To make your startup dream a reality, you’ll have to sell your startup to more than just customers and clients, you’ll also have to sell to angel investors and venture capitalists. However, this is easier said than done. Did you know that in most cases, you will have only around 10 minutes to make your life-changing pitch? This is especially true when you’re dealing with venture capitalists and angel investors.
Many startup founders make the mistake of winging it when it comes to investor pitch prep. However, there is a better way — you must master the fundamental art of making a pitch before you meet your potential investors. This will exponentially increase your chances of securing those crucial funds.
From preparing for a pitch to mistakes to avoid, this guide has got you completely covered in the art of pitching.
A business pitch can be thought of as a presentation of business concepts. It’s a way to show prospective customers how your company will benefit them financially and operationally. They can be conveyed verbally, on paper, or through multimedia.
A well-thought-out pitch with exceptional delivery can sway judgments and secure funding, whether it is delivered to a single person or a huge group of people.
A business pitch can range from an informal “elevator pitch” (a brief sales pitch that can be delivered in the time it takes to ride an elevator) to a professional hour-long PowerPoint presentation. Your business pitch should showcase the value of your business and the product or service you offer in a way that is clear, succinct, convincing, and attention-grabbing.
Though every business pitch is unique, they all share the same goal of persuading the listener to do business with you or invest in your venture.
Preparing and practicing your pitch before you face your potential investors will help you own the room when you’re pitching. Here’s how you can do just that:
There are various kinds of investors, but if you want to secure the sweetest deal, you must target angel investors and venture capitalists, and your pitch can differ slightly depending on who you’re presenting to.
Angel investors are wealthy individuals who take a hands-on role as the only backers of a project. Consequently, angels are typically more prompt in their responses. Don’t get bogged down in the details while pitching angel investors; instead, highlight the big picture, the upside, and the massive market your product or service covers.
On the other hand, venture capitalists are a group of investors. As a result, they are more meticulous, detailed, and concerned with the numbers. They have serious responsibilities to make wise choices because they are signing checks on behalf of their own investors (LPs). Give careful consideration to specifics, figures, and potential risks while pitching to venture capitalists.
Investors calendars are packed, and meeting promising startups is just a tiny part of their routine. Rest assured, you won’t be the only startup they will be meeting. In most cases, you will get around 10–15 minutes to make your pitch, which is why proper preparation is crucial.
Also, don’t forget to study for the inevitably mandated question-and-answer session! After you’ve made your pitch, there will be a question and answer round where you’ll have to clear your potential investor’s doubts and queries. For instance, you can have a 30-minute meeting with 20 minutes dedicated to your presentation and the remaining for the Q&A round. Make sure you use your time judiciously.
To get comfortable with answering unexpected questions, try running mock pitches for people who aren’t familiar with your startup. If you’re looking to do some Q&A prep, checkout our free pitch prep flashcard game here…(but finish reading this article first 😉)
It’s unusual to close a deal on the spot after your very first presentation. It’s more likely that you may get rejected by multiple investors before you find one willing to invest. Therefore, it’s often best to start with someone other than your ideal investor.
You should approach each rejection you receive from a potential investor as a learning experience. You will gain insight into what investors are looking for, how to frame your pitch, and what questions you can anticipate being asked.
This will hone your pitching skills and increase your chances of securing a deal when you finally meet your dream investor.
You need to make sure that your presentation deck is your companion and not a burden. Keep it simple and easy to understand. At the very least, make sure your presentation directly addresses these four points:
You want to make sure your investor knows where you’re going with your pitch. Therefore, start by presenting your elevator pitch. This should be a brief summary of your entire pitch, lasting about 30 seconds. Next, clearly state the problem, solution, and core value proposition to ensure that you and your investor are in alignment before proceeding to the next stage.
Most successful business pitches begin with a compelling story. This should be fairly easy since you only need to address the problem you want to fix within the market. Doing so will enthrall your listeners right from the start. Including actual data from any testing you may have done previously will be a great idea.
The goal here is to:
You should establish your credibility early on in the presentation. Communicate the progress you’ve made in the right direction. Feel free to boast about yourself here. Make an impression on the investors by showcasing your team’s progress so far, such as sales, key hires, contracts, and so on. You may have alluded to some of these points earlier, but now is the time to develop a complete picture of your company.
But don’t stop at what you’ve accomplished; talk about where you’re headed as well. Prepare a detailed financial model and plan outlining your planned actions, any extra milestones, and how you intend to use the funds.
It’s quite rare for your product not to have any type of competition in the market. In fact, if you don’t have any competition, it’s likely a red flag to investors. Even if your product vision or feature is the first in the market, you will still compete for market share from non-direct competitors. Not to mention other startups or enterprises that may be developing similar products.
Make sure you conduct thorough research and present a detailed analysis of your competitors and sector, highlighting their strengths and weaknesses.
Your revenue model will outline how you plan to generate income from your product or service. Be very articulate about your solution and its pricing. For example, you can include:
Breaking down how this model aligns with the aggregate annual revenue goals will be a great addition too.
Display your projected revenue (per product) over the next three to five years. You must provide reasoning for your calculations and assumptions. Investors will check your calculations with their smartphones to ensure you’re not pulling their leg, so provide them with all the data they’ll need to verify your accuracy.
Be sure to include an explanation for the inflection points in your financial projections if it resembles a “hockey stick.” You may be tempted to spend a lot of time with them in order to explain the finances, but you should keep in mind that you need to get your point across swiftly. Make sure to include detailed records of your financials in the extended pitch deck or be available to address investors’ queries afterward if they have more inquiries.
