How to Successfully pitch your Business Idea to Investors? [Tips]
An entrepreneur must know how to pitch their business. You might not be at the stage where you need funding. But, that’s not the only utility of having a pitch. It can be beneficial for you in more ways than you were thinking. If you have a solid elevator pitch, it means that you know your business inside and out. This can come in handy in a lot of situations, including when the time comes to seek out investment.
In this article, we’ll help you understand how you can successfully pitch your business idea to investors. We will share a few tips that will help you prepare the perfect pitch for your investors.
Let’s get into it!
TABLE OF CONTENTS
- Best Tips to Successfully pitch your Business Idea to investors
- Make a Presentation?
- Know your pitch inside out
- Get your Brand story straight!
- Present your Solution
- Know your Target Market
- Present your Business Model
- Showcase your preliminary success and milestones
- Present your Team
- Customer Acquisition
- Your Competition
- Revenue and Financial Projections
- Funding Requirements
- Exit Strategy
- Follow Up
- Final Step - Feedback and Refinement
Best Tips to Successfully pitch your Business Idea to investors
First things first, to create a successful pitch, you’ll need a thorough business plan. With a thorough business plan, you’ll have to identify what makes your business valuable and worth investing in. You must be able to explain concisely why your business is worth investing in, without going into detailed financial records. Your business plan will help you do just that, and that’s why you need to put a lot more thought into it.
Wondering why we’re asking you to keep it brief?
This is because while pitching to venture capitalists and angel investors for the first time, you’ll most likely only have around 10 to 15 minutes to present your case. Let’s see how you can make the most of those 10-15 minutes.
1. Make a Presentation
To plan a successful pitch, start with putting together your pitch deck. You want your pitch deck to be something that you can easily work with. Apart from being easy to work with, it must get investors excited about your business.
We recommend that you have two versions of pitch deck ready at all times. One should be a short version that you can present within 10-minutes. The other should be an extended version that includes everything you’d like to share with you potential investors.
2. Know your pitch inside out
You need to know your pitch inside out. And for that, you need to practice your pitch. If you cannot speak quickly and clearly about different elements of your business, then all your other efforts will be futile.
Don’t get overconfident and think that just by knowing your business you can explain it’s value quickly and intelligibly. If you’re not fully prepared, don’t expect your killer pitch deck with attractive visuals to be enough to fall back on. Our point is simple, whatever you do, don’t go into pitch meetings unprepared.
3. Get your Brand story straight!
Your brand story helps you connect the potential investors and customers with the problem you’re trying to solve. That’s why you should start your pitch with a compelling story. Your brand story should address the problem your brand or your products are solving.
A good brand story helps humanize the brand and engages your audience right out of the gate. Include actual data in your story if you have done real-world testing.
The more relatable your story is to your investors, the higher the chances of your securing funding. Get to know your investors before you meet them. Do some research so that you have a good sense of their interests. This will help you tailor your story to their interests, needs, and desires. The point of the story is to justify your business and its existence. You have to ultimately show that there is some real problem that your business solves.
4. Present your Solution
You must clearly state what’s unique about your product. Also explain how your product will solve the issues highlighted in your brand story.
You must keep the solution short and simple for the investor to explain to others. Avoid using technical jargon unless your investors are familiar with your industry.
If you’ve done some testing beforehand, include the results of such test(s) to increase the credibility of your solution.
5. Know your Target Market
You must know your target market. Avoid saying that everyone in the world is potentially your target market. You must have exactly determined what is your target market before going on to making an elevator pitch.
You must know who you’re building your products for. Divide your market into TAM, SAM, and SOM. Not sure what are TAM, SAM, and SOM? Let’s discuss briefly :
- TAM: Total Addressable/Available Market is the total market for your product. This is everyone in the world who could buy your product, irrespective of the competition in the market.
- SAM: Serviceable Available Market is the segment of the market that you can acquire. So, if your product is only available in one language, your SAM would be the subset of the TAM that speaks the language that your product is developed for.
- SOM: Service Obtainable Market is the subset of your SAM that you will realistically get to use your product. So, SOM is your target market that you will initially try to sell to.
You should be realistic about who you’re building your product for. Depending on who your product is for, break out your market into TAM, SAM, and SOM. This will help you think more strategically about your roll-out plan and even impress your audience.
Try to develop a few buyer personas that realistically represent your potential customers. This will help determine your target market more comprehensively.
Information about buyer personas and target market will help your investors visualize the potential customer base. It will also go on to show that you’ve thought intently about who your business will serve.
