GTM V – Pitching to VCs – What to tell us about your customers.

At a broad level – pitching to VCs is a process over many months and at different levels of depth.  Mark Suster outlines a great series on how to raise from VCs and our very own Adrian Lloyd sets out how to pitch to Episode 1 here and here.

However, what often gets lost is what to tell us about your customers.  It can seem a simple area to cover.  A painful truth, however, is we see Entrepreneurs consistently getting this wrong through high-level assumptions that leads us to question their credibility and understanding of what they’re building.

Here’s a few of the worst offenders:

Confusing Market with Opportunity

The high level approach to the marketwhere an Entrepreneur will use a report that states that ‘Dental hygiene is a $7bn market and we only need 1% of that’ to make a huge business.

Often we’ll dig deeper into this.

“Great – tell us how that market is broken down? Which of the specific areas do you address? What alternatives to the customer have compared to you?”

Silence can fill the room, sometimes the right answer is we don’t know yet.  Be clear, the size of industry is not your addressable market.  Do not conflate the market, break it down into what you know and let’s discuss those assumptions together.

Sweeping Generalisations

“So who are you selling to?

Financial services

Yes – but whom in Financial Services

Well all of it’

 What it tells us is that you don’t really know who they are – it’s a very general approach to the customer. We want to know – is that Wealth Management? is it the IT Operations team in Financial Series? Is that the CIO or the Operations leader? Is it the Head of New Product Growth?  Be specific as to what role within a specific category of Industry.  This will often be a starting point and will certainly grow into adjacencies in the future.

Presenting a pipeline as a truth.

One of my roles before Episode 1 was 2 years in Sales Operations covering a $1.5bn portfolio of business across 23 countries with a 500+person sales team.  That’s weekly, monthly, quarterly and annual sales commits, covering nearly every excuse for pipeline health, slowness in sales conversion between stages, deals shifting for various customer reasons.

Therefore, when you present a pipeline and we ask deeper questions – know that we’re simply trying to understand what is actually real.  Pipelines evolve, they have sensitivities built in that are not always obvious. Innovation budgets and pilots are not always representative of a what will move into production and a line of business budget. Share the truth of the relationship and we can have an open discussion on how we envisage working together

The plan always says to Hire an Experienced Sales Person

We’re not saying this is a bad thing – more it’s a timing thing.  At seed stage, you should be focused on Founder-Led sales, getting to a deep understanding of your customer, their pain points and what value you bring.  Once you understand and see patterns in the value you bring, the proposition resonating frequently– then it’s the right time to bring in the first commercial hire.

Too often, we see Entrepreneurs searching for an easy answer by hiring an experienced sales person before you – as Founders – have even understood your customer. This is a common discussion during the VC pitch – what is the right talent plan in the Seed to Series A journey.  It differs depending on the type of start-up, industry focus and maturity.  Be open to that discussion – it’ll help align Entrepreneur and Investor.

The Easy Bit – what to tell us about your customers?

  1. Which customer groups you will focus on?
    • Top down and bottom up market focus.
    • For Episode 1 – pick a key market to understand in depth eg UK, Financial Services – we want to see you win that market and then go beyond.
  1. Who you sell to within the customer.
    • Their role, their personality or persona, their goals
    • What they see as valuable in your product.
  2. How you think about pricing.
    • You will have a starting point, that will evolve and continue to do as as new customer groups and usage and value models emerge.
  3. How you will develop internally to create an incredible customer experience? This will evolve from Founder Led Sales to a greater commercial structure at Series A.
  4. How you think about your customer’s journey in relation to your sales process.  The more mature the business and for traction & execution focused areas, the more we expect this to be a mature discussion.

In pitching to VCs, observe the questions asked about your customer.  The majority of the time, it’s a VC trying to understand what you see in the customer base and determining if you have a shared vision for the market, customer pain and therefore how you grow your company.  After all, as an Entrepreneur you want a VC onboard who believes in your vision of changing an industry through deep customer insight.


Over a series of blogs, we’re focusing on the Seed to Series A step of GTM and share what it means to think through the customer experience:

INTRO – Why we’re all in Sales

GTM I – The Detail:  What are the individual areas we should think about?

GTM II – Playful Customer Dynamics: Connecting with customers

GTM III – What doing it correctly actually looks and feels like?

GTM IV – What tools should we use and where can I access advice?

GTM V – Pitching to VCs – What to tell us about your customers.

We do more than just blogs – after all the writing of theory is easy. We work with our portfolio companies at a deeper level on an accelerated approach to crafting a properly and considered GTM that delivers results. Working with a wider ecosystem of expert partners and existing expertise within the Portfolio Companies, we’re embedding customer culture into the heart of success for startups.

We welcome input from you – expertise, areas to hear about more.

Comment below or tweet at the link.

#GTM  #SalesDoneRight #CustomerExperience #startupsuccess





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