How to pitch really damn well

I spent a large fraction of my life thinking about what makes stories good or bad. At YC and at Magid I’ve specifically thought about what makes a startup story good or bad. To me, startups are themselves a story and founders are the storytellers, adjusting the narrative to fit the audience while (and this is critical) being honest. Let’s focus on the story that founders tell investors.

Every story serves a purpose. The purpose of an investor pitch is twofold:

1. Convince investors your startup is going to be worth billions (trillions?) of dollars.

2. Scare them that they're at risk of missing it.

To do both, consider what an investor's actual job is in every early meeting. An investor’s primary limitation is time, not money. No investor or firm can meet with and diligence every company raising a round, so at each meeting the investor’s primary objective is elimination: dropping companies that don't merit more time. Investors know that a tiny number of companies will generate essentially all venture returns, and their nightmare is crossing off one of those. Your goal in every meeting is therefore simple to state: make them feel it is unsafe to dismiss you right up until they decide that you’re the big one.

The best shorthand investors have for future greatness is enormous growth. If you have it, build the story around it. If you don't yet have it, build the pitch to convincingly demonstrate that you soon will.

World building

The best founders are worldbuilders. They are able to envision a future world that doesn’t exist yet and share the intense excitement of that vision with investors. The path from here to that reality may be excruciatingly difficult, but worldbuilders convince investors that their team, technology, and execution will close the gap.

Founders who get great at this are the most formidable of fundraisers because once they’ve taken an investor into their world, they can justify extraordinary claims about their company’s future. Investors also read this ability as a recruiting signal. A founder who can pull an investor into their world can do the same with the exceptional people they need to hire.

You want to be one of these founders. You’re probably immersed in your company’s operations. You’ve done some complicated and super cool things there to optimize margins or something. Walking investors through that complexity will generally lose them, at least in your first pitch. Instead, show how your current work leads inexorably to altering something foundational about the world. You already believe this in your gut. Now you have to get someone else to believe it in their gut in about 15 minutes. Sometimes you have to do it in less than that.

The vertebrae

Walking into pitches with an untested narrative is a dangerous proposition and a great way to waste the time and social capital it took to access an investor. Instead, before your earliest meetings identify the three or four key points that best support the argument that your company will absolutely become enormous. These are the vertebrae of the story, your load-bearing claims. Choose them so that if an investor believes any one of them, they'll be afraid to write you off.

Then test these points. Treat your meetings with investors in the six to twelve months before the raise like a laboratory. Watch which points generate leaned-in questions, which ones investors repeat back to you, which ones they remember a quarter later. What excites them is your data. Record the reactions and use that insight to refine your narrative over time. Do this right and, by the time you're formally raising, every vertebra has been load-tested against real investor skepticism.

Make them contrarian, then make them right

There's a deeper layer to investor psychology worth understanding, because the best fundraising stories exploit it deliberately.

Every investor wants to be a contrarian. It's cool. It's the equivalent of wearing a black leather jacket. And it's what they tell themselves and their LPs for why their fund is differentiated.

Of course, it's rare to find a contrarian who wants to stay contrarian forever. The trick of financially successful contrarians is to stake an initial position counter to prevailing wisdom and then find ways to build consensus around it. Contrarians who never manage the second half are, simply, curmudgeons.

Founders take advantage of this dynamic by making the investor feel that investing in their company is an arch-contrarian position. That's the easy part. The hard part is convincing the investor, and then the world, that more capital will show up once the company begins growing and their secret starts getting out. That requires the founder and investor to believe together that at each stage of the funding cycle there will be enough people inside the contrarian tent to feel they're getting a good deal, and that soon more people will realize it.

If you can thread that needle you have an exceptional story because investors will jump at the opportunity to fund.

This matters more now than ever because companies are being founded and scaled faster than ever. Investors are unsure of the metrics and benchmarks by which to evaluate a company, but they have all seen generational companies slip through their fingers. Structure your vertebrae to position your company as a massive contrarian bet and you can capture the excitement and fear of investors in the AI era.