There is no shortage of start-ups pitching their ideas to investors. Just getting the attention of an investor is hard enough and you rarely get a second chance if you make a mess of your pitch the first time around. This means that your pitch needs to be brilliant from the word go.
To stand out, it also must be unique, which means that there is no tried and tested formula to create the perfect pitch for investors. There are, however, key elements that are generally included in every successful pitch. Here, we look at the factors that must feature in every winning pitch to help you in your quest to create the perfect pitch for investors and secure venture capital for your growing business.
- Learn all you can about your investor
- What to cover in your pitch to investors
- How to end a pitch to investors
- Make your pitch visual
- Make your pitch engaging
- Show your passion
- Keep your pitch concise
- Have the figures to back everything up
- Be prepared to pitch virtually
- Practice your pitch
- Ensure your legal team are prepped
Learn all you can about your investor
You should have done your due diligence on your potential investor or investors before approaching them and securing a time slot for your pitch. You should know that they are interested in your sector and what sums they typically invest, but once they have agreed to see you, it’s worth doing a bit more homework on them.
Check out their LinkedIn profiles, their Twitter feeds, articles they have been mentioned in or published and recent news about their investments. See who they have in their social media networks and the subjects they follow and are interested in. Look at the companies they have invested in and exited, research the ones that have done really well and the ones that haven’t done so brilliantly. All of this will help you to understand a little more about their working practices and how much they already know about your sector.
What to cover in your pitch to investors
Your pitch must focus not just on where an injection of investment will take your business, it must also cover the story of how you got where you are today. Explain clearly and succinctly and evidence where necessary:
- Who you are and what led you to start your business?
- What your product or service’s unique selling proposition (USP) is and why it is different from anything else out there, even your nearest competitors.
- Who your main competitors are and how you differ from them?
- The current state of your sector.
- Who you are marketing your offering at and the demographic and other defining points of your target customers?
- How you are getting your offering in front of your target audience and how you are selling it to them.
When you have explained all of this, you are ready to move on to your business’s future, which is where your potential investor comes in. Here you must cover:
- How big your market could become?
- Your current revenue model and how it will develop.
- The current demand for your offering and the predicted future demand.
- The profit you are already making or will make in the not so distant future.
Next, when you pitch your business idea to investors, you must introduce your team. A business is only as strong as its component parts. Your potential investor is going to be just as interested in hearing about the people who are helping you to run your company as they are in you. Don’t just talk about these people and stick their names on a slide deck. Bring them along to your pitch.
If you have twenty great employees, don’t include them all, but introduce two or three of those that do the most critical jobs and who share your enthusiasm for what you are doing. If you have someone on the team who has worked for a household name, such as Microsoft, mention it. Your potential investor may be impressed to hear that someone chose to come to your company from such a well-respected brand, this helps to validate you as a business that’s going places.
How to end a pitch to investors
Many people struggle when it comes to how to end a pitch to investors – summing up a complex proposal isn’t always that easy. What you want to do is conclude with the two most important facts the investor wants to be given: your required investment and your predicted exit date for your investor. Investors buy into companies and then sell out of them having hopefully made a fantastic return on their investment. Buying and selling stakes in companies is their job, they typically look to exit within four to seven years.
Be upfront about exactly how much you want them to invest in your business, how you plan to use the money and how urgently you want it. Tell them how long you expect to require their investment for and outline your plan for their exit strategy, perhaps you plan to list the business on a stock exchange within a certain time frame or even sell the business. You must also know what percentage of your business you are prepared to give to your potential investor in return for their backing and how much operational control you will hand over to them. Don’t be embarrassed about talking money and share capital, it’s what your potential investor does for a living.
Make your pitch visual
Once you’ve decided on the content of your pitch, you need to work out how to take it off the page. To achieve this, build a visual angle into your pitch to keep your audience engaged. Demonstrate your product or service, let the audience use it, use a slide deck, video and/or role play. If, as is increasingly the case in the Covid-19 era, you are presenting your pitch virtually, send your audience your product prior to the pitch or let them access your service, so that they can experience it for themselves.
