“And Then Magic Happens” – Are You Accidentally Making This Claim?

I just came from a startup pitching event with about 100 angel investors and VC’s in the audience.  The startups only had the typical 5 minutes to give their pitch, which meant they had to dramatically streamline their full story into something more akin to an elevator pitch in a really tall skyscraper.

I knew one of the startups because I have already verbally committed an investment to the founder.  I talked to him at the mixer afterwards and asked about the feedback he got from the audience members.  He responded that too many of the investors he talked to immediately afterwards said they didn’t quite get it.  As I thought about it later, I realized that he might be suffering from the “and then magic happens” dilemma.  Without knowingly doing so, his streamlined story caused his pitch to come across like this:

  • There’s a huge set of barriers in the (A) market that makes it extremely difficult for companies to (B)
  • If they could only have a simple way to accomplish (B), they could quickly realize benefits (C), (D) and (E)
  • We give companies a simple way of accomplishing (B)
  • We already have ______ as customers, we’re raising _______ and our founding team is made up of _______

Oops, the shortened pitch caused the founder to accidentally make an “and then magic happens” claim without knowing it.  And the investors that said they didn’t quite get it are likely saying they don’t know what the company actually does.  In some cases this is an easy fix to the pitch but in other cases, the “exactly what we do” explanation can be difficult to convey in 30 seconds or less.  But this is so critical that you cannot give up until you nail it.  Savvy investors don’t invest in magic.  If you can figure out a basic 30 second explanation, you will earn your chance to sit with those same interested investors to give them the more complete explanation, if needed.  And that’s all you’re shooting for during pitch events – follow on conversations.

Check out my other blog articles related to fundraising here.

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Author: Gordon Daugherty

Over the past 15 years Gordon has seen more than 1,500 startup pitches, given personal advice to more than 500 entrepreneurs and been involved with raising over $45M in growth and venture capital. Throughout his 28 year career in high tech, Gordon has two IPO’s and a $200M acquisition exit under his belt. Now, through his advisory practice called Shockwave Innovations and as Managing Director for Austin’s Capital Factory startup accelerator, Gordon’s focus is purely on educating, advising and investing in tech startups.

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