You're listening to Business English Pod, the Business English podcast for professionals on the move.
Hello, and welcome back to Business English Pod.
My name's Edwin, and I'll be your host for today's lesson on pitching to investors.
The world of tech startups can be extremely exciting and rewarding.
But success is certainly not guaranteed.
In fact, 90% of new ventures that don't attract investors within the first three years will fail.
So if your company has made it through the valley of death and you're burning through cash but don't have any revenue, then you'd better make sure you've got a great pitch to potential investors.
In just 10 to 20 minutes, you need to convince investors that they should risk their money on you.
Or, more accurately, why they should risk their money on you instead of on the thousands of other companies they could invest in.
It's hard to think of a higher-stakes presentation than a pitch to investors.
So what will increase your chances of success?
Well, you need to talk about the problem that your product solves and how your product is truly unique.
Of course, in the startup world, timing is everything, so you need to be able to show there's a market for what you're offering.
And a good startup isn't just about a good idea.
It's about a solid revenue model, so you'll need to explain that clearly.
It's also smart to sit down and think about what questions investors might have and answer them before they have to ask them.
In today's dialogue, we'll listen to a presentation by Quinn, who founded an online payments company called Moolah.
In our last lesson, we heard Quinn preparing for his pitch with the help of a mentor.
Now it's showtime, as Quinn delivers his pitch in the hopes of attracting investment.
As you listen to the dialogue, try to answer the following questions.
1.
What is the problem that Quinn identifies at the start of his presentation?
2.
Who is Moola's target audience?
3.
What question does Quinn anticipate the investors might have?
So, business was good.
We were growing at 300% a year.
Our online biz was booming, but there was something driving me crazy.
Credit card fees, and the time it took to get our money.
I mean, 50,000 in fees on micropayments alone?!
!
It felt like death by a thousand cuts, and I asked myself, does it have to be this way?
Turns out, it doesn't.
The whole process is fragmented, with different silos for transaction combinations and no real end-to-end solution.
Until now, that is.
With Moolah and real-time settlement, it's really very simple.
Okay, what you can see on this slide is the traditional way of processing online payments.
Clear?
No.
Simple?
Hell no.
And it sure ain't quick.
Now, look at this.
Just four hops.
The result?
Simpler faster, cheaper moolah can do this in under three seconds at twenty percent of the cost.
Three seconds, not three days.
Nobody's managed to do this before because nobody has thought about an end-to-end solution, but we've managed to develop a solution that works for all cases, so who really cares about this?
Well, I saw some nodding when I mentioned credit card fees, and I see this all the time.
So who cares?
Not just every retailer with an online presence, but every business and customer that takes part in an online financial transaction.
We're talking about over $40 trillion in ACH payments every year.
$40 trillion!
So, how do we take a cut of that?
With Moolah, the buyer and seller share a 50 cent transaction fee.
This is on all transactions of over $10.
Transactions under $10 are free.
This is huge, really huge.
Everyone hates the fees on small transactions, so we give that to them for free and take our cut on anything over 10.
Now, you're probably wondering, will people actually go for this?
Well, they already have.
We've run a pilot with three major online retailers.
With just this early rollout, we've generated $200K in revenue in the first quarter.
And that's just the beginning.
Now let's go through the presentation again and look at the language and techniques Quinn used in his pitch to investors.
We join the presentation as Quinn is telling a story about his previous company.
Yeah, so business was good.
We were growing at 300% a year.
Our online biz was booming, but there was something driving me crazy.
Credit card fees and the time it took to get our money.
If you tuned in to our last lesson, you heard Quinn learning about the importance of storytelling.
And now, in his pitch, he's telling the story of his previous business in order to set up the problem that Moola is trying to solve.
Identifying the problem is a really important element of a pitch.
If your new product doesn't solve a problem that many people face, then how will it make money?
In fact, solving a problem is how good ideas begin, and that makes it a logical place to begin your pitch.
Quinn talks about how credit card payments drove him crazy or made him extremely upset.
What are some other ways we can identify a problem?
Let's run through some more examples.
We had too many files in too many different places.
The big problem here was that the video quality was terrible.
With so many passwords, how can anyone remember them all?
So we saw that there was no way to manage all your records in one place.
Now let's listen as Quinn explains how he approached the problem of credit card fees.
I mean, 50,000 in fees on micropayments alone?
It felt like death by a thousand cuts, and I asked myself, does it have to be this way?
Turns out, it doesn't.
The whole process is fragmented, with different silos for transaction combinations and no real end-to-end solution.
Until now, that is.
With Moolah and real-time settlement, it's really very simple.
Quinn is describing exactly why online credit card payments are a problem.
As he says, it's a fragmented process, which means it's broken up into many different steps.
The alternative, which Moolah offers, is a simple end-to-end solution.
That means they're managing the transaction from beginning to end.
Although we can't see Quinn's PowerPoint slides, we can hear him describe them.
And now that he's identified the problem, he wants to illustrate his solution clearly and visually on his slides.
Let's listen.
Okay, what you can see on this slide is the traditional way of processing online payments.
Clear?
No.
Simple?
Hell no.
And it sure ain't quick.
Now, look at this.
Just four hops.
The result?
Simpler, faster, cheaper.
Moolah can do this in under three seconds, at 20% of the cost.
Three seconds, not three days.
Nobody's managed to do this before, because nobody has thought about an end-to-end solution.
But we've managed to develop a solution that works for all cases.
Quinn is clearly showing how his product is different from existing payment options.
He uses the language of comparison and simple short statements so that it's memorable.
