In 2017, venture capitalists committed almost $150 billion to startup companies. After hearing pitches from companies, these investors believed in their businesses enough to put their money on the line in an effort to help them achieve success.
If you’re currently in the process of trying to get your startup off the ground, obtaining the proper funding might be the only thing standing in your way. It’s why it’s important for you to learn how to pitch to investors and then go out and do it.
A successful pitch to investors could literally make or break your business. It could be the difference between you taking your startup to the next level and you making the painful decision to shut your business down.
Here are 12 tips that will help you make a strong pitch to investors and hear “I’m in!” in return.
1. Plan Out Your Pitch From Start to Finish
The pitch that you make to investors on behalf of your startup could very well be the most important pitch that you ever make. So you should not, under any circumstances, “just wing it” when it comes time to make your pitch.
The investors are taking valuable time out of their day to listen to your pitch. So give them the respect they deserve and plan out every single aspect of your pitch, from start to finish, ahead of time.
By doing this, you’ll give investors the impression that you’re on top of things and as prepared as you can possibly be. Planning out your pitch will also help you manage the nerves that will come along with standing up in front of an important group of people to deliver a presentation.
2. Tell the Story of Your Startup Within Your Pitch
There are a lot of startup owners that make a crucial mistake when they step in front of a group of investors to pitch a business idea. They inundate the investors with spreadsheets, valuations, and statistics and miss out on the chance to create a real connection with the investors.
Spreadsheets, valuations, and statistics are obviously important. They’re so important that they should make up the bulk of your presentation since investors will want to see and hear about the real numbers associated with your startup.
But before you dive headfirst into the numbers, use your pitch to tell the story of your startup and how it came to be. There’s a good chance that there’s a great story behind the origin of your startup company. Make sure investors know that story by the time your pitch is over!
3. Make Your Pitch as Short and Sweet as You Can Get It
The average venture capitalist or other investor doesn’t have an hour to sit around listening to you run through the numbers associated with your business. In fact, they don’t even have 15 minutes to do it in most instances.
More often than not, you’re going to have about 5 to 10 minutes to make your pitch to a group of investors. So it’s best to make your pitch short and sweet while still including all the pertinent information in it.
Telling the story of your startup is a great way to start your pitch, but it should only last for a minute or two. From there, you should spend a few minutes going over things like customer acquisition, potential revenue, and more before ending your pitch and taking questions from investors.
By keeping your pitch concise, you’ll say everything you need to say before you start losing an investor’s attention. You’ll also open up the floor for questions and be able to address any specific concerns that investors might have on the spot.
4. Prepare to Explain What Makes Your Product or Service So Special
You’ve likely invested a lot of your own money in order to develop the product or service that you’re trying to sell a group of investors on. There is something about that product or service that you think is special and that you want to share with the world.
Your pitch should touch on what makes your product or service so special to you as well as what you think will make it special to other people. The investors sitting in front of you should be blown away by how innovative and forward-thinking your product or service is.
If it doesn’t sound like you believe in your product or service, investors aren’t going to believe in it, either. You really need to sell them on why you think people are going to line up to buy your product or service once they invest in it.
5. Let Investors Know What Makes Your Startup Unique
The truth is that your startup probably isn’t as unique as you think it is. There are roughly 80,000 new startups that pop up all across the U.S. every year, and a lot of them overlap as far as what they have to offer to the world. Many of them even produce very similar products and offer very similar services.
Your pitch will give you an opportunity to show investors what makes your startup unique from similar startups in your space.
Maybe you have a particular patent that’s going to allow you to produce products that work better than the products produced by other startups. Or maybe you’ve figured out a way to produce a product that’s already around for a whole lot less than other companies are doing it now.
Whatever the case may be, your job is to show investors why your startup is the startup that they should invest in right away. You can do it by making your startup look and sound as unique as possible.
6. Paint a Clear Picture of Your Startup’s Target Audience
Any investor that agrees to put money up to fund a startup will want to know that there is a clear target audience that the startup is going after. Investors will often ask, “Who did you create this product/service for?”, when they’re listening to a pitch from the owner of a startup company.
