Each year, millions of startups looking to raise funds pitch to venture capitalists and angel investors. In most instances, these entrepreneurs get 10 minutes or less to pitch their business opportunity to potential investors who make an instant decision based on they deliver their presentation.
During the presentation, these entrepreneurs put themselves and their businesses out for scrutiny in order for investors to determine whether to back the venture or not.
So, your pitch deck determines how successful your startup launch will be or whether the business idea will never get off the ground.
Indeed, pitching to investors is a nerve-wracking aspect of being an entrepreneur or startup founder.
Here is how to deliver a strong pitch.
Tips for Nailing Your Investor Pitch
The following will elevate your pitch and support your presentation.
Search for Right Investor
Winning an investor begins when you enter that door, and so your outcome is sealed when you pick your investor.
But why is that so? You will not get a check when you pitch to the wrong investors because your business idea may not resonate with them.
Therefore, pitch to the right investor. You can do this by first doing your homework correctly. Research everything about your potential investors, such as their career history, interests, network, availability, and temperament.
The internet will tell where they’re headquartered, the number of exits, and any active investments in your niche.
Create a Pitch Deck
Basically, a pitch deck is a visual representation that a founder uses when speaking to a potential investor. So prepare your pitch deck immediately you find the right investor.
The pitch deck should have 15-20 slides, and they should have the following details.
- The problem you’re solving
- The proposed solution
- Your products’ ins and outs
- The target audience
- The Business strategy
- The financials
- The exit plan
A phenomenal pitch is not a compilation of information on a PowerPoint. It’s a presentation with a few financial charts, colorful graphics, and some bullet points.
The presentation demands purposeful design, thoughtful word choice, and strategic planning. These elements will help your investor understand your business model, visualize your market data and engage in your pitch.
Tell Them Your Story
The purpose of preparing a pitch is to inspire, excite and attract investors. It’s not to put them to sleep. Your pitch will definitely bore them if your focus is numerical data, forecasting, and trends.
So step away from a lot of data when making a presentation and instead focus more on the story you want to tell them.
Tell them about the problem that inspired you to launch this business, the success you have achieved so far, the setbacks that changed or defined your company, and where you’re headed now.
Include details about your business model, financials, team, and future projections. An investor will not simply hand you a check just because you have a bid idea. You have to show them that your plan is viable, and they will make money by backing you.
These things will pique the interest of your angel investors and keep them engaged in your presentation.
Bring Supporting Documentation
It’s important to support all that is mentioned above with documents. For instance, have a business plan to share with your potential investors. Provide financial statements and sales forecasts to prove your business viability.
Your goal is to deliver a powerful pitch and prove to them that they can make money by backing your business idea.
Rehearse your pitch. Don’t be deceived that you know your business in and out. You might crash and burn when delivering that presentation. Angel investors and venture capitalists are busy, and they may only grant you 10 minutes of their time.
So, read your presentation and identify the area that needs extra details or the information to delete. Rehearsing will make you more confident, and you can pitch at any time.
What Investors Look For
A Compelling Story
Your pitch should begin with a compelling story about the problem you intend to solve in the marketplace. It should be a story that engages with the right audience from the start. This begins by researching about your potential investors.
As mentioned, you should only pitch to people who have the same interest as you. But you can only know this when you do some due diligence. This will help see what they care about and then tailor your story according to their interests.
Highlight the Solution
What is unique about your products? How is it designed to solve the problem you mentioned above? Explain your business model in a short, concise, and easy manner that allows your potential investors to share the same opportunity with others.
Understand Your Audience
Who are you building the product for? The investor will not be happy to hear that you’re targeting the entire world. Although this is every entrepreneur’s dream, it’s not practical for a startup.
So be realistic about who you’re targeting with your products. In fact, your business plan should have the total available/addressable market (TAM), the total market for your product. Everyone in the world is a target customer for your products or services regardless of the market competition.
