Every pitch is an exercise in persuasion. If you can persuade potential investors to believe in your idea and mission, you can get the funding you require. That will make all other aspects of your business easier. That’s why how to pitch your business to investors should interest all entrepreneurs.
Pitching to investors is a challenging task, whether you are seeking seed investment or Series A. Everything you say will be examined for its monetary value. The smallest of mistakes can hurt your valuation, irrespective of the soundness of your business idea.
All successful entrepreneurs know that preparing to pitch to investors will pay rich dividends later. If you have a meeting scheduled with investors to get your startup off the ground or help it expand, here are 14 tips to successfully pitch your business.
14 tips to pitch your business to investors
1. Find the right investor
A successful pitch doesn’t begin in the meeting room. It begins with research. If you need investors to buy into your vision, you should be pitching to the right kind of investors. Before you reach out, know as much as you can about the investors.
Have they invested in your category before? Have they made public statements about interest in your field? Is this their first investment? Are they hands-on investors? These will make sure that you find the right match for your business.
2. Write your pitch deck
The most important aspect of your pitch will be your presentation. It should contain all the information that a potential investor might seek and importantly, get them excited about your idea.
Your pitch deck is where you state your case. It’s important to keep it short, ideally below 25 slides. You can have an extended version in case your audience wants to know more. Go through the pitch decks of the most successful startups here and here to get inspired.
3. Practice your presentation
Writing the perfect pitch deck is one thing. Delivering it with conviction is a completely different matter. For that, you need to practice. Merely knowing all the slides won’t help. You need to hear yourself presenting them.
When you practice, ensure that you speak slowly and take your time. Don’t read out the slides but explain what’s written on them. Get your colleagues to watch you present. This will help you simplify your message since you would see it from the audience’s point of view.
4. Format it like a story
Every great pitch is a story about a problem and a solution. People may forget the stats and the graphs but they will remember a well-narrated story. Start with the problem but state it like a story.
If you have trouble fitting your product into a story, take a bird’s eye view of your category. What’s the biggest problem you are trying to solve? What other solutions have your users tried before? What benefit will this solution bring to the day-to-day lives of your customers?
5. Explain your solution
The story you start with should organically lead to your solution. This is the highlight of your presentation and needs to be conveyed in an interesting and engaging manner. It should leave the audience excited to know more.
All successful entrepreneurs know that to successfully pitch to investors, they need to keep the solution short and simple. Everyone should be able to understand it. If you are forced to explain it in detail, your presentation – or your product – would need more work.
6. Define your target market
The key here is to be as specific as possible. ‘Small businesses’ is too vague to be a market. ‘Small businesses without in-house accountants’ is specific. ‘College students’ is too general. ‘College students who want to learn another language’ is more focused.
Developing the profile of an ideal customer will help the audience better understand your target market. They will be able to visualize the user seeking a solution to a problem or trying to add value to their lives.
7. Explain your business model
How do you plan to generate revenue? Do you have multiple streams of revenue? What’s the timeline for revenue generation? All these have to be explained in detail in your business model.
Remember that your business model will invite questions. That’s why you have to be as specific as possible. It’s always better to be realistic because the investors would know the business models of businesses in similar industries.
8. State your accomplishments
More than anything else, what you want to build through a presentation is credibility. The best way to do that is by telling your audience how far you have come in your journey. If your team has built the product, tested it out, and gained some traction, this is where you impress the audience with those figures.
Cite specifics about your achievements. Even if your business is at an early stage and doesn’t have big milestones, the investors will be more convinced by the direction and the speed.
9. Spell out your customer acquisition strategy
Customer acquisition is one of the most important parts of an investor presentation. Unfortunately, it’s also one of the most neglected. Some founders mistakenly believe that generic social media traction or public relations will get them their target audience.
Investors would like to know in detail your marketing plan and customer acquisition costs. You should explain your advertising strategy and the channels you would be using. You can also share a mockup of an ad to better explain your tactics.
10. Analyze your competition
When you describe your competitors, it’s important to talk not just about their products but the particular edge you have over them. You can list out their solutions and explain how your product has a better value proposition for the users. Here again, it pays to be confident but also realistic.
At times, you could also be competing against a particular behavior or practice. If you have a better solution, investors will be interested in it since you might be creating a whole new category.
11. Introduce your team
An investment in a company is primarily an investment in its people. Your potential investors would want to know more about you and your team members. This is where you introduce them, highlighting their areas of expertise and achievements.
You can also mention the positions that you haven’t filled yet. These could be in programming, sales, or marketing. This gives a more realistic picture of your startup and shows how you would spend the investments.
12. Be specific about your funding requirements
When it’s time to ask for funds, a common mistake that founders make is being ambiguous. Instead of asking for a specific amount, they ask for a range. This can erode investor confidence in the business.
You should be confident enough to ask for a specific amount. Don’t hold yourself back if you can justify why you need it. Explaining how you plan to use the funds will inspire confidence.
13. Prepare for Q & A
Even if you learn how to perfectly pitch to investors, there will be questions at the end. You should see those questions as proof that your pitch has interested them. The questions can be about the product, customer acquisition, competition, or pricing. If you fumble in your answers, the potential investors won’t feel confident about your business.
The solution is to see your pitch from the investors’ point of view and come up with possible questions. You can get your team members to ask questions while you practice.
14. Follow up
A pitch doesn’t end when the presentation ends. While the investors may raise a few questions during the meeting, they might think of other questions later. If they don’t get in touch with you, it’s your duty to contact them.
Reach out to the investors within 24 hours of your presentation. Ask them if they have any questions or feedback. Even if they don’t have any, this will help them remember you. This conversation will also show how you believe in your business and how serious you are about funding.
In short
These tips will help you successfully pitch to potential investors by persuading them to believe in your product and mission.