One of the toughest things you will go through as an entrepreneur is finding out how to pitch your startup to investors. You will get shot down multiple times and often torn to pieces if your numbers or pitch doesn’t stand up under scrutiny. However there are some tips and techniques to make a good pitch and win over prospective investors.
So when it comes to pitching your startup business to investors, you are first expected to accept the fact that several other entrepreneurs are probably doing the same to them. You will therefore want to give an explanation on why the investors should choose to invest in your start up business and not invest in others.
Your intention will be to make the investors feel like they would want to hear more about your business and develop an interest towards investing in it. The information you will be willing to give should be full of benefits that your investors will get by putting their cash into your business.
A good pitch will give solutions to the following questions:
1. What is your aim in the pitch?
The first statement should capture the attention of the investors. I believe you should address “what is the problem” followed by “what is the solution.” After this statement, the investors should feel more comfortable and interested with the rest of the information in your pitch and understand upfront what your business, product or service will do.
Related: Pitch Deck Presentation Review Video
They might interrupt you, so be prepared for questions as you go through the presentation. However they might remain silent and go throgh a Q&A session at the end, but its always best to be prepared for questions at any time.
Being interrupted unless they tell you to stop does not mean that they are no longer interested in whatever you are going to tell them.
During the introductory statement, briefly state what your enterprise deals with. Then it’s important you tell the investors the key messages in the shortest time possible in your pitch.
I have been in pitches with only as little as 10-15 minutes provided, others can be 20-40 minutes. However long or short you are given, make sure you are prepared for the right timing. There is nothing worse than hitting a hard stop without even getting to how much capital you are raising or how great your product is because you have run out of time.
A good rule of thumb is have a 30 minute pitch which can have more detail, but also have a 10 minute pitch that is for short quick fire sessions. Practice both and you will be able to cover all bases.
2. What type of team are you working with?
Investors always want to work with the best people. Do a short introduction of the people in your team. If there are many, narrow down on the best colleagues you have or the key people in the team.
Talk about the successes they have achieved and explain briefly on how the achievements were met. Talk about the highest qualifications they have attained and the experiences they have from their previous works. Then with confidence convince the investors that you have the best team that will work towards their satisfaction and a successful business.
3. What is unique about you in customer satisfaction?
Talk about the customers that your business is targeting. Explain briefly what the customers expect and focus on how your business is different from others when it comes to customer satisfaction and solutions. You can also cover competitors and how you differentiate or deal with competition.
State a few examples on how customers have benefited or will be able to benefit from your good and excellent services. Convince the investors that indeed there is more demand out there for your products and services. At this point you can also explain to your investors how you have managed to advertise or how you will be marketing your products.
If you have already done your market research now is a good time to lead into this.
4. Who are your main potential customers and size of market?
Every new start up business must have a target market for its products or services. Try to explain to the investors the unexploited market that your business is targeting. Be specific on which customers your products are meant for.
Let the investors know that the customers you are targeting are many and that the number will keep on increasing. Let them know the size of the market, how many potential customers and what are the locations. you can use a number of KPI’s and demographics here to illustrate this.
Explain what advantages you have over other entrepreneurs that will best assist you serve the targeted customers. Talk about how innovative your business will be so as to maintain its monopoly in the targeted market. Investors will want to invest in a business entity that ensures customers retention.
5. What motivates you and your team?
Investors will want to know why you chose that particular type of business. Inform the investors of the great achievers in your line of business. Share a story of one or two people who have once succeeded in such like businesses.
Let the investors know if you have previously had a one on one conversation with great achievers in your line of business. If so explain how their experiences in life motivated you. You can also mention that your target is to achieve more than they did.
Of course you will need to convince the investors on how you will make it a possibility.
6. How will you get finances?
Your business must have started with some “seed” capital. Explain to your investors how you got funds to start the business. Let them know how you have been getting more funds since you started the business.
Make it clear to them on what are the easiest ways to get funds in the business. If there are insufficient funds, tell them on what plans you have to increase your sources of finance. Convince them that your team will manage the funds well and that money will not get lost.
7. The numbers – Is your business expanding?
Lets cut to the chase one of the most fundamental parts of the investor pitch, and the biggest question you will need to answer is on your numbers. The hard forecast that should break down all your cost, revenue and profit year by year for the next 5 years.
Expect to hear terms like burn rate? The rate at which your enterprise spends money, especially venture capital, in excess of income. When is your break even point/date? When you reach a point in the business venture when the profits are equal to the costs.) What is your Exit strategy? In other words, the exit strategy is a way of your investors “cashing out” of the investment. Examples include an initial public offering (IPO) or being bought out by a larger player in the industry such as an M&A.
These are the hard questions you will be asked.
Be prepared to back up your assumptions with either proof from existing sales, or good statistics/surveys from market and product testing or potential customer feedback that you have gathered. There are a number of processes you can use to test your assumptions using the lean startup method.
Investors will want to know where you started from and where you have reached at the moment. Explain to them the different stages you have gone through and how you were able to succeed in each stage. Mention how many staff members you have and how many you started with.
Explain the challenges you have gone through and how you have been dealing with them. You can also state where you will want to be in the near future and what strategies you have in place to reach there.
8. Which big company would like to do business with in future?
Investors will want to know whether you intend to work with any big firm in the future. Let them know how you will ensure business continuity in future. Explain to them on how you would want to make your business the biggest thing in the country or even worldwide. Are you planning to merge with other firms in future? If so which kind of organisations are you targeting to work with?
Explain to the investors that the products you are dealing with will one day be available all over. Let the investors know whether you will one day rebrand to something else. If you have intentions of selling your business in future let them know what benefits you have in mind by doing that.
It’s important to finish your pitch in a more interesting manner. Some investors might want more explanations on what you have talked about. Feel free to repeat yourself in some of the points or dive into detail. Answer all questions that they might ask and make them feel satisfied after the pitch.
All the above information can be best delivered in form of slides. All will be much easier for you if you prepare well, know your facts and numbers and get your the slides nailed down well in advance.
A good pitch will attract more investors and if you keep trying in the end your dreams will come true. Have any of you had experience pitching? what type of deck or slides did you use? what was the toughest part of the pitch, please share you comments with us?
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