By saying simpler faster, cheaper and three seconds, not three days, he's highlighting what's unique about his product.
The tech world rewards innovation.
So you have to be able to say, as Quinn does, that nobody's managed to do this before.
If you're pitching something that already exists, why would people throw money at it?
Let's practice some more ways of explaining what is unique about your product.
We've managed to cut shipping costs out completely.
So we can provide the same experience, but in the comfort of your own home.
As you can see, the customer maintains control from start to finish.
Now that Quinn has identified the problem and explained how his solution is unique, what does he do next?
So, who really cares about this?
Well, I saw some nodding when I mentioned credit card fees, and I see this all the time.
So who cares?
Not just every retailer with an online presence, but every business and customer that takes part in an online financial transaction.
We're talking about over $40 trillion in ACH payments every year.
$40 trillion!
With a simple transition word, so, Quinn introduces the topic of his target audience.
Notice that he doesn't use overly formal or academic language in his pitch.
He doesn't say target audience.
Instead, he says who really cares about this.
Then he can answer his own question by saying everyone who makes online payments.
Of course, investors need to see that your product will appeal to people.
Better yet, to a lot of people.
So when you identify your target audience, try to be as broad as possible.
You can hear this broad appeal in words like any and anyone in the following examples.
Anyone who's ever played a game online will love this.
Managers, employees, contractors, this is great for anyone working remotely.
We've designed this for students, teachers and school administrators.
This is great for any small to medium-sized business.
Once you've described your solution to a problem and demonstrated you have potential customers, you're ready to talk about money.
Let's listen.
So, how do we take a cut of that?
With Moolah, the buyer and seller share a 50 cent transaction fee.
This is on all transactions of over $10.
Transactions under $10 are free.
This is huge, really huge.
Everyone hates the fees on small transactions, so we give that to them for free and take our cut on anything over 10.
Without a revenue model, an idea is just an idea.
It's not a business.
And in a pitch to investors, you need to explain this clearly and simply.
They need to be able to see that there's an opportunity for them to profit.
That's the entire purpose of the pitch.
Quinn explains very simply how Mueller takes a cut or takes a share of the 40 trillion in online transactions annually.
Notice that with the revenue model too, he's talking about what is unique about his business.
They are not charging for transactions under $10, because that's what drives everyone crazy.
What are some other ways of explaining a revenue model in clear and simple terms?
Let's go through some more examples.
So, each school pays a subscription of $10 per month per teacher.
The app is free to download, but each new game is $2.
We will license this to the hospitals on a yearly basis.
Users can pay per event or buy tickets in bulk at a reduced rate.
Quinn's making good progress, but he's not done yet.
He's got one more trick up his sleeve that will make it easier for investors to give him the money he needs.
Now, you're probably wondering, will people actually go for this?
Well, they already have. we've run a pilot with three major online retailers.
With just this early rollout, we've generated $200K in revenue in the first quarter.
And that's just the beginning.
After the pitch comes a question and answer session, where investors are likely to ask some tough questions.
With some thought and preparation, you can probably guess what many of those questions will be, and it's a great idea to try answering some of those questions before your audience even asks.
Quinn addresses this directly by saying you're probably wondering before asking the question he thinks they have.
This is a clever way of saying.
I understand how you think and I've already considered what's important to you.
That should help the investors have confidence in you as a business person.
Let's try some more ways of anticipating investor questions and introducing them directly.
Now, I realize you may be thinking, will this work in other countries?
So, perhaps you're curious whether anyone else has tried this before.
Before you ask, let me just tell you how many customers we've already signed up.
Well, Quinn has delivered a really good pitch and you have to imagine that the investors will be impressed that he's already generated a lot of revenue.
There are no guarantees when pitching to investors, but with good preparation you can deliver a confident pitch, just like Quinn.
Now let's practice some of the language we learned in today's lesson.
Imagine you are the founder of an online education platform.
You're making a pitch to some potential investors.
I'll give you a suggestion for what you can say during each step of the pitch and we'll provide an example answer for each step.
Ready?
Let's give it a go.
Start by saying that teachers are frustrated managing so many different programs.
Answer.
The problem is that teachers are frustrated managing so many different programs.
Now say that you have the only truly complete education platform in the country.
Answer.
What we have now is the only truly complete education platform in the country.
Next, say that every single teacher and school can benefit from your product.
Answer.
Every single teacher and school can benefit from this product.
Now say the revenue comes from schools buying subscriptions for their teachers.
Answer.
The revenue comes from schools buying subscriptions for their teachers.
Finally, say that you realize everyone is wondering if teachers like using the platform.
Now, I realize everyone is wondering if teachers like using the platform.
Now let's practice some of the vocabulary we've covered in this lesson.
In a moment, you'll hear a series of sentences with a word replaced with a beep.
Repeat each sentence, including the missing word.
For example, if you hear...
You can say, After each response, we'll provide the correct answer.
Let's begin.
Our new social media strategy has helped us expand our online, Answer.
Our new social media strategy has helped us expand our online presence.
We ran a program to see how people would use the app.
Answer.
We ran a pilot program to see how people would use the app.
Answer.
With all these banking charges, it feels like death by a thousand cuts.
By speeding up the process, we can take a of every online transaction.
Answer by speeding up the process, we can take a cut every online transaction.
We've reached the end of this lesson, the second in our series on startups.
We've learned how to identify a problem, explain how your product is unique and describe your target audience.
We've also looked at explaining your revenue model and anticipating questions.
In our next lesson we'll hear Quinn address the investors' concerns and answer some tough questions.
Thanks for listening, and see you again soon.
