Investor Pitch funding is one of the biggest challenges any entrepreneur must deal with.
Being able to pitch your business idea successfully requires great skill. When it is not something you do daily, knowing how to pitch correctly may be an even greater challenge.
If you’re an entrepreneur and passionate about your business, chances are you have had issues with funding. While most entrepreneurs will tell you about how they bootstrapped their business to success, they are far and few.
Let’s say you have a great business idea. You have proof of concept for, but now you need funds to take it to the next level. Here is a reality you may have to face, determining how best to pitch to interested investors is going to be a challenge if you are not prepared. One of the most difficult presentations to make as an entrepreneur is the investment pitch. And this article aims to help you through it!
From the Investors View
When you want someone to give you money – capitalists, investors, friends, family or others, you must convince them of the merits of your idea. Most people who have not dealt with entrepreneurs looking for investment funding, you may be faced with people who will find just about anything that presents a problem. Anything that indicates they might lose money, absolutely any risk to success at all is a scary sight for people who have to part with money.
All in all, most potential investors are mostly predisposed against you! Very harsh, but absolutely true. While you talk with passion and conviction, they’re looking for reasons your business will fail. Don’t take this personally though. Chances are, most of what they hear are sure-fire ways to lose money, so you must do absolutely everything in your power to convince them that you are offering a sure-fire way to make them money!
Top 10 Tips for a Successful Investor Pitch
Determining how best to pitch to interested investors will be the key to your funding success. Possibly one of the most difficult presentations you will make as an entrepreneur is the investment pitch. Make use of the following tips to make a successful pitch:
- Sum it up, and quickly! It’s easy to assume that all the great things you want people to know about your business can’t possibly be summed up in 30 seconds. When you understand that your investor pitch needs only to entice the appetite of your potential funders, you’ll quickly realize that you don’t have to share absolutely everything. In a short space of time, sharing too much serves only to confuse. Think about the absolute core of what you do, and describe it in a way that shows value, in the most engaging manner. The idea is to ‘hooks’ them and leaving them wanting to know more. Do this in 30 seconds. Don’t waste time with too much data, background and data.
- Share exactly who your customers are. Be very specific and describe your target market very clear and simple way. This will give your potential funders a basic understanding of who you aim to service, how big your market is and how lucrative or profitable it could be.
- Define your market as clearly as possible. Explain how you KNOW that your target customers will pay for the product or service you’re offering. Quickly sum up your Unique Selling Points/Proposition (UPS), and any research and proof of concept that you have.
- Detail your competition. Show your potential investor that you understand the market environment. Differentiate yourself so that your potential investors get an understanding of what makes you different or sets you offering apart. Don’t say you don’t have any! Include even those that tangentially associate to your offering even if you genuinely feel that you don’t have any.
- Showcase your unique value. Explain why it’s crucial that you make this happen and why their funding will get you to the next level. Also, explain that your idea is not one that can easily be duplicated. Your investors would not want to put their money in an idea that can easily be picked up by any person with money, run with it, and achieve market penetration quicker than you can.
- Learn as much as you can. You believe in your business, so, get to know every aspect of it, don’t shy away from learning about things you suspect may make it difficult to succeed – risks, competitors etc. Pretending challenges don’t exist won’t make them disappear. Best to learn all you can about your business and determine how you’ll succeed anyway. Some of your investors are going to pose difficult questions, and it’s best to be prepared. When the time comes, you can speak with wholehearted faith in your business with confidence and enthusiasm. This is how you get others to believe in what you’re doing too, and that takes them one step closer to investing in you.
- Leverage from partnering with other experienced entrepreneurs. Form partnerships that can benefit your business strategically from your relationship with other experienced entrepreneurs. Find businesses and individuals who would be willing to partner with you. Create partnerships that offer you credibility by association and boost confidence in you and your business. If those who are established are willing to partner with you, others, investors included, will feel more comfortable doing the same.
- Specify your requirements. Be specific about what you want, whether it’s money, expertise, or something else. Investors are not looking for someone that is not clear about their requirements. Clearly state what you want from your investors.
- Share exactly what any funds you are asking for will be spent on. Make sure that all the funding you are asking for will be spent on essential things that will grow your business and be prepared to justify the use. Particularly, the funding should be used for taking the business to the next level.
- Test your pitch. Get feedback, revise and use every pitch presentation as an opportunity to learn for the next one. Write down all the questions and cover as much as possible in your next presentation to avoid them being asked again.
With that said, go out there, and be confident in your pitch, but don’t be desperate! It’s important to come to terms with the fact that not everyone is going to ‘get’ your idea.
Some may be interested in your idea but their ‘funds’ already have committed funds elsewhere. Some may not be interested in investing in the industry you are in and so focus on one or two that they are familiar with. Even when there is interest, there will also be times when your potential investors believe in your idea, but it might still take a while to get the funding you need quickly.
Recognize that this is all part of the process, and if you’re willing to follow the advice above, and stick with it, you stand a better chance of getting funded than most.