You likely only have one shot to put your best foot forward with a potential investor. The start up pitch provides a start up with an ideal opportunity to tell the company’s story in a way which garners support from potential investors. To help you succeed, we’ve gathered a few tips to help you make the most of your pitch.
Know Your Audience
The more you know about the investors to which you are presenting, the better chance you’ll have of making a connection. Knowing what industries they focus on, what investments they’ve previously made, how those investments turned out (what are their pain points), and what funding they have available are all important information. If possible, it is also important to research their personal professional backgrounds, such as their education (do they have education in your industry space), their previous companies (do they have contacts who might support your company’s success, thereby decreasing their risk if they invest with you), are they invested in other synergistic companies (you make something their other investment can distribute), etc. Without knowing these important details, your one-size-fits-all pitch will fall flat – you might be selling an entire industry to one group with no expertise and then boring the next group who invests in the space all the time. By knowing your audience, you can also avoid wasting time and money pitching to the wrong investors, allowing you to focus on a tailored pitch for your ideal investors.
Shoot Straight About Your Market
As a good entrepreneur, you need to know your business, industry, and market segment better than anyone else. An investor will have some knowledge of the space and, if interested in investing in your company, will conduct their own research into your market. If the potential investor finds you have provided incorrect, inaccurate, or incomplete information, they will worry that you don’t know your own market – or worse, that you are not an honest business partner. Investors need to rely heavily on the management team to carry their investment to a positive return. If potential investors believe management is not solid, not knowledgeable, or doesn’t shoot straight, investors will not invest.
The most prominent area that this becomes an issue is when entrepreneurs describe their markets. Seasoned investors have seen hundreds of pitches or more. They know that it is extremely unlikely you will capture a 20% share of an existing $10B industry in 6 months with your new widget. The fact that your projections cast aside all competitors as inferior, unadaptable, and static undermine your credibility. Take the time to know your competitors so well that you could pitch their company for them, knowing their strengths, so you can present the competition fairly and demonstrate your mastery of a realistic plan for your start up’s success.
Help Them Bet on Your Horse
Everyone has heard analogies that investors bet on the horse or investors bet on the jockey or a combination thereof. A winning Derby horse doesn’t need to be the best horse on the track, the horse needs to work in unison with an experienced jockey – a team which wins because of teamwork and capability. Your company must have a plan to provide a successful return on investment for your potential investors. The plan must include the exit strategy, the steps necessary to get there, any anticipated hurdles, and the anticipated cost of those steps. The pitch needs to demonstrate that the entrepreneur either has the experience to ride a horse over the obstacles and through to the exit strategy or that they’ve assembled a team with such experience. Describe your team, not by just resume bullet items, but also by “how” they will be important in ensuring proper execution of the plan. By providing a pitch including a reasonable plan for your horse to reach the finish line, including all steps, and demonstration of the team’s ability to jockey the horse, your potential investors will feel much more at ease with trusting you with money.
It’s a Trailer, Not a Motion Picture
Have you ever been in a presentation where the lecture was so boring that your focus became escape? The presenter in that presentation thought the information was so important that they droned on forever and left you completely unengaged. Don’t be that presenter. Your company is extremely important and exciting to you, but it isn’t that important (yet) to your potential investor. Cover important details, but be clear and concise (and speak slowly/normally, speaking too quickly loses you audience). Tell an overview story that a lay person can understand, with a few bullets, focused on how your plan will be executed, who will implement, and how your investor will make a return on their investment. You aren’t pitching to a grant organization, focus your trailer on how the potential investor will be benefitted from the investment and let them delve deeper later.
Make the Time Spent Worthwhile
Potential investors are people, too. Like you, they have a lot of ways they can spend their time. If they’ve sacrificed some other obligation to hear about your company, make sure the pitch was worth it to them. Follow the tips above, know your audience, be honest, and concisely tell them how your team and company is worthy investment to consider. Ending with an appreciation of their time and a smile can go a long way. Don’t forget, potential investors know other potential investors, if they can explain your story and felt like the time with you was well-spent, they will likely share the story with others.
Good Luck! Now you are ready to visit our funding page.