Raising cash in 2018, this is essential reading before you pitch to investors.
Investors hear business pitches all the time. Some that capture their imagination and are highly memorable, and some that are forgotten within the hour. Some businesses you know investors will be clambering to get a piece of, and others they will keep at a distance.
Putting together a pitch that will have an investor reaching for their wallet is not as easy as you’d think. If you have the opportunity to pitch your idea to an investor there are a few common mistakes that you should avoid.
It happens time and time again — entrepreneurs get themselves in front of an investor (finally!) but they are underprepared, their research isn’t deep enough and they aren’t able to answer the questions thrown at them.
The pitch is as much about presenting the opportunity as responding to the questions investors are going to ask you. These will be very specific, they will be assessing how you answer and respond to questions. You have to know your business and sector thoroughly to respond succinctly and convincingly to questions from the investor. So spend a lot of time getting to know your business, your target customers and your competitors. Do your research and get all of the answers.
You will have a unique point of difference and advantage. But you must have a strategy on how you’ll react if a competitor suddenly offers that unique selling proposition as well, or a new competitor enters the market with the same point of difference. Investors want to see that you’ve thought about every possible ‘what if’ scenario.
2. I am the (wo)man
Investors won’t have confidence in a business with a single founder because one person can’t do it all. You need a team around you so spend a bit of time developing your team. Make sure you explain who will be helping to execute your venture to ensure that the investment capital will be deployed in a way that brings the venture more sales to scale.
You might not have a full team at the time of your pitch, and that’s ok. But you need to know the skill sets that are currently a gap and how to attract them your company. You should be prepared to show the skill gaps in the business and how you intend to fill them.
You also need to show that you have people to lend outside support and expertise. Create an advisory board and a list of mentors that will share their knowledge with you. With a team and advisory board you will be on track to operate a successful business.
3. Winging it
People don’t practice their pitch enough. Pitching can feel uncomfortable, but if this if your business, and you’re absolutely passionate about it, put in the time and the effort to practice constantly. Write your pitch out like a speech, with no more than 60 words per minute and ensure it complements your visual presentation. Remember, a pitch does not have to go into deep details in every aspect of the enterprise, but have given enough information that it lures in the investor in to invite you back for a further conversation.
Pitch to your friends and family as though you’re pitching to an investor. You don’t have to be a salesperson. Be yourself, be authentic and let your passion for your business shine through. Make sure that you can give the investor a feeling of confidence in you, that you know your business, that this is a compelling opportunity that they would be a fool to miss. Show enthusiasm for your idea and the investor will be infected by your enthusiasm. Make your pitch so convincing that they can’t say no.
Just as you have to do your research on your business, market and customers, you need to make sure that the investors you approach are the right ones, and do your research on them before you’re standing right in front of them. You need to understand the investor that you’re meeting with as best you can.
Find out who the investor is, what makes them tick, what their leanings and interests are, and what they’ve invested in before. Consider whether they have a preferences for types of investment. Don’t approach a fintech investor if you’re presenting a social hospitality venture. Go and see an impact investor. Remember, you’ll probably only get one crack at pitching to each investor and then they won’t see you again until you’ve advanced to the next stage. So make sure you’re well prepared on all fronts.
5. Marry Me
Unless it’s an amazing, world-first, blow your mind idea, no one will write a check without knowing you, your business and it’s team really well. On average it will take you 20–30 hours of contact time with a single investor for them to make a decision on whether or not to invest in you.
It’s important to build a relationship with your potential investor. Think of it as a lot of first dates, getting to know someone for the first time, and determining whether you are a good match for one another. You have to take the investor on a journey. They want to see your resilience, persistence, and that you’re committed. That you are 100% for your business. They want to see that you will MAKE it work.
Give investors all the reasons to say yes, and don’t give them a reason to say no. The secret is, investors want you to have an amazing idea and they want to hear about a scaleable business that is going to have impact. They want to invest in you and your team.
If you have a fantastic idea that you think could create incredible social or environmental positive impact, pitch it to us at Impact Investment Fund.
Originally published at www.impactinvestmentfund.com.au.