It’s your responsibility to figure out who your target audience is ahead of time. If you aren’t sure who is going to be interested in your products or services, an investor is going to be apprehensive about giving you the money you need.
7. Walk Investors Through How You Plan to Acquire Customers
Acquiring customers on behalf of your business can be a tall task. From setting up a fully functioning website that brings in business to creating successful marketing campaigns, you’ll need to work hard to acquire customers.
You’ll also need to spend money to generate enough business to sustain your company. There is a customer acquisition cost that investors will have to keep in mind before investing in a startup company.
If your CAC is too high, it’ll usually scare investors off, unless they see clear ways in which the CAC could be reduced. You should crunch the numbers to figure out what your current CAC is and strive to bring it down as much as you can before you start pitching your business ideas to investors.
8. Reveal How Profitable Your Startup Could Potentially Be
Most investors won’t invest in a product or service that they’re not particularly interested in. They want to feel some sense of excitement when they think about the possibilities for a startup.
But at the end of the day, investors put their money behind startups for one reason and one reason only: To make money! Whether they’re investing $10,000, $100,000, or more than $1 million, they want to get a high return on their investment in the shortest amount of time.
With that in mind, your goal during your pitch should be to illustrate how quickly you can start making money and how soon it’ll be before investors see the amazing ROI they’re chasing. Don’t ever lose sight of the profits that your investors will want to see.
9. Jampack Your Presentation With Passion and Enthusiasm
Good investors can tell which startup owners are passionate and enthusiastic about the products and services they’re selling and which of them are only in it for the money. They’ve seen enough pitches to know the difference between the two.
There’s nothing wrong with being business-oriented and spending a lot of your pitch talking about the money that you think you’re going to be able to make with your startup. But you shouldn’t allow the money talk to overshadow your obvious passion and enthusiasm.
Right before your pitch, stand in front of the mirror and think back to why you wanted to start your startup in the first place. It should fill you with an unbridled enthusiasm that comes across when you take center stage.
10. Anticipate Any Questions Investors Might Have
When you’re all done making your pitch to investors, they’re going to have more than a few questions for you. You should be worried if they don’t have questions since that might mean they’re not interested enough in your startup to question you any further.
Do your best to anticipate the questions they might have ahead of time so that you’re prepared to answer each and every one of them. Investors will essentially be trying to poke holes in your plans and find potential problems, so it’s not going to be good if they ask a question you can’t answer.
Be open to fielding as many questions as investors want to ask and provide as much information as you can while answering them. Investors will feel more confidence in you and your startup company when you’re able to answer their questions eloquently.
11. Talk to Investors About an Exit Strategy
The vast majority of startup owners spend almost their entire pitch trying their hardest to sell investors on “entering” their company. Very few take any time to talk about an exit strategy for investors.
If you really want to set yourself and your startup apart from all the other startups, work an exit strategy for investors into the mix during your pitch. Tell them exactly how they’ll be able to make enough money from your company over the next five years to exit from it with their heads held high.
That doesn’t necessarily mean that investors are going to want to stick to this exit strategy in five years. But they’ll appreciate the fact that you’re thinking ahead and attempting to show them the potential rewards that they’ll get from investing in your company.
12. Practice Your Pitch Over and Over Again
No matter how confident you might be about the product or service that your startup sells, you’re going to feel that confidence drain from your body when you step in front of a group of investors. It’s a nerve-racking experience for anyone, including those who have pitched ideas to investors before.
Therefore, it’s essential for you to practice the pitch that you’re going to give to investors over and over again. Whether you’re going to be doing the pitch on your own or working with business partners, practice the pitch until it’s perfect…and then practice it some more!
The last thing you want to do is start stammering over your words when your pitch begins. You want to feel confident in what you’re saying, even if your knees are knocking and your nerves are on edge.
Learn How to Pitch to Investors Before Your Next Presentation
If you’re ever invited to pitch a business idea that you have to investors, you should make sure that you take it seriously. The pitch you deliver will reflect on both you and your startup and determine your future in a lot of ways.
By using the tips listed here, you can learn how to pitch to investors successfully. You can also reduce some of the jitters you’re going to feel on the day of your pitch.
Spend some time reading other articles available on our website to learn how to use financing if you’re lucky enough to receive an investment from an investor.