- Ed Amoroso, who runs the consultancy TAG Cyber, is an NYU professor in cybersecurity and was previously a longtime AT&T chief information security officer.
- Amoroso says he has heard hundreds of pitches, and has picked out a few common mistakes many young companies make.
- The cybersecurity industry has venture capital funding and sales dollars that startups can pick up – if they have a focused approach, he says.
- There’s money on the table for startups in cybersecurity, but young companies must be laser-focused to pick up investment and sales, experts say.
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Investment in cybersecurity startups has been strong during the COVID-19 pandemic. Security startups raised $1.9 billion in VC funding across 104 deals in Q2 2020, according to PitchBook, and 2020 is on pace to exceed 2019’s record for $7.9 billion in total funding.
But that funding has gotten tougher for little startups to capture, PitchBook shows. In no previous year have there been more late-stage deals than early-stage deals, as has happened this year — seeming to indicate that investors are flocking to safer bets rather than risky young upstarts.
In order to compete, startups must refine their pitches for funding and for sales, says Ed Amoroso, CEO of consultancy TAG Cyber, a professor at New York University, and former chief security officer of AT&T. As a consultant, Amoroso says he has heard hundreds of pitches from startups hoping to make a name for themselves, while also discussing with venture capitalists what they are looking for. At AT&Tm he was pitched for nearly two decades by many startups hoping to get a foot in the door at the powerful company.
In TAG Cyber’s new annual guide to cybersecurity – a 340-page report – Amoroso urges security startups to sharpen their approaches. Amoroso’s tips include very tangible guidance steering startups away from commonly made mistakes. .
“I don’t know what your pitch deck looks like, but I can almost guarantee you it will be better if it starts on Slide 4,” he said in an interview with Business Insider. “No one wants the introduction. Get right to the meaningful content.”
Don’t tell investors and customers that your product will save time and money – every company says that. Skip to what is unique about your startup. What problem were you inspired to fix, Amoroso suggests, and what is the inspired approach that fixes it?
Don’t include a “logo wall” of companies that use your product, he advises. “Be really careful. You could be pitching a former executive at those companies who asks who gave you permission to use the logo and who your contact is. If you don’t have that really nailed down, that could end up blowing the deal.”
Don’t include live demos when pitching investors and companies, he also says. They often don’t work – and if they do, “they’re usually a letdown.”
And he says you should not have one pitch deck, but several, targeted to different investors and parts of a company. “Make sure your company fits into the VC’s strategy and get to know a little about each person you are pitching. Align backgrounds and experience and make it personal.”
Investors who are solely focused on finances want to know if you know how to make money, Amoroso says, but investors who are experienced in tech want to know about the coding, with no fluff in the conversation. Security pros with a strong sense of justice want to know if you can stop criminals, visionaries want to know if you are breaking new ground, and operations managers just want to know: “Are you going to break my network?”
Pitching any of those audiences with the wrong approach can ruin your chances to secure funding or make a sale. On the other hand, learning about the different personalities and developing relationships is invaluable in launching a company – and may be a new skill that young engineers need to learn.
“Having a warm lead or soft intro from a trusted source helps companies break through the noise and may give the VC an extra bit of confidence in a founder. In short, never underestimate the necessity of a strong network,” Amoroso writes in the annual guide.
Here are Amoroso’s suggestions for cybersecurity startups pitching to investors and companies:
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