6. Present your Business Model
Investors will care about this slide the most in your business pitch. They would want to know how your business will make money.
Give specific, detailed information about your products and pricing. You should also emphasize how your market is anxiously awaiting your arrival.
Your Business model must be air-tight and well thought out. If investors notice even one discrepancy in your business model, they can back out of investing in your business.
7. Showcase your preliminary success and milestones
During your pitch, you must build some credibility by sharing the relevant traction you have gained. Any early milestones that your business has achieved can help investors determine the viability of your business.
This is your opportunity to impress the investors with what you and your team have accomplished to date. All the sales, contracts, key hires, product launches, etc that you’ve made help present your company in better light. This is your moment to blow your horn and create a full snapshot of your business for your potential investors.
But, remember that you don’t just have to talk about what you’ve already done. Your investors are also equally interested in where you’re going, if not more. Show them a roadmap of subsequent targets and additional milestones. Let them know how funding will help achieve these targets and milestones.
8. Present your Team
Investors don’t just invest in ideas. They also invest in people. So, make sure that you share details about your proficient team. Explain to them why they are the right people to lead this company.
You don’t just have to show them how good your team is. You must also be transparent. If there are some skill-sets missing on your team, let your potential investors know clearly.
Investors know and expect most startup teams to be missing some key talent. So, don’t hide this fact and present your team as complete and perfect. Let them know the real situation of your team and business.
9. Customer Acquisition
The financial details of your business should easily allow you to calculate your customer acquisition costs.
Moreover, you should also mention how you intend to reach customers, which channels you’ll be advertising on, and even present an example of messaging.
If you’ve done your research and understood your customers, why not show investors what that will look like in action.
10. Your Competition
This is a very important part of your pitch. Are you wondering what’s the best way of communicating your value proposition over your competitors’?
It’s actually simple; just show it in a competitive matrix format.
In a competitive matrix format, you list your competitors down the left side of the page, you have your features/benefits across the top. Now, you have to place check marks in the boxes for which company offers that service.
So, you’ll have check marks at the top for every category whereas your competitors lack in key areas to show your competitive advantage.
11. Revenue and Financial Projections
In your pitch, make sure to show your revenue projections (per product) over the next three to five years. Share all your assumptions that back up your revenue and other financial projections.
Investors will want to do their own calculations to make sure that your number and projections make sense. So, make sure that you give them all the information they might need to make their own calculations. Never try to hide anything, transparency will help you more than deception ever will.
12. Funding Requirements
Before you state your funding requirements, let your investors know how much money has already been invested in your company. Let them know who has invested, what are the ownership percentages, and how much more you need to go to the next level.
Also, clearly state what is the next level that you’re trying to reach. Your investors must know where you are right now, where you want to be, and how much time do you project to get there.
13. Exit Strategy
Most investors will want to know your exit strategy if you’re seeking large sums of investment capital (over $1M). They’ll want to know if you’re planning on getting acquired, going public, or anything else. You must show that you’ve done your due diligence on this exit strategy and why it would make sense a few years down the road.
14. Follow Up
You must be able to back up all your claims because your potential investors will expect you to.
At this moment, it’ll have a well-thought-out business plan on-hand to share. This will allow all the interested investors to read more if they’d like to.
The intention behind delivering a powerful pitch is that by the end, their hands are out asking for either your executive summary or your complete business plan. And if you know your business pitch is good enough, make sure that you have your complete business plan or executive summary to present to the interested parties.
Final Step - Feedback and Refinement
Irrespective of the outcome of your pitch, you must look for areas to improve. Whether you receive funding, another meeting, or get rejected, you must always be on the lookout for ways in which you can improve.
Ask your potential investors for their feedback. Take their feedback into account the next time you pitch. But, remember to not push the investors if they’re unwilling to provide feedback. You’ve just taken up their valuable time, so asking for more time can be a risky game.
You can also take another team member there to take notes and review them later. Explore your weak-points and the slides that led to negative reactions from the investors. Keep practising and improving even if you think you’ve found the perfect pitch.
That’s the thing about a good pitch, you’ll only know it’s good when you actually do it. So, don’t get stressed out. Think of every investor pitch as a learning experience for you and your business. With practice, you’ll only get better and better and soon be able to apply those learnings to every area of your business.
We hope that this article helped you understand how you can make a winning pitch for your business. If you have questions let us know in the comments below or write to us and we’ll get back to you at the earliest.