So you want to pitch your ‘amazing ‘ idea to investors? Get it right from the first attempt. Here are tips as shared by entrepreneurs who have walked the path.
- Tell a life story- When possible, open your pitch by telling a real customer story that addresses the problem your product or service solves in the marketplace. Avoid using buzzwords and tech talk when you tell your story. Instead, use real names and real customer challenges. Keep it simple and realistic.
- Capture the essentials. Investors care more about the presentation than the business plan. Can you, in less than five minutes, explain the project, the return on investment and the growth strategy? Your business model should answer the questions: What do you sell? To whom? How much do they pay? and How do they pay you? You don’t need to talk about everything, just the core part. Prioritize the most important things you want to share and stick to those pieces.
- Prepare yourself, not just your idea and sell both. Don’t be afraid to talk about you or you and your team’s accomplishments—especially if those accomplishments relate to what it takes to start and scale a venture. Tell and show the investors why you are the right people to lead this venture. It’s important that the investor and entrepreneur can get along. They will want to see that you are fast, thoughtful and efficient, and can sustain the project through its conception and growth.
- If you can get someone who doesn’t understand your business model to grasp what you’re communicating, then you’re prepared to give a pretty good pitch. Leave out the acronyms and techy gibberish. Would someone outside the industry understand your model without hitches? Keep your pitch short, sweet, and to the point. Practice your pitch on someone outside of your company, and ask them to repeat what they think your business model is back to you.
- Have a plan from day one. Many investors tire after about seven years with a company and look around for new opportunities. So what is your next move when the plug is pulled? Are you going to sell all your shares to a new entrepreneur? Go public with the company? Sell to venture capitalists? Franchise?
- Address competition head-on. You have competition so face it . Everyone has competition, even if it’s indirect competition. Caroline Cummings shares this example “Think about when Henry Ford built the Model T. Were there other cars on the market at that time? No, but he had to find a way to steal people away from other modes of transportation (horses, trains, and walking, for example). One of the best ways to illustrate that you understand your competitive landscape and your differentiators is to have studied and analyse your competitions.
- Show your products or mock-ups. It’s easier to sell an idea that is visual. Even if your product is not yet built, show mock-ups. It’s amazing what a visual representation of your product and your business can do for the overall effectiveness of your pitch.
- Do your investor research. You should find out as much as you can about your angel investor. Who has he or she invested in before? Have they been successful? How well do they know your industry? How much time can they devote to you and your idea?
- Be realistic. Go ahead and excite investors about your big picture, but be reasonable and responsible. Respectable investors will not take you seriously if you present them with nonsensical financial graphs that claim your company’s revenues will grow from outrageously in three years. Show investors that you have a grasp on reality with three versions of financial projections: best case, moderate case and worst case. Base each of these models on facts, past and present performance data, industry and competitor analyses and a series of well-thought-out, defendable assumptions.
- Learn the vocabulary—it’s all there on the Internet, in this case. I’ll say “Google is your tutor”.
Insights from Caroline Cummings, Scott Gerber and Baybars Altuntas