🧠 the 8 things investors look for in a pitch (that you should too)

Let's dive deep into the 8 T's: team, TAM, timing, traction, theory, tracking, terms, and technology.

Hey friends 👋

Only 16% of startups manage to raise money from angel investors.

By the time you get to Series A, that drops below 1%.

Why?

It’s not complicated. Most of the time, they just weren’t fundable.

If you’re raising a round (or will be soon), ensure you stand out by covering the eight T’s investors look for in a pitch: team, TAM, timing, traction, theory, tracking, terms, and technology.

Let’s dive deep 👇

The top of the list should be obvious:

1/ Team

In fact, starting with team is cliché.

I’ve talked about the importance of team so much that you’d think I’d have little else to say.

And yet, I do.

Because the truth is that no one funds the B team. We’ll invest all day long in A teams with B ideas, but never B teams with A ideas — why?

Because an A team has a good chance of pivoting that B idea into a successful business, while a weak team will flub the A idea into a costly failure.

(btw… team is a lot more than just the founders)

So why are you the right team to go the distance here?

2/ Total Addressable Market (aka opportunity)

But that’s not enough! There needs to be an opportunity.

You need to be tackling a really big problem in a really big (and growing) market.

That seems straightforward enough. But there’s actually a lot more to it than it seems.

A “big market” doesn’t just mean there are a lot of people in it.

There also has to be desirability:

• Lots of potential customers; AND

• A big, unsolved (or poorly solved) problem; AND

• A scalable, lovable, truly differentiated product that solves it; AND

• An eagerness to pay for it.

When looking at your total addressable market, don’t just consider the people and problem. Consider their eagerness to solve it. Start with a niche.

Remember — TAM isn’t a number; it’s the opportunity.

Therefore, your pitch must include the size of the market, the severity of the pain, the urgency to solve it, and the evidence for why this is the right solution to it.

Because that’s what makes an opportunity compelling.

3/ Timing

If the most common question is “why you”, the second most common is “why now”.

In other words, why not a year ago? Or a year from now? What about the current market conditions make this the right moment to pursue this opportunity?

Evidence for timing is varied:

• technological advancements & trends

• shifts in consumer behaviour

• regulatory changes

• cultural moments

• growing markets

• emerging trends

• competition

• etc.

These are all signals that the conditions are ripe for rapid growth — you’re riding the wave, rather than paddling upstream.

Great timing is a superpower. Neglect it at your peril.

4/ Traction

Ok, right team, right market, right time — so how has that been working for you so far?

Traction is the acquisition of confirmatory data in support of a market hypothesis.

In other words, are customers saying yes?

The most straightforward way to think of this is sales, of course. But that’s not the only way to measure of traction:

• References

• Retention

• Referral

• Sales

• Pre-sales

• Crowdfunding

• Letters of intent

• Waitlist/beta signups

• Customer interviews

• Validated research

They all count as traction — in descending order of persuasiveness.

Traction is a ladder, and the higher you are, the more risk you can accept, and the more funding you can acquire.

At the end of the day, traction is fairly simple:

Can you prove you’re solving a real problem for real people?

5/ Theory

You’re the right team, on the right track, in the right market, at the right time, and there’s potential to get huge — but you’re not huge yet.

You need a credible theory of how you’re going to get there.

In familiar startup terms, the theory is a combination of your business model and go-to-market strategy.

Your theory needs to have:

• a compelling value prop

• for an early adopter

• who you can easily find & serve

• in a way that makes money.

One of the most common shortcomings I see in startup pitches is a vague, unproved, or expensive go-to-market strategy.

Let’s do a sidebar.

The go to market component of theory is the intersection of two things:

1. An early adopter that gets you into the market; and

2. An efficient means of getting a message to them.

The biggest mistake founders make is to keep this high level: we’ll run Instagram ads; we’ll use influencers; we’ll do network outreach; etc.

You’re waving a magic wand, and magic wands are lazy. We hate them. And you should, too.

You’re not a wizard, Harry.

Instead, use the “how shovel”: dig deeper by asking how.

Here’s an example of a vague strategy:

We’ll target eco-conscious consumers who want sustainable cleaning solutions.

See how much clearer we’re getting?

Don’t stop digging until you get mired in detail only the experts care about.

After all, if you can’t get to that level, how can we expect you to execute on it?

No one will pay you to guess and check.

6/ Tracking

In the same vein, your ability to be successful is directly tied to your ability to identify and track the metrics that matter.

What gets measured is what gets improved, after all.

And your first instinct might be that it’s obvious — sales, of course!

But the problem with traditional metrics — revenue, market share, etc — is that they are zero on day 1, but still functionally zero on day 300.

These are lagging indicators of success. They tell you if what you did yesterday led to a result.

In an early-stage company, or when doing anything innovative, you need to find the leading indicators that tell you if the work you’re doing today is likely to lead to that result tomorrow.

In other words, taking a step back, what are the signals you can measure that point toward dollars and customers?

And then… what are the signals that we’re heading toward those signals that point toward dollars and customers?

And then… what are the signals that point toward those signals that point toward … you get the idea.

It’s turtles all the way down.

And it’s called innovation accounting: we focus on tracking actionable metrics of validated learning — such as customer engagement, retention, and other early indicators of product-market fit — and use iterative experiments to make data-driven decisions about whether to pivot, persevere, or abandon our ideas.

Finding the right metric is both an art and a science, but here’s a straightforward example:

Let’s say your startup is a forthcoming meal subscription app. You might measure the conversion rate of users signing up after viewing a landing page, in order to validate whether their value proposition resonates with potential customers — before building the full product.

In other words, you can’t track sales, because there’s nothing to sell, but you can track whether or not users will even care.

Many are a lot less straightforward.

But always game it out like a chain of leading indicators. If you’re building an ad-based social platform:

• To get revenue, you need advertisers.

• To get advertisers, you need inventory.

• To get inventory, you need engagement.

• To get engagement, you need acquisition.

• To get acquisition, you need a well-placed value prop.

• etc.

Then, what’s the lowest point on that ladder for which you don’t have compelling evidence? Your metric is probably in there somewhere.

And if you want to gut check your metrics, feel free to book a session.

7/ Terms

All of this culminates in an ask of your investors:

We need X dollars for Y time period to get us to Z milestone.

For example:

• Pre-seed: We’re raising $250K for a 6-month runway to validate our initial product concept with 100 pilot users

• Seed: We’re raising $1M for a 12-month runway to scale our user base to 10,000 monthly active users and demonstrate product-market fit in our initial vertical.

• Series A: We’re raising $6M for a 24-month runway to build out our enterprise sales team and achieve a 3x increase in our B2B contract volume.

As the astute reader will have noted, the milestone is tightly related to the Tracking, though it’s not always identified as such in a high level pitch.

In fact, it’s pretty common to have a milestone of just the next round:

We’re raising $2M for an 18-month runway to get us to a Series A.

But notice how comparatively weak that seems as an ask!

The reason it seems weaker is that it says neither what progress the money gets you, nor what you need to accomplish before you can successfully raise that next round.

This credibility is a big part of your investment readiness.

The ask isn’t for investors to cover your expenses for a period of time. The ask is for them to help you reach a key milestone in that period of time.

8/ Technology

It’s a little contrived, but I call this “Technology” because it begins with a T. 😅

It’s more accurately represented as defensibility, or secret sauce:

It’s the work product you’ve created as a team in order to define and achieve the above, as well as why that creation won’t be obliterated by the market.

That defensibility is two things:

• Breadth

• Unfair advantage

A common problem with startup ideas is that they represent a feature instead of a business — meaning the concept is too narrow to stand alone as a full, scalable company. It solves a single problem without enough scope to address a broader market or generate sustained revenue.

These are also too easily obliterated by competitors who do offer a full solution — they’ll just add your feature to their product!

You need breadth, but it’s not enough.

You also need defensibility — meaning your company creates barriers to entry, making it difficult for competitors to replicate or outcompete. In other words, it’s your ability to sustain a competitive advantage.

For consumer packaged goods, inventions, and deep tech, this is often (though not always) patent protections on your core intellectual property.

For SaaS, it could include proprietary algorithms or unique expertise, but there are a number of additional ways to create barriers to entry:

• A strong network effect

• Accumulated unique data

• Exceptional user or customer experience (loyalty)

• Deep integration into customer workflows & ecosystems

• etc.

How will you keep competitors at bay?

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With all that under our belt, let’s circle back to the top-line:

A pitch is just a 10-slide story of these 8 T’s.

Most of these map fairly closely:

• Terms → ask

• Team → team slide

• Theory → business model & GTM slides

Some other T’s don’t have a dedicated slide, but find their way to multiple slides. For example, Tracking is often in the ask, traction, and roadmap slides, and often stated only implicitly.

But when one of the 8 T’s is missing entirely, it’s pretty obvious.

Often glaringly so.

So if you’re fundraising, go through each of the 8 and make sure you have a theory of hugeness that’s credible.

Until next week,

— jdm

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