It is the night before the investors’ pitch that could take your business to a new level. You have been preparing for this moment for months, maybe even years, and you want to ensure you can persuade the investors to believe in you and your business. There are multitudes of thoughts going through your mind- did I prepare enough? Am I saying the right things? How will I stand out?
It is normal to feel anxious during such an important milestone, but there are several ways you can prepare that can significantly improve your chances to impress your audience and boost your confidence.
The following steps will tackle each aspect of a successful pitch and help you avoid making common mistakes.
1. Know Your Investors
Do your research. Understanding what types of businesses each investor is involved with or has worked for is imperative for you to be able to personalize your pitch to their specific needs. Investors are experienced financial professionals that know how to mitigate risk, as their main goal is to generate revenue.
An investor will only invest in what they know. They won’t invest if they don’t understand how it will benefit them. Therefore, you need to be able to pinpoint how your idea applies to their specific business and to be ready to address any concerns they may have head-on. Going into a pitch with this information will show investors that you have done your homework and that you are credible.
Things to research before pitching to investors:
– How are they the right fit?
– What specific business problems can you solve?
– Explain why you need their investment.
2. Storytelling is Pivotal
Be human. Investors want to be told how you came to where you are today. What spurred this idea into existence? What makes you passionate about this space? What did you learn during the process? Humanizing your story, so that they can all relate with it, will make your pitch more meaningful.
If you conduct adequate research on each investor through Google and word of mouth , you will be able to identify what makes them tick. The last thing you want to do is to assume their pain points when you could put your resourcefulness to good use and dig deeper. Check out their social media channels, see what they share and like so that you can better develop your understanding of them. You may even find common ground that you can build from, like a shared interest.
If you seamlessly infuse this together, you will be able to influence their decision because it is more than just selling your product or service– it’s about connecting and engaging with your audience.
How you construct and deliver your story is important as well, as it will determine how well it is received. All successful storytellers use these three elements in their stories which are the how, the why and the what.
The following are a few questions to ask yourself:
– How do you plan on accomplishing your vision?
– Why should they believe in your passion and vision?
– What is the reality of the goals at hand?
3. Know Your Product/Service
Study your product or service thoroughly. Your pitch will be more effective and accurate if you are confident with the information you are presenting. Furthermore, think about all the possible questions that an investor may ask you about your business plan and other product or service-related questions.
Meeting with other business professionals for mock pitching sessions is another way to be prepared to answer potential questions with ease. If you don’t have an answer to a question, it is actually more about how you respond than the answer itself. This can portray to investors how well you can handle uncertainty and pressure– two things that entrepreneurs face daily.
Key points to keep in mind:
– Know your product and service inside and out.
– Meet with other business professionals to find out potential questions.
– Think about all the questions your investors may have about your business plan and roadmap, product/service and competitive landscape.
4. Time Your Pitch
Be concise. Most pitches are about 12-15 slides and last 15-20 minutes on the long side. If your pitch runs from 7-10 minutes, you will be able to have more time for questions and discussion afterwards. A brilliant business plan should be easily communicated to investors within this time frame with a well-organized plan and delivery. The less time your pitch takes up, the more time investors can zero in on the points in the pitch that are of most interest to them and ask questions. Their time is of the essence and they appreciate when you respect the time allotted to you by being laser-focused on the core components.
The core components to consider are:
– Clearly explain what your products or service is.
– What is unique about your product or service?
– Define who your target audience is.
– Identify how you will obtain new customers.
– How will you generate revenue?
5. Know Your Numbers
Make your case using numbers. Investors become more confident with a venture when they have numbers to work with. However, we don’t recommend overloading the pitch with too many numbers, but narrow it down to key figures such as overhead costs, number of employees, profit margins and ROI (return on investment). Also, make sure you are able to back up your numbers explaining your revenue model and how you plan on applying it to your business. Overall, the main question investors care about is “how will I make money?”
