Pitching for Funds
Having just finished the spring semester I was led to ask myself ‘why is pitching so important in entrepreneurship education’? The question occurred because as an entrepreneurship professor I have the pleasure of sitting through countless business plan presentations, elevator pitches, stadium pitches and trade shows as part of our assessment of the students. These assessments have become a ubiquitous feature of entrepreneurship education and can be found in countless programs and competitions across the country. When thinking about the ‘pitch’ one is quickly drawn to TV pitchmen like Billy Mays and Anthony Sullivan and their somewhat exuberant commercials. The sales pitch is clearly an important skill for gaining customers, both for sales people and entrepreneurs, the pitch in entrepreneurship though is normally focused on efforts to raise funds or gain interest in a venture.
Pitching for funds comes in many forms. The standard elevator pitch, for example, involves a one minute proposal that provides an overview of a product or service, a company and a market; with an explanation of why it might be attractive to investors. The elevator pitch is typically trying to simulate that once in a life-time opportunity when you accidentally meet somebody who could make your venture take-off but you only have the time span of an elevator ride to make your case and get their interest. Apparently, the elevator pitch has its origins in Hollywood where script writers would attempt to gain the interest of producers while riding the elevator. An alternative that we have used recently is the ‘stadium pitch’, apparently created by Chet Holmes. Here the approach is more complex but driven by the idea that you have a stadium filled with perfect prospects but that as soon as you start talking they can walk out. In this method you have to capture their attention with a ‘wow’ that has value to them, encourage them to want to take action (or create a ‘buying criteria’) and then pitch your value to them (the ‘core story’). In this method the pitch for the product or service comes at the end, which is quite different to an elevator pitch. The stadium pitch is also slightly longer and tends to simulate a ‘sales’ situation where more time is available to attract interest. We also use formal business plan presentations where prospective entrepreneurs learn to present their business propositions to prospective investors, typically focusing on the investment opportunity, the team, the company, the product or service and the proposal’s financial attractiveness. In this form the pitch is simulating a more formal opportunity to attract investors where the entrepreneurs are interviewed intensely and is somewhat akin to what they would experience talking to business angel syndicates or venture capitalists. The final method used is the trade show (sometimes called a venture exhibition). Here prospective entrepreneurs develop their ability to demonstrate business concepts through a more visual means using prototypes, display boards, and media; basically any means through which they can capture the attention of passers-by and get them to talk about the opportunity.
Having just sat through these various types of pitches I was left wondering why we use them. The conclusion is perhaps obvious. Entrepreneurs during the venture creation phase are basically sales people. They need to convince a whole range of different people (e.g. family members; customers; suppliers; partners; and, investors) to buy into the concept they are trying to start. All of the techniques used assist people to acquire communication skills that they need to sell their business ideas effectively to many different types of stakeholders and in many different contexts.
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Tags: Elevator Pitch, Entrepreneurship education, New venture planning, venture concept