has had so far recording revenue.
Finally, state the special experience that your management team has in solving these problems and building solutions in this area. Remember: For investors, building businesses is not only about ideas but about the execution of them—and who you have on your team is a big part of that.
When to Use an Elevator Pitch
When an elevator pitch is used to raise capital, the company must think of it as the 30-second summary or “hook” to get an investor interested in hearing the entire pitch deck. The perfect response to your elevator pitch should be “When can I learn more?”
If you're looking for investors, especially during the COVID-19 pandemic, know that investors are even more focused and know what they want to hear from an elevator pitch.
What Steve Miller, founding partner at Origin Ventures looks for in an elevator pitch is simple: “Are they solving a big problem and why are they the team to execute on this?” he says.
Origin Ventures has invested in several companies during COVID. In one case, they led a $9.3 million round in Blueboard, a business that focuses on uniquely memorable experiences for employee rewards and recognition.
According to Taylor Smith, the company's CEO and co-founder, Blueboard's elevator pitch to Origin Ventures was about providing a solution to what is going on in the world right now.
"Given everything that has happened in 2020," Smith says, "building connection and community at work is more important than ever. Our company helps companies achieve that goal in an authentic, visible way."
If your elevator pitch “hooks” the investor, they'll likely follow with targeted questions. They will want to know how many paying customers you have and the growth of your revenue. They will also ask where the modest exits for investors like them are in the near future. They may even ask who will eventually buy the company so they can get a return on their money. If the business is sold, what will the founder’s expectation for company valuation be? They will also be interested in how your company can prosper on limited financing since multiple rounds may not be possible.
The elevator pitch is a great exercise for every company—even mature ones. It helps you and your team focus on the difference you really want to make for customers and can assist you in raising additional capital when your business grows. Use it strategically and it will help you take your business to new heights.
Read more articles on venture capital.
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