Turning into a successful entrepreneur does not happen overnight. When you have a solid idea in your mind and want to implement it on a bigger dais, grabbing good funding from your investors can make or break your entrepreneurial dream. An investor pitch is what can decide the beginning of your startup journey.
Investor Pitch
Putting it simply, an investor pitch is the way of presenting your business idea to the investors from whom you are wishing to raise funds for your project.
That said, investor pitch is not always about startups or newbie businesses.
Consider this scenario:
An established company obtained more than the expected demand for production. However, the resources are limited and the company needs more money to procure the material and boost the production to meet the demand. At such a time, it is normal for it to seek funds from investors.
This also comes under investor pitch.
Strategy to prepare an investor pitch
Whether you are approaching an angel investor or eyeing Series A funding, an investor pitch is essential. When it comes to pitching, it is the way how you prepare and present the pitch that matters.
Explaining your business idea to a team of investors (or maybe a single investor!) is undoubtedly a nail-biting one. Many factors do come into play that decides the success of an investor pitch.
Here is a step-by-step guide that explains how to create and present an investor pitch that delivers results.
Step 1: Research your investors
Step 2: Time is money
Step 3: Prepare the presentation
Step 4: Make an impression with your story
Step 5: Offer a flexible exit plan
Step 6: Talk about data
Step 7: Show an assuring business model
Step 8: Be ready for Q & A
Let’s dig deep into each step and understand what is what.
Step 1: Research your investors
The term ‘investors’ may sound like a ray of hope for those who need money for their projects.
But here is one aspect that you should not ignore: Your investors should also fall in love with your idea first.
It means, the investors should have the mindset to comprehend your budding idea and can appreciate why you are doing what you are doing.
For instance:
Let’s say you are building an app that solves the hassles of HR companies. You want to share this idea with the investor. That investor should be able to trust your ideas and understand the problem that you are ready to solve.
That said, if the thoughts are not tuning, you have chosen the wrong investor.
How to choose the right investor?
- Dig deep into their professional profiles on social media and company websites. Understand their experiences, thoughts, and interests.
- Check their investment history. Use tools like Crunchbase or TechCrunch to know more about investors and their genre of investments.
- Then, prepare a list of investors that matches your business idea. This process takes time but we know that well begun is half done.
Step 2: Time is money
Getting the attention of investors is not as simple as it sounds. For investors, time is money. And the same should be reflecting in your investor pitch.
If you approach an investor mentioning – “I need just 15 minutes of your time”, make sure you really stick to it. Preferably, close the presentation within 10-12 minutes.
To do this, you have to prepare a killer investor pitch deck that speaks for itself.
Step 3: Prepare the presentation
When preparing an investor pitch presentation, remember this: Create two variants.
One with crisp and short, with visuals and statistics.
Another with all details and content-oriented to share with investors after the presentations.
PowerPoint is the easiest and most effective way to create an impact forming investor pitch presentation. If you have time and want to display creativity, you could also check out online tools to create killer investor pitch decks.
Preferably limit the investor pitch deck to 15-20 slides, explaining:
- The problem and the solution
- Your customer persona
- Business model
- The need for funds
- Exit plan
Use simple effective sentences than long paras in your presentation. Do not go overboard with the usage of words. Be plain, practical, humble yet confident.
Step 4: Make an impression with your story
Out there in the market, there might be many aspirants who are ready to solve the same problem that you are intending to solve.
Then why should investors give their big fat check to you?
This is where your storytelling makes a difference. Explain your story in a gripping way to the Sharks sitting and staring at you with all their attention.
Talk about where and how your idea began. Explain in a visualizing way the ups and downs of your journey. Explain to them why and what you would like to achieve with this idea, and what makes you different from others in the market.
Be honest and transparent in every word you mention. Mind that investors have been there and done that long back and can sense whether you are honest or not.
Step 5: Offer a flexible exit plan
Investors look for this in specific: Your exit plan.
What is your goal at five years or maybe ten years down the lane?
Are you eyeing a merger?
Want to opt for an IPO?
Franchise?
Sell your shares to new entrepreneurs?
Most investors wish to move one from a given business after 7-8 years. So, show them a solid exit plan. Talk about your competitors. Explain how different you want to be positioned compared to them at the end of ten years.
Step 6: Talk about data
Here’s where you need to show that you have solid data and that you did your homework. Present the market trends, statistics, future projections, expert observations, etc about your business. Explain how the idea is hopeful to make its mark and bring profits to the investors.
That said, do not bore them with endless research and figures. Give important and not-to-miss figures and finish this talk as quickly as possible. That said, do not rush. Maintain the flow and finish the discussion sooner than they expect.
Remember that investors can get data easily and hence, data is not their prime focus. It is YOU and your personality and attitude are what that is being observed.
Step 7: Show an assuring business model
The world is changing faster than imagined and it is important that businesses also stay agile. Explain how you would incorporate features into your business model that would make it immune to any unforeseen circumstances.
Detail about production, technology, software, staffing, logistics, cost-cutting approaches, infrastructure, operations, sales, and support, etc. Because in the end, these are what are going to consume the dollars that investors put in too.
Talk about how and where you need the funds for. Be assertive, transparent yet speak with respect and humbleness. At the same time, do not show too much that you are deadly dependent on their money and need it at any cost.
Confidence is an indispensable virtue of any successful entrepreneur. Investors can sense this from miles away.
Build trust that you have done your research about the financial needs and are prepared to handle any situation meticulously. Show how much intended income they can expect for every penny they invest.
Step 8: Be ready for Q & A
Once you are done with the investor pitch presentation, ask for questions. A hint that investors are interested in your business is – they will ask questions.
What questions you might expect and how to prepare for them?
- Observe carefully the investor pitch deck very well in advance and multiple times. Check for any gaps in the picture. They might be probed as questions.
- If the investor pitch deck is too glossy with added facts to make it look solid, this also might raise questions. As we said earlier, investors are not sitting there without any experience.
- To prepare for Q&A, research more about the products, competitors, loopholes in the business model, suitability of exit models chosen, and other aspects without missing any.
No questions? Chances are that the investor pitch could not nail it! Now go back to step 1 and get started with the whole strategy, this time in a revamped way.
Conclusion
Investor pitch is a game-changing step for any business. Doing it in a crisp yet impact-making manner is a challenging and yet fruitful task.
Do intensive research and choose investors with care. Craft an effective investor pitch post deck that would adhere to time limits while also driving the point.
Keep the business model flexible and adaptive. Show solid exit plans. Encourage the investors to ask questions and thank them for their time. Who knows you could the next unicorn!
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