At the same time, don’t overuse the visuals. Don’t just play a video for eight minutes, sit back and wait to take questions at the end. Stick to between 15 to 20 slides and don’t leave a slide on the screen for more than the minute it takes the audience to digest its meaning. When you pitch your business idea to investors, think of the visuals as the garnish of your pitch, not the main course.
Make your pitch engaging
You might not be presenting something as fascinating as an affordable flying car, but if what you’re selling has the potential to make an investor a lot of money, it must be interesting in its own micro way. When you pitch your business idea to investors, you need to tell the story of your business in an informative, effective, and entertaining manner and don’t just rely on clever visuals. Add a few amusing anecdotes, throw in some impressive numbers and some great client testimonials.
Show your passion
You came up with this business idea, you made it happen, and you’re excited about its potential. Show your elation. Excitement is catching. You want your potential investor to become as excited as you are and to want to get involved as soon as possible. Keep reminding yourself how passionate you are about your offering too and it will make you feel more confident when presenting your pitch and help to quell any understandable nerves.
Keep your pitch concise
How long should my pitch be? This is normally the first question start-ups ask when preparing their first pitch. Investors are time short. They might sit through dozens of pitches a week in the hope of finding the next big thing. They are probably also working with other start-ups and may have their own personal projects on the go too. They want you to get straight to the point of your business and why it will benefit from their funds. You have ten minutes max.
If you’re seeing a professional investor who hears pitches all day long, you may be given some guidance on timing, but always keep your pitch shorter than your specified time window so that there is time for questions at the end. There is a lot to squeeze into a short amount of time, but with careful editing and clever visuals it can be done.
Have the figures to back everything up
Investors need numbers. When you say you’re turning over so many millions of pounds or expecting to reach a profit target by a certain point, you need the data, trends, and financial forecasts to prove this.
To create the perfect pitch for investors,come armed with spreadsheets showing your outgoings and income and predicted future costs and earnings. Perhaps bring your accountant or finance director along to help answer any tricky financial follow-up questions.
Be prepared to pitch virtually
The Covid-19 pandemic and the recent growth in virtual meetings means that it is quite likely that you will be asked to do your pitch virtually via a platform such as Microsoft Teams or Zoom. Although the content of the pitch should be the same as if you did it in person, you will need to make some additional checks to ensure that your pitch works brilliantly via a conference call.
Firstly, make sure that the room you are going to make the call from has a top-notch broadband connection so that you won’t freeze mid-sentence. Next, think about what the audience will see on their screen, you want to ensure that they can see at least the top half of your body, so that hand gestures don’t get cut out and that you and the rest of the pitch team are in shot.
Make sure that no one disturbs you during the call and that you don’t sit in front of a glass screen or window where people could pass by and cause a distraction.
Practice your pitch
Don’t finish off your slide deck at three in the morning on the day of your pitch. You can continually polish and fine-tune it, but make sure that you are happy with the structure and content of your pitch a few days before pitch day, so that you can practice it fluently without having to continually consult your notes. Ask friends, family, and work colleagues to listen to it, and ask questions about it, so that you can practice your answers too.
No matter how comprehensive you believe your pitch to be, your potential investor will ask a lot of probing questions. Look at your pitch from an investor’s point of view and try to anticipate what their questions are likely to be so that you have an answer ready. This is when you may have to refer to your figures, so make sure that you can do so quickly and that you have all the information easily to hand.
Practice your pitch with the other members of your team that you are bringing to the meeting too. Make them aware that you may field questions their way if it concerns their area of the business and they are best placed to answer them, so they need to prepare and do their homework too.
Ensure your legal team are prepped
If your pitch proves successful you’ll need to make sure you have the right corporate solicitors in place ahead of time to support you when writing and reviewing the necessary agreements between parties. Whether it’s just the investment agreement, or shareholders’ agreement, term sheet and beyond, you’ll want to make sure that you have an experienced legal team in place so that your business interests are protected throughout your relationship with your investor, and that all terms of the agreements are clearly laid out for all parties involved.