Many entrepreneurs fall into the trap of believing their own hype. They get so excited about their ideas and their business that they forgot to put enough work into their investment pitches. They forgot that other people (i.e. investors) have not had the same amount of time to build up excitement or knowledge about the business.
Unfortunately this can lead to unsuccessful pitch after unsuccessful pitch and entrepreneurs start questioning why no one else can see the potential in their business.
If you firmly believe that you have a great idea; a fantastic business, then you have got to put the work into the planning and building of your investment pitch. Just as you wouldn’t turn up to an interview not having done any prep, nor should you turn up in front of investors without a killer plan.
Securing investment, especially your first, can be very tricky. After all, you are asking someone to give you a lot of money but without any guarantee that you will be able to show them a return on their investment. They have to be able to trust you to make this leap of faith.
Whether you’re angling for your first investor, or your tenth, a killer pitch will help you win investors round. So, here are a few of the best tips and techniques to keep in mind when you’re planning your own pitch:
1. Identifying your target audience
It is essential you don’t waste time and money trying to securing investment from the wrong kind of investor. Just because they invest in businesses, does not mean that they’ll automatically be interested in investing in yours.
Investors are not a straightforward bunch; what one sees as a definite success, others will view as a definite failure waiting to happen. Many investors will not even be interested in the industry of your business, the size of your business or the actual product or service you’re offering.
So, be prepared to do a lot of research into the different investors you could approach. Identifying the right targets and knowing exactly what an individual’s interests are will ultimately mean you’re a lot more successful in securing the investment that you’re after because you’re targeting the right audience.
2. Give your pitch a beginning, middle and end
The best pitches are told like a story, so when you’re crafting it make sure you have a clear structure; a structure that shows exactly how and why your company is going to be the next big thing. If you craft your story well, and really show investors the future and why your company needs to be there, you will achieve the valuation you require.
Remember to end on an exciting point! After all, this pitch is just the beginning of your company’s story; you want the investors to read on!
3. Be dynamic and proud
You might have the best business in the world but if you can’t show enthusiasm or your passion clearly, then how can you expect investors to become excited and want to give you their money? You have to show your pride and stay dynamic throughout your pitch.
This kind of energy will transfer across to investors; after all who better to invest in then someone who is passionate and enthusiastic about their business idea; someone who will work hard and never give up because they believe in their idea.
Make sure you use exciting language, make strong statements and ensure everything you say is clear, especially when it comes to defining exactly how you will be allocating the funds that are invested.
4. Follow the KISS principle
Keep It Simple Stupid, KISS. There’s a reason that this has become a hugely popular working principle. So many people in business, as well as personally, end up making things so complicated that they just make everything harder for themselves.
You must appreciate not everyone will understand the technicalities and specific information related to your business, especially if they have no experience in your industry. Don’t try and impress with endless acronyms and blast them with language they’re unlikely to understand.
Your business model is what is important and it should be clear without much explaining from you. Try out your pitch and documentation on close friends or family, if they can’t understand your model and pitch, you’ve got more work to do!
5. Know your sales figures and talk about them
Investors may like your idea, but if you’re unable to clearly explain your sales figures, this will set off warning bells in your potential investors’ heads. Obviously not every startup will have made money before going to an investor pitch. However, if your business has managed to make money in its first six months, be proud and show exactly how it made the money and why this is impressive.
Investors will challenge you on your figures, especially if you come to them with a great many projections. What investors really want to see is that you can make repeat sales, and if your margins are good, this will show your business has potential and is a worthy investment.
6. Set strict deadlines
It is important to show that you can set realistic deadlines and keep to them. It is scary at times to see that deadline getting ever closer but without it, you can’t show that you know the importance of tight timeframes.
No investor worth their salt wants to be tied into a company where it takes years before they see any kind of potential return on their investment. With this in mind, you should have a deadline set for when you want to have investors in place and communicate this to every investor you meet with.
Giving them a tight timeframe to make their decision will help speed up the process. As you secure each investor, make sure you are communicating this to the other potentials. Investors are always more tempted when they know that other investors are in the mix.
7. Clearly define how investors will get their ROI
Return on investment is the whole reason for an investor to invest, so be sure you clearly communicate how and when they can expect to see a return. An investor will also be interested in the exit strategy, as in what happens when they want to take back their investment and reward and move on from your business.
Try to look at your business from the outside; from an investor’s point of view. Ultimately, you need to show them that your aim is to make them more money, and in doing so also make your business a great success.