When over 90% of funded pitches share one thing in common, your pitch better include the same. Successful startups like Mint.com, airbnb, and ZocDoc all began their pitch with the problem. To win funding, so should you.
But many startups present the problem so poorly that they destroy their pitch. This has led at least one prominent investor, Bill Reichert of Garage Technology Ventures, to coach startups against presenting the problem!
The key to pitching the problem successfully is to follow the 30/90 Rule. If the problem is simple, explain it in less than 30 seconds. If the problem is obscure, explain it in less than 90 seconds.
Case in point: In 2011, GetAround pitched onstage at TechCrunch Disrupt and started with a familiar problem: “We’re here to share our vision for solving a problem we call Car Overpopulation. We have over 250 million cars in America that sit parked 22 hours each day. Our solution to this problem is Getaround, a new way for people to share cars.” Simple, clear, and it required less than 30 seconds. This simplicity not only contributed to GetAround taking home the $50,000 grand prize for best pitch; today the company has over $19 million in funding.
Two years later when Enigma pitched on the same stage, cofounder Marc DaCosta had to explain the esoteric issue of public data access via online databases. DaCosta gave a short description of public data, then outlined the difficulty with data access, including “restrictive web portals to messy FTP sites to 1970’s database formats.” It took Enigma 90 seconds to set up the problem before they introduced their solution, and in that time they successfully oriented the audience to the issue and highlighted the need. Enigma would take home the $50,000 grand prize that year.
Don’t waste time explaining familiar details like the number of cell phone users in the U.S., and avoid long exposés on the importance of fashion in the modern world. Limit yourself to 30s for simple problems, 90s for complex problems. When you do, you maintain investor interest while highlighting the needs that your product fulfills. That wins funding.
For more on how to pitch the problem, read Chapter 2 of The Startup Pitch.