Entrepreneurs, it’s time for a pop quiz! If you had to choose one option, how would you describe your existing small business pitch to investors?
A) It’s more of a narrative than a pitch. I invested a lot of time and thought into every possible detail to tell the story of my business and what makes it unique. I have actually crafted more than one pitch, come to think of it!
B) My pitch is a work in progress. I think it’s pretty good at explaining my offerings and services, but I’m not entirely sure if I’m doing it “right.” There is so much advice online about how to pitch to investors, and I want to be sure my pitch stands out!
C) Drafting a pitch for investors?! It’s on my to-do list, I swear. (Right after incorporating the business … which I still need to do.)
The good news is there's no right or wrong answer to this question. You’re not in trouble if you haven’t prepared a business pitch or are unsure of how to make a pitch for investors. A fancy pitch may not necessