In most instances, to gain an investor, you need to conduct a time-limited pitch to exhibit a business proposal or idea. Pitches need to be compelling, informative and follow a clear goal. Pitching is synonymous with the feeling of nervousness and a multitude of other thrilling emotions. Tied in with the notion of having a chance to “make it or break it” is the biggest thought process to overcome. If you’re unfamiliar with pitching to investors and are looking for direction, you’re in the right place. So, how do you make an outstanding and irresistible pitch that can’t be refused? We’re highlighting the things that you need to consider to nail your next pitch… let’s go.
Preparation is key
You know your business inside and out. You understand everything that makes it tick. What you need to do, is methodically collate your information to prepare for your showcase. Contemplating how to make the most out of the opportunity is of the utmost importance.
1. Visual presentation
If you plan to use a visual presentation for your pitch, think about the investor audience and tailor it to suit their wants and needs - this can help set the tone for the duration of the pitch. Overcomplicating your pitch could result in confusion and the inability to appear persuasive. Spencer Waldron (presentation expert and UK Country Manager at Prezi) is an advocate for spending time and energy on a presentation to pitch. He believes that the more time you contemplate, write, prepare and design your presentation, the more chance you have of success.
2. Investment goals
What do you want to achieve from this pitch? You may be seeking a monetary investment, customer acquisition, or technology improvement. Whatever it may be, ensure you‘re clear on your goal. Being indecisive about your appeal can result in questionable reliability.
3. Do your homework on the investor!
Approaching the right investor is important for many reasons. You may require counsel that has expertise in a certain industry or has contacts within the field. Knowing their background, what company(s) they own, and how they conduct their business is crucial to show your knowledge and find common ground with them. Knowing your investor may also help you prepare your answers for the questions they may ask. Before your pitch, think about how you could align your strengths and weaknesses with specific investors to gain a mutual understanding. Investors may be more inclined to engage in the pitch based on how relatable you are.
Investor insights with Gian Seehra, founder of Pitch Deck Helper
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Common mistakes startups make when pitching to investors
If you’re a startup entrepreneur who’s never pitched to investors before, you may experience anxiety about pitching. Richard Harroch (MD + Global head for Vantage Point Capital Partners) says that investors don’t have the time to listen to “terrible” and “inexperienced” presentations given by entrepreneurs. However, getting rid of these misconceptions is key; just because you’ve never pitched before, doesn't mean that you’re terrible at it. By avoiding the following mistakes that startups commonly make, you can ensure that your pitch is at the highest standard.
1. Failing to understand your business model
If you know that you can continually make money, scale up your business and pursue the right channels to reach your customers, you need to prove it! By demonstrating you’re an expert in your field and have the capabilities to shake the industry, you can hook the investors. Many entrepreneurs make the mistake of articulating their competitive landscape, forcing investors to disengage in the proposal.
2. Poor presentation
Appearing presentable in front of the investors is important. Creating visual slides or additional documentation with lousy punctuation, spelling and grammar can cause an unappealing reaction to credibility. Entrepreneur James Caan, who features on Dragons Den, says that the pitch is only part of the story. Make a good impression with your pitch presentation by displaying confidence, making good eye contact and body language and dressing appropriately. By doing this, you’re showing investors that you pay attention to detail and personally, for James, it’s a trait that he’s looking for if he were to back a startup with investment.
3. Getting sentimental
Investors understand that your startup means a lot to you, and sentimentality and passion can come through the process of a pitch. Alex Dawotola, CEO of HENECO, says that investors are driven mostly by the need to make profits and a deal has to be financially attractive to appeal to most investors. Entrepreneurs of startups should show passion through their pitches to investors, but not at the expense of the bottom line, which is what the investor wants to learn.
4. Unrealistic projections and values
Investors aren’t interested in the use of over-exaggeration. Realistic facts and figures are what drive the conversation and spark interest. If investors notice discrepancies in your numbers, you run the risk of losing credibility. Avoid assumptions in your projections and valuations that you find difficult to justify.
5. Refraining from addressing potential risks
Before the reward, investors will want to know the risks. Failing to address the risks can disassociate the investors. Showing your thought process and mitigation precautions you plan to take to overcome potential business plan risks will bode well with investors. To be prepared with answers, here are some questions that you may encounter in regards to potential risks:
Do you have any regulatory risks?
What legal risks do you have?
What technology risks do you have?
What do you see are the principal risks to the business?
What steps do you anticipate to mitigate such risks?
How does COVID-19 affect your business going forward?
6. Not knowing your numbers
This isn’t the first time you’ve heard this, and it won’t be the last! To be prepared to pitch to investors, you need to know your numbers. Reco McCambry, Founder of Novae, says it’s a big mistake if an entrepreneur doesn’t know their profits, losses, and how to price. Knowing your numbers is important to make your margins look attractive to investors.
How to win investors over with your idea and successfully pitch your business ideas
Hassle.com Co-founder + CEO, Alex Depledge focuses on the idea that "anyone can do it" when it comes to pitching to investors. “it's something you need to learn yourself as you go along your entrepreneurial journey”. Having raised 6 million from the venture capital community, Alex knows his stuff!
Tell a great story!
To tell a great story, you need to immediately engage your audience. Find ways to show your personality or connection through the business. Make sure the storyline has peaks and troughs, offering solutions for consumer problems. And, how has your data-driven research influenced how you consider furthering your business. Articulating the root story of your business through to the present incrementally shows how you conduct business and how you will approach the future of the business.
Alex Depledge says, “People relate to things they connect with. Personal anecdotes work well; a ‘this was the problem and this is how we solved it’ approach”.“When delivering your pitch make eye contact and project your voice. Be natural and personable. Make investors like and believe in you and show your passion. It may sound simple but it’s amazing how many people forget to do this.”
1. Introduce the team behind your business
Again, Entrepreneur James Caan also highlights the importance of introducing the team behind the business. You have to envision that the pitch is not just about the business plan, but also how you plan to execute it. Show your strengths and highlight what makes your start-up different. Being able to show a powerful team of people behind the business displays the full package and reassures your investors that there’s substance to your business as a whole.
2. Timing is everything
Caroline Cummings (co-founder and CEO of OsoEco + RealLead) reminds us that you can cover all of the key points investors want to hear in a 10-minute pitch and all extra information can be included in your business plan. Getting your most compelling points across early is important because each minute is precious when pitching. By putting across two or three of the most important points early on in the pitch, you are emphasising a clear roadmap for your explanatory points throughout.
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