How To Pitch To Investors 101

August 23, 2021

How To Pitch To Investors 101

When raising funds, your investment pitch is essential, and understanding how to pitch a startup is critical to your company’s success.

Regardless of how innovative, well-thought-out and potentially profitable your business concept is – if you find it hard to convince others to invest in your startup, your venture may likely face serious difficulty scaling.

Of course, raising funds presents a unique set of challenges that several startups struggle with every day.

Your potential investors aren’t going to take only your word that your business idea will flourish and yield good returns; you need to demonstrate to your investors that their investments are likely to yield a good ROI.

Successfully attracting capital entails a strong, compelling pitch that convinces investors to back your business concept (startup) rather than others. 

Raising capital can help scale up your startup faster than bootstrapping and can create many opportunities for great connections.

Even though you know the nooks and crannies of your business, the concept of sitting across from an investor and giving a business pitch can be daunting for entrepreneurs.

Still, understanding what investors want to know, and including this can allow you to create an enticing business pitch. It’s all about capturing interest.

Your pitch needs to be captivating enough to pique the interest of your target audience, making them want to see and learn more about your company. The more exciting your pitch, the greater the interest is likely to be.

Even though you know the nooks and crannies of your business, the concept of sitting across from an investor pitch and giving a business pitch can be daunting for entrepreneurs.

Use a slide deck when discussing the target market

What Are Investors Looking For?

What exactly is the detail that makes investors decide whether to invest or not? If only the answers were simple as a checklist that would assure you money in the bank, but the fact is that every investor pitch is quite different.

They all have slightly different things they tend to look for when assessing a potential opportunity in a business or an entrepreneur.

One may be strict, by the numbers, investor who looks for strong financials. You may see another that might be a sucker for big market potential and wants a 200x return.

A third might go by their gut or have a strong feeling about the co-founder standing before them. There are several things investors tend to look for when they are listening to a pitch.

However, credibility, likeability, and momentum are the essential investor’s wish list for any potential investment:

Credibility

Investors want to know whether you know what you are talking about, such as your business and the industry.

Keep in mind that investors want to know that you’ve done your research about the business and you possess the proper skills and experience needed to make it happen.

Likeability

Investors will ask themselves questions like, “Do I like this business idea and product or service?” and “Do I feel comfortable spending time with them for who knows how many years working out to make this happen?”

Investors want to feel good about what they are doing and how it will mean to people.

Momentum

Investors need to know if their funds are likely to be kindling on a fire that’s already dead, or would it be gasoline on a fire that is already burning strong?

However, the element that seals the business deal may be quite different from one investor to another. Still, if you assess your pitch in line with the above three core values, chances are you will be speaking the investors’ language more frequently rather than not.   

Your team can help prepare your market analysis slide

Step By Step Guide

So, now you are ready to take your business to the next level. You’ve gotten some great feedback from users and the press, but you don’t have enough capital in the bank, and if you don’t raise much money soon, you won’t be able to move further in your business.

It will help if you sell your concepts to others which is a first step in building a mutual relationship with an investor.

This is what convinces someone to take a meeting where you can have the opportunity to show investors about your business idea. However, the following are the steps you need to take before asking investors for money:

Put Together a Pitch Deck

Startups often prepare a pitch deck to present their company to potential capital investors. Your pitch deck is a brief presentation or demo with a number of slides often created using keynote, PowerPoint, or Prezi.

It is intended to showcase your company’s product or service, technology, and team to the investors.

A pitch deck shows that you understand your customers’ pain points, and shows that your product is the best solution to their problems.

However, putting your pitch deck together may not be a small task, so research others who have successfully pitched or receive pitches daily.

It is not just investors who will be interested in funding your startup. Thus, it is essential that you nail your investor pitch deck and articulate a compelling and captivating story.

Many founders and authors have created different versions of what they consider required components to have a successful pitch presentation, which depends a lot upon the specifications of your business strategy.   

Investment data and how you will spend your funding is key

Pitch the issue you are trying to solve, and remember that practice makes perfect

Practice Your Elevator Pitch

An elevator pitch should be a brief and compelling introduction to your company. You should be able to slightly revamp your elevator pitch depending on what you are pitching to your potential investors or prospective customers.

To perfect your elevator pitch, you need to start strong, be positive and enthusiastic in your delivery. Also, keep it a minute in length, avoid using ambiguous industry language, pitch the issue you are trying to solve, and remember that practice makes perfect.

The fact is it is always good to put together a strong pitch for those times where you don’t have a captive audience. Still, you don’t want to miss the opportunity:

  • Have a clear goal
  • Focus on the result and benefits
  • Make sure you include a CTA (call-to-action) to offer your audience a chance to do follow up with you later

The secret of making sales is to leave the prospective customers wanting more.  

How you value your sales and revenue can help build traction

Find the Right Investor For Your Business

Investors are more than just helping you financially – they are industry professionals. The right investor for your company can help manage your money, resources, infrastructure, team, and many more.

Some investors will have a seat on your board. You want business partners who guide without questioning every decision you make.

For instance, much larger venture capital (VC) firms have marketing departments devoted to taking care of external messages and portfolios.

The business model can position young companies before potential investors and assist press releases and other aspects a company might not have the bandwidth to address adequately. 

Technology and vision is important for investors

Research Your Audience

Before doing your pitch deck, do some research about who you will present your pitch deck to. For example, some investors may be public figures who can do a lot of research about them.

