How to pitch to an investor

Pitching is the act that determines if an investor will likely invest in your company or otherwise. Investors are not easy to come by, therefore you want to make the most use of any opportunity you have when you have one seated across you.

When talking to an investor, you have to be passionate and sell yourself. Sell yourself first; the skills, talents, ideas, you possess that can help you launch and grow your business. investors like to know they can trust you with their money and you know what you are doing.

Here is how to pitch to an investor.

Research the investor

One step towards delivering a good pitch to an investor is research. Research your investor before you meet them; are they interested in your line of business? In which business have they invested and which stage of the company?

Find common ground with the investor. Check their public profiles and search for any press. Are there any hobbies or interests you have in common? It can be a good icebreaker when starting the conversation.

Connect with them online. Following a Twitter or Instagram account is always a good idea. Engage with their posts, but don’t overdo it. Facebook tends to be more personal. So hold off on sending your friend request. LinkedIn is also good to connect with professionals. Most people are open to accepting a connection even if they haven’t met you. But make sure to add a personal note to your request. After all, it’s your first impression.

Try to get a warm introduction. Do you know anyone at their portfolio companies that could give you an introduction? Is there an event he or she will attend where you know someone from the organisation? Social proof is important to all aspect of your business. Whether you’re selling to potential customers or pitching to an investor. If you can get someone to introduce you you’re already one step ahead in the game.

Capture the investor’s attention

Apart from listening to your pitch, there are a thousand and one things going on in your investor’s head. To grab their attention, tell a story about what brought the conception to your business idea.

Everyone has a story, go ahead to talk about what your company does, stating the problem you have identified and how you are trying to solve it with your product/service. Tell your story with passion. An investor first wants to know why you do what you do. He will then start to analyse the business model itself.

When talking about your business, don’t assume the investor already has a prior information about your business. Hence, use simple and straightforward language. You should be able to say what you do in one sentence, and the investor should be able to understand.

The more you talk, the more your opportunity to say something that people don’t like — Michael Siebel

Market size

Proceed to talk about how big the market is. An easy way to do this is by making a research on how big the general industry your product/service is in. Assuming an investor already knows about this and therefore skipping it, is a big mistake. Take time to research the market value and don’t exaggerate it.

The next thing to talk about how much traction you have. This should also be explained in basic terms. Simply talk in terms of your growth since you launched, the number of sales, the amount of revenue you currently have, number of users. This is a way to show investors that you are moving fast.

Competitive Advantage

Another mistake entrepreneurs make when pitching is ignoring the competition. Saying you have no competition shows you still have a lot of work to do understanding your market or chasing something unrealistic.

Talking about your unique insight is an opportunity to state what the biggest players in your market don’t do well or understand. Investors want to know who your competitors, how your product/service is different from theirs and how you plan to survive and thrive in the midst of your competitors. In short, talk about what sets you apart.

Know your difference!

Business Model

What comes next is defining how you make money. Subscription? Direct sales? In-app ads? However, your revenue comes in should be stated during your pitch. Overlooking this shows you are yet to figure out your business model, and how you want to monetize your business. Meaning the traction you have stated earlier, may not be entirely true.

Team

If your team has done something significant and impressive in the past, something that has made investors money now is the time to mention it. Your team is the most valuable part of your business. Talk about the number of founders there is (how long you have known each other, how you met), your engineers, business team, tech team; their skills and how it has contributed to the launch and growth of your business. How committed and dedicated you all are to the business, investors like to know that. They also like to know team members are working full-time.

Exit Strategy

This mentions how investors will make their money. This is the part they are usually interested in the most. Who wants to lose money? Therefore, you have to clearly state a plan you have in place for investors. You have to ensure they know what is in it for them.

The means of getting back their money should be stated: be it “straight schedule” (for investors who are providing loans instead of buying equity in your company), the percentage of ownership, or at a “preferred rate” of return.

You have to be able to figure out if it is a fundraising conversation or not. If it is, before the meeting, you have to know how much you are raising.

Also, create a plan to launch and grow without investors money. Never put investors in the ultimate position of power.

In conclusion, make your pitch simple and brief. By so doing, there is enough room for the investor to ask questions in order to know more about your business.

Bonus: How to make a great pitch by Guy Kawasaki

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