Fundraising is no less than your full-time job. You have to be organized and make sure you’re ready with the right materials as you move from one meeting to another. Some pitches may take place in a formal office setting, while others can be brief conversations over coffee.
Prepare multiple pitch templates for different audiences and occasions, incorporating relevant insights for each context. Start by preparing one customizable and polished source deck to pitch to every new investor. The source deck can work as a presentation aid as well as a stand-alone document that tells your startup story when shared.
Once your polished slides are ready, you can go out and start pitching. And when you’re doing that, make sure you follow the KISS method, which is to Keep it Simple, Stupid.
Choose easy, pronounceable words when describing your product rather than jargon and buzz words. Additionally, use static slides or ones with embedded videos directly to ensure a smooth presentation flow and avoid technical errors.
Nowadays, most investors prefer entrepreneurs to present their first pitch over a Zoom call. That means familiarizing yourself with virtual call shortcuts will ensure your investor gets a smooth viewing experience.
Investors are interested in three things done right, which include:
When making a pitch, it is important to highlight the qualifications and experience of your team members. This includes discussing their expertise and credentials. That way, your investors will be confident in your capacity to bring the idea to the market. Moreover, it’ll help them identify areas where you might need further assistance and even help you with it.
Remember to talk about potential risks your business may likely face. Avoid being too optimistic about your concept that you completely forget about the possibility of external risks.
Following are some examples that you may want to mention during your pitch:
Besides mentioning the risks in your pitch, make sure you’re ready to answer questions on how you’ll approach and solve these risks.
When meeting with investors, it’s common practice to schedule some time for Q&A. Despite your best efforts, you can never predict the exact questions your investors will ask.
Never fall back on “I don’t know” or “I’ll cover that later in the presentation” when you’re handed a curveball. Don’t worry if you do not know the answer to a question but never make answers up.
However, you should know that tough questions from investors indicate their attention and engagement. They could be evaluating how well you think on your feet. Do your best to respond when confronted with a challenging question, but do it with humility and candor, acknowledging that you may not know the answer as well as you should.
It’s very likely that you’ll encounter certain doubts and concerns from your investor during the presentation. And while this may cause you to become defensive, know that being so will not work in your favor.
Note that the investors have their money at stake here, so it’s quite natural for them to be overcautious, making them raise concerns. Your goal is to convince them that investing in your business will be worth their money and time because it will not just solve a major problem but also help them generate significant ROI. So, listen to every question and concern they raise carefully and answer them empathetically and with kindness.
Regardless of whether you receive the funding or get rejected, always find areas for self-improvement. One way to do this is by asking for feedback and working on it for the next pitch.
You can also have another team member take notes during the presentation. This will help you identify weak points, slides that receive negative reactions, and areas that require more work. Finally, continue to refine, practice, and execute, and you’ll find your pitch getting better each time.
Some investors (especially in seed fundraising rounds) may be less concerned with hearing about your exit strategy in the beginning stages of funding. However, if your business develops and investment levels reach the millions, this question becomes increasingly important to angel investors and venture capitalists.
Whether your plan is to go public or opt for a buyout, describe the approach you choose and the larger setting in which you plan to implement it.
Say something like, “To the best of my knowledge, [answer], but that’s a question I should be able to answer, so I appreciate your asking." Or, if you are unsure, you can also say something like, “Let me verify that and get back to you after this meeting”.
A simple thank-you note after each pitch is a fantastic idea, regardless of if you were rejected. However, be sincere and avoid sending generic notes of gratitude by highlighting a specific takeaway from your conversation with the investor. Sending a note of thanks demonstrates humility and sincerity, plus it maintains you in their good graces (even if they don’t contribute now, they may do so in a future investment round).
Long paragraphs won’t work here. Curate a brief summary of two to three short sentences describing the company and encouraging potential investors to check your pitch deck. Avoid being too technical and instead, try to highlight the reasons why this is a great investment opportunity.
Note that every investor will have a different objective. Some may only be interested in investing in mobile apps, biotech, or any tech-related business idea. Others may be pretty particular about the geographic location or stage of the company. Therefore, doing your research before pitching your business idea will help ensure the startup aligns with the investor’s goals.
Checking the investors’ websites will give you information about the exact location, stage, and industry they invest in. Being aware of an investor’s background and the businesses they invested in before will help facilitate the conversation. Moreover, it’ll show that you have done your homework for the meeting.
Almost every investor is on the lookout for startups that can grow and become meaningful, particularly in the current political, economic, and COVID environment. Therefore, make sure you highlight this issue and demonstrate why your company can thrive.
Avoid presenting small ideas. In case your initial product has less opportunity to succeed in the current market, you can, perhaps, position your business as a “platform” company.
Investors want to know whether you understand your customers or the user acquisition issues. How much will it cost to acquire a client? What will be the estimated lifetime value of that customer? What marketing channels will you employ to acquire the user or customer? If you are unable to answer these questions clearly, it will give the impression that you haven’t thought out your startup plan well enough.
It takes time and practice to master the art of pitching. Even though you’ll be well on your way to creating great pitches after reading this, the best way to learn is to practice in front of investors and continuously refine and improve.
Until you give your presentation, you have no idea how well it will go over. Don’t worry too much, and look at each investor presentation as a chance to improve for the future. You’ll keep getting better, and you may use what you’ve learned in any facet of your startup!