Key numbers to remember:
– Overhead costs
– Number of employees
– Profit margins
– ROI (return on investment)
6. Share Who is Involved
Reference who is, has or will be working with you. Disclosing these details to potential investors gives them a way to validate your credibility early on and determine if it will be a good fit for them. Investors care about the team you work with. They want to know everyone from partners, brand collaborations, team members and other investors that have a stake in the company. They don’t want to get involved in something that doesn’t align with how they do business and what they aren’t comfortable being a part of. Just imagine if you were an investor, you wouldn’t want to give your money to people you don’t know and trust!
After releasing this information, notify those individuals that they may receive a phone call or email from the investors to discuss their involvement with the company, their thoughts on the venture, and how they plan on continuing to be involved in the future.
Key members that should be discussed:
– Business partners
– Brand collaborations
– Other advisors/advisory board
7. Acknowledge Competitors
Benchmark your main competitors. Convey why your company can do it better and clearly define what your USP (unique selling point). It’s a rookie mistake, or naïve outlook, to believe you “have no competition”. Everyone has competition where it is direct or indirect. For example, when Coca Cola started in 1886, they were the first company to mass-produce soda beverages. Even though they were the first to have these types of beverages at the time, their indirect competition was all other types of drinks such as water and milk. Make sure you identify your direct competitors, but it is also smart to acknowledge other indirect competitors that consume some of the market share too.
Display your competitive analysis in a chart form to display exactly what your company has or does that the competition is lacking. Investors appreciate when you do the leg work for them by showcasing what the landscape looks like and how your business differentiates itself.
Things to share about your competitors:
– Define the unique selling point
– State direct and indirect competition
– Display information in a chart to compare businesses to show how you will overcome your competitors’ challenges (that will affect your business) and plans to capture market share.
8. Showcase Product/Service
Don’t just talk about it, show it. Investors want to interact with your product or service to get a first-hand look of how it works to evaluate if it is actually worth investing in or not. If your product is not being manufactured yet, show drawings or demos of the product to give them a visual to base their decision on. Implementing this into your pitch can give you a break while the investors interact with your product to collect your thoughts and enjoy conversing with them on a more personal level.
How to showcase your product or service:
– Show how it works and why it’s unique
– If your product isn’t being manufactured, show demos, 3D printed mockups, or drawings
– Let the investors interact with the product
9. Exit Strategy, Stage Left
Where will your business be in the next five years? It is important to consider what the future holds for your business. Exit strategies include your company going IPO (initial public offering), being acquired by or acquiring another company, specific licensing that will stimulate growth or passing on the business to a successor (a family member, manager, or employee). Being upfront about these possible changes will give the investors an indication of what their investment will mean for the long-term.
Exit strategies that you may consider:
– Going IPO
– Being acquired by a company
– Acquiring a company
– Passing it on to a successor
10. Practice Makes Pitch-Perfect
Be confident with your pitch. Not all of us are naturally great at presenting, especially when your nerves are at an all-time high. A great tactic is to record yourself doing a run-through of your presentation enough times where you can master your tone and volume of your voice. Once you’ve mastered the tone and volume, move onto filming your practice. This will help you hone in on fidgeting, expressions, and gestures.
It is a good idea to practice to the point where the presentation feels more like a conversation because you know your product or service thoroughly enough to do so. This makes your delivery not seem too contrived but rather organic with the proper amount of eye contact and engagement with your audience.
The end of your presentation should end strongly, giving the investors something to think about rather than simply moving onto a Q&A slide. Possible strong endings could be reiterating the opening line of your pitch, offering inspiration, challenging the investors, surface their objectives or inviting your audience on a metaphorical mission.
Things to keep in mind while practicing:
– Pay attention to tone and volume
– Be aware of your body language
– Use of props
– You know your stuff, be more conversational
– Maintain eye contact
– Have a strong, non-generic ending
What’s Your Key Takeaway?
We want to know all about your investor pitches and what advice you can give to help our fellow entrepreneurs out there. Share your experiences in the comment section below and let’s get a conversation going!