Picture it. The day of your pitch has arrived, you’ve worked on your idea, sacrificed weekends and evenings paying a fortune in sweat equity. You know your market down to a T. Your idea is innovative, disruptive and scalable. Now on to the fundraising – a challenging part of the entrepreneurial process.
By now you’ve probably watched hours of the BBC’s Dragons’ Den to gain a feel for what it’s like to pitch to venture capital investors. While this is good homework, the reality of pitching is quite different. It consists of a casual chat with investors about a business opportunity, with a pitch in the middle.
There are easier things to do than pitch to a room of seasoned investors. There’s a huge amount of information to research and understand - from simply knowing your product, to understanding the trends and nuances of your target market.
Following on from our previous blog on what investors look for, this blog gives advice on how to pitch to them.
Firstly, what is a pitch?
A pitch is the entrepreneur’s chance to deliver, in their own words, their business plan to potential investors. The structure of a pitch is quite flexible, but usually consists of three main sections:
- Introduction – This is where investors get to know you and vice versa. Our advice here is to be yourself and take this as an opportunity to get comfortable and prepare for the pitch. This part shouldn’t be underestimated, as it’s important that you and the investor get along.
- The Pitch – The main event. This is when you will present your business plan; it is usually done through presentation slides and a demonstration of your product.
- Questions – Questions can be daunting, but if you’ve researched your industry and know your product then you shouldn’t worry. If you’re asked something you don’t know, tell them.
Now you have an idea of what to expect, here is what investors will expect.
Below are some tips on how to present yourself and your investment opportunity. This is by no means an exhaustive checklist, but serves as a guide to deliver an effective pitch.
1. Presenting yourself
This section will feature things you’ll have heard many times before in the context of meetings and interviews. However, they’re just as much of a deal breaker as arriving at a pitch with an error-filled deck.
- Punctuality – First impressions count, so arriving late is best avoided. Better to arrive early, familiarise yourself with your surroundings and take a second to gather your thoughts. However, don’t be over keen and arrive too early as investors may not be ready and find your eagerness more of an annoyance. If you arrive and find yourself with thirty minutes or more to spare, go to a nearby coffee shop and wait.
- Look the part – You don’t need to arrive in a suit. Smart casual is fine. However, the best pitch in the world can be undone if you arrive in a similar fashion to Mark Zuckerberg’s flip flop and board shorts attire. Don’t make the error of thinking your genius will shine through and woo investors in an instant. It may have worked for him, but it doesn’t for the majority. Hitting the right notes on a psychological level in terms of looking and acting professional is important.
- Be yourself – Starting off on the right foot is key. An investor will want to know what you’re like as an individual, so be yourself from the get-go.
- Practice – If you need notes or can’t remember the next slide, you probably haven’t done enough. You might find it useful to have an ‘elevator pitch’. This is a 60 second, easily digestible pitch which describes your whole business in a nutshell. When dealing with time-short individuals, it’s important to be concise and keep their attention. You don’t want to be cut short due to time constraints mid-presentation.
- The team – You may or may not have a complete team at this point. If you do, investors will want to hear from them, and to see if their interests are aligned with yours. Bringing a team member to a pitch can be beneficial. Just make sure that they’re able to answer the hard-hitting questions that you have so diligently prepared for yourself.
2. Presenting the product
What are you presenting and why? This is your chance to show off your product.
- The pain – Let us know exactly what value your product brings. What is the customer’s need and how will your product fulfil it? At this stage there should only be one. Focus all your effort on answering this one pain point and then expand. Strengthening the core business of a start-up is vital in its success. Take Uber for example; they first set out to ease the passenger journey to access taxis. The rest of their innovative story came afterwards.
- The story – Creating an emotional connection is a great way of helping the investor understand why the product is worth their investment. The difficulty investors are up against is the sheer volume of poorly researched ideas, so you don’t want to get lost in the clutter. By telling your story in an engaging way, you’ll make sure you stand out.
3. Research, memorise and research some more
Understanding each other is important. By the time the day of the pitch arrives, the investors will have done a fair amount of research about you. They will likely know your team’s work history, education and will have drawn conclusions on your ability to execute your idea.
You should undertake similar research on the investors too, much like you would for an interview. A pitch about how efficient your code is at analysing a specific data set will sound impressive, but if your audience’s background knowledge is more high-level, it won’t mean much. These are some of the things you should do:
- Know your audience – If you aren’t compatible, it may save a lot of time and effort to cross an investor off your list. The fundraising process is long and you don’t want to be traveling around the country pitching an idea to investors whose interests may not be aligned. Research factors like the specialisations of the fund, its size, capabilities and value-adds, the possibilities of carry-on investment and the community of portfolio companies they are managing. A quick look on their website should uncover most of the information you need.
- Support your claims – If you’re going to say your total addressable market is £10 billion, back it up with reasoning. If you’re using more innovative tech than competitors, tell us why competitors aren’t doing this. This is a chance to show off your market research and technical knowhow.
- Prepare your slides carefully – A poorly made deck can be as much of a turn off as poor punctuality. Put the effort in to make it engaging, fluid and as simple as possible. Slides should only highlight the key points. The investor will want to focus on what you have to say.
- Have a good grasp of your financials – Financials are a tricky business. We’ve seen people whose coding skills are some of the best out there, but found the intricacies of a cash flow statement to be mystifying. When presenting and answering questions, the key financial metrics should be ingrained into your mind. If you know the answer to ‘what is your cost of acquisition to lifetime value ratio,’ then you’re probably on the right track.
Would you trust a person’s ability to execute their business plan if they lacked the foresight and work ethic to prepare well for their pitch?
These points won’t guarantee you investment, but should help you to give your pitch your best shot. Feel free to use this blog as a template or checklist to aid you in your fundraising journey.
But equally, if you want to add other things into your pitch, go for it. This is by no means a complete list of what every investor wants to see. And after all, individuality and uniqueness are common traits of a successful entrepreneur.