In contrast, while some may prefer anonymity, it’s challenging to get any information about them. However, if you can try to do some research about them, find out their patterns:

Find Out If They Like To Be Involved In Their Investment

Some investors choose companies they want to be involved with and wish to have a seat in the meeting room in exchange for their money. In contrast, others would love to be hands-off and enjoy quarterly reports on profitability, but otherwise not be involved in the business. However, if you are pitching to a room full of investors, make your findings to know more about each of them, and you should be able to answer the below questions:

  • Do they know my industry?
  • Do they have other investments in my industry?
  • What’s their personality like? Are they quiet and careful or loud and volatile?
  • Are they seasonal or new investors?
  • What companies did they start their career with or come from before becoming an investor?
If you want to make a point, you could use a slide that shows key data

Highlight The Underlying Business Model

This is an integral part of your pitch, and this is where most entrepreneurs make a mistake. The fact is your business model can be the most captivating or the most tedious aspect of your business.

After the excitement of seeing a problem, getting the solution, and then talking about an audience that will want to use what you’ve got, going into the details of how you are doing that can be tiresome and cause people to lose focus.

Explain your business model with the actual words as possible. Ensure you connect what you are doing to another popular company to make it easier to understand.

However, the investors will want to understand your business model. So you can use this slide to address key issues such as how you make money, what’s the pricing model, what is, the long-term value of a customer, and what are the customer acquisition channel and costs?

The chances of investment is higher with a good pitch

Explain Who You Are and Shape Your Story

This is where you need to be personal and tell the investor your story. You can do this by introducing the core team, and if it is just you, you can talk about yourself. 

Let them know why you are the best person to do everything you’ve presented to them in the pitch deck. Tell them the story about your business and show them what your team offers and how they complement each other.   

Key market data is pivotal to securing investment

Be Clear on The Problem You’re Trying to Solve

Here it would be best if you showed the investors why your business idea is so great. To make this happen, you need to define the problem your startup is going to solve. You can do this by defining your target market, their pain points, issues they are facing, and the need for your startup. Here your investors must be convinced to invest in your startup, so you need to show them all you’ve got to figure out.

Know your customer and above all else support your vision

Know Your Finances Inside-out

No startup pitch can go for a presentation without the most crucial part – the financial plans. Investors would like to know your startup’s current financial situation and project future burn rate (monthly or yearly cash loss while the business is growing and marketing its product or service).

To convince the investors that your startup can deliver, you have to know more than just telling a story. Investors need data and figures. Thus, create financial plans and include them in your pitch. The following are slides to cover in your financial plans:

  • The actual capital you need to invest
  • What exactly do you need the funds for (furniture and equipment, marketing, employee training, many more)
  • Your expenses in the first year
  • Three to four years financial projections
  • The expected return on investment
  • Unit economics and burn rate
  • Total revenue and expenses

Know your finances inside-out and present a detailed financial plan that shows you did proper research about your finances. Ensure your financial projections are realistic; you don’t want potential investors to question your financial analyses as absurd or not believable. For example, avoid saying you will grow your sales revenues by 20x in less than one year but only increases sales and marketing cost by 5x.

Know your customer and above all else support your vision

Develop a Road-Map For Your Future Success

After you’ve defined the problems your target audience is facing, this is a stage where you offer a solution to their particular issues. This is the part where you go deep down about your startup idea and how it will help your target audience.

Ensure to provide all the essential information like what problems you are going to solve, how you are going to do it, and what product or service you will offer that can solve their problems.

Also, you need to ensure your investors understand exactly how things will work and why your concept is bound to be a success. 

In your pitch deck presentation, they need to know the massive difference between you and your competitors and why your startup idea is still unique and brilliant.   

Ensure to provide all the essential information like what problems you are going to solve, how you are going to do it, and what product or service you will offer that can solve their problems.

Create a solid slide deck to make your point clear

Be Prepared to Answer Questions

If an investor is interested in doing business with you, he will ask more questions about your startup and the story behind it. Be ready for his questions. However, it would be nice to formulate competent and persuasive answers to the technical questions. You will need to present yourself in the manner and abilities investors would love to see.

Create a solid slide deck to make your point clear

Dress Appropriately

Investors invest in individuals as much as their idea. Therefore, you need to always put your best foot forward.

At the end of your presentation, you are the person that your audience needs to have the utmost trust in. You have to invest in yourself just as much as you invest in your business idea and pitching to investors.

If you want to be a successful chief executive officer (CEO), you need to dress like one. Then, do everything you have to do to come out swinging and confident, whether that means a ton of research in your brand.

Do your best to deliver the presentation, and you will eventually find the best investor pitch that matches your startup.

If you want to be a successful chief executive officer (CEO), you need to dress like one.

Your team can offer support early in the pitch

Practice

Confidence is the key when it comes to pitching to investors. Before you step on a stage, boardroom, or into any office to present your pitch deck, ensure you know it front to back. Then, try it out with your team.

The more time you go through your pitch deck, the better it sticks to your memory or feels more natural. The key to a successful pitch presentation is to practice it, and when you are practicing it, ensure to speak out loud, and you can record yourself while presenting and play it back to know your mistakes.

It is simple to ignore what sounds weird when reading silently, but they become prominent when you hear them. Thus, the best to learn is by practicing.

The more times you put together a pitch deck and talk about your business ideas, the more comfortable you will get to process and the better you will start to see what resonates and what works well.

Conclusion

Pitching for investors is a demanding task, but with the right tips and great business ideas, you can make your presentation work. Use the right tips we’ve discussed above to enhance your startup pitch and leave an excellent impression on the investors. This will help you reach your company goals and get funding for a startup.

Your team can offer support early in the pitch

About the author: Joe Silk -

Joseph is a Start-up Consultant, Copywriter & Business Owner with 9 years of PQE. He is extremely client-centric, able to work on a wide range of topics and deliver high-quality standards on projects of all sizes for clients all over the world. View on Linkedin

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