Serviceable available market (SAM) refers to the percentage of the market available for your product. If your product is available only in one language, such as English, French, Portuguese, or Arabic, then your target audience is people speaking that language.
Service obtainable market (SOM) refers to the segment that will use your products. This is the target market that you will try to sell to.
Such information will impress your listeners and also help you understand your roll-out plan.
Explain Your Business Model Viability with Distinct Sources of Revenue
This is the slide that investors are interested in the most because they want to understand how you make money. So give specific details about your products and their pricing as well as how the target customers are anxiously awaiting their arrival.
You should be able to describe your business model easily, how it works, and connect it with expenses and revenues. While you don’t need to put all that information on this slide, and you can put it on the financial section. Also, you should back it with some documentation.
Speak About Your Success – Initial Traction and Milestones
Share your initial traction and milestones early in the presentation in order to build some credibility. Use pre-sales data, customer research, and more to prove your business’ traction.
So you can use this slide to show your potential investors what the founders and the team have accomplished to date. Further, show them how you’re building on this early traction as well as the strategy in place to support your sales, products, and growth milestone.
While this doesn’t have to be incredibly detailed, you should use it to show the investors that your business has a strategic direction.
Outline Your Marketing and Sales Strategy
Most aspiring entrepreneurs think that acquiring customers is not important, so they leave it out in their business plan and investor pitch.
However, investors want to see how you have analyzed the potential market and selling to the target customers. So show your target investors how you plan to market your business or sell your products and services.
Share with them how you plan to reach your customers, your messaging, the cost, and measure the success.
Tell them about the specific channels and messaging examples you have in mind. If possible, link the acquisition costs with the overall revenue in order to show how the marketing expenditures fluctuate over time.
Showcase Your Team
Indeed investors are looking for good investment opportunities; however, they prioritize people over ideas. Therefore tell them about the founding team, their qualifications, experience, and why you think it’s the best group to lead the organization.
Still, tell them the skill-sets you’re missing on your teams, such as management expertise, marketing, operations, sales, programmers, financial management, and more.
Parade Realistic Projections
Have revenue projections spread over 3-5 years and back them up with your assumptions. Remember, your target investors will want to confirm whether your numbers make sense. Therefore, use this slide to show them that your numbers are accurate.
Also include profit and loss projections as well as the cash flow statements. Displaying these forecasts helps them see that you have all business aspects on your fingertips and have a healthy cash runaway stretched forward until you attain profitability.
Show Your Competition
Show the investors that you know your competition and why you’re different from them. Talk about your competitive advantage and explain how it differs directly and indirectly from your rivals.
Use a competitive matrix format to communicate your value proposition over that of your peers. List them on the left side of your slide, your benefits and features across the top, and tick those companies offering similar services.
The more blanks, the higher is your competitive advantage.
Discuss How You Plan to Use the Funding
Begin by telling the investors how much has been injected in your company, by whom, and their percentage of ownership. State the amount you need to reach the next level and clearly say what that level is. Discuss how much you need, why you need such an amount, how you will use it, and the expected outcome.
Disclose whether you’re want to raise multiple rounds of funding if the investment is an equity round, a convertible note, and more.
Show them that your founding team can manage this investment for growth.
Disclose the Exit Strategy
Investors want to know what your exit strategy is, especially when you borrow over $1M. This can be IPO, acquisition, or something else.
Make sure your exit strategy makes sense in the next 3, 5, 10, and more. Doing due diligence will help you learn about other companies’ exit strategies or those that can acquire your firm.
Have a Q/A
Investors will always have questions no matter how flawless your pitch is. Therefore, anticipate these questions and prepare for them in order to increase your credibility. They may ask you to clarify some information or give extra information about some aspect of your business model.
Therefore look at your presentation from the investor’s point of view.
In conclusion, pitching to an investor can be a daunting task, but your startup’s success depends on this funding. So knowing how to do it right is what will set the company apart. Therefore, choose the right investors and then prepare your pitch accordingly.
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