5 things every academic should know when pitching investors

As Director of the Center for Entrepreneurship at UC Davis, I work with a number of faculty and students who are interested in seeing their research move from the lab into the market. To do so often requires pitching investors on their ideas. The challenge is that these are two very different worlds–with very different values, frameworks, and language. Not an insurmountable challenge, but usually enough to derail the initial meeting.
With this in mind, here are a few quick tips to help prevent some of the more common mistakes that academics make when pitching their ideas to investors.

1. It’s about the business, not the science. Until they know it’s a good business, they’ll give you the benefit of the doubt on the science. That means, for the 15-20 minutes you have their attention, your first priority is probably convincing them you’re working on a clear and valued solution to an equally clear customer (and market). In most cases, the market and customer are already well-defined and your research is improving on a common product or process: a better malaria drug, or more efficient light bulb. Here the priority is convincing them your solution is better than what’s out there. In addition to showing that your research is valuable and valued, talking about the business potential is a strong signal that you understand a care about bringing your ideas all the way to the market, they are investing in you as much as the research.

1b. Most investors have science advisors of one kind or another, and you may or may not be talking to them. Find out in advance if you will–and if so, then you can delve more deeply into the science behind the solution. Even then, be sure to show you understand the business aspects as well.

2. Know your solution. Can you state, in 30 seconds or less and in a language my grandmother would understand, the problem you are solving and how you’re solving it? It’s called the elevator pitch, and most entrepreneurs can give you theirs at the drop of a hat. Most elevator pitches include the customer, the problem, and the solution. For more information, try looking here or at http://yourelevatorpitch.com/

3. Know your competition. What’s the dominant solution? What’s the best currently available? What else is under development? How is yours better? Nothing shouts “Ivory Tower” like someone who doesn’t know (or particularly care) about what other solutions are coming out and how theirs matches up.

4. Know your audience. What kind of investors are you talking to: angel investors, venture capitalists, equity investors? Do they prefer investing in very early stage companies (seed money for launching a company), early rounds of an established start-up, or later rounds? Are they general-purpose investors (increasingly rare) or do they prefer to invest in particular markets/sciences (like information technology, healthcare, green technology)?

5. Know your own objectives. Are you trying to raise money? Are you trying to interest them in licensing the technology? Are you doing this because your dean or chairperson asked you to? Be explicit with your objectives (to yourself at least) and open and close your presentation appropriately. One valuable objective is to learn as much as you can about the market potential of your research. In this case, be up front about it–don’t make up a customer or market if you don’t already know. Find out your audience’s expertise and set yourself up at the beginning of your talk by saying “I’m not sure how my research can best be brought to the [investor’s preferred] market and so I’ll talk a little about the technology and then I would like to have a conversation about how you think we might take this forward.”

and as an added bonus track:

6. Ask questions. What are they interested in hearing about? Investors are as often looking for talented people as new ventures, and you may be able to help them by providing your scientific opinion on what’s happening in research that might soon affect markets. Similarly, you might have a doctoral student or post-doc that could work for them or one of their portfolio companies. Finally, you might know colleagues who are working in areas that they have invested in. How can you help connect them to other people, ideas, resources? What goes around comes around, and the more you can help them connect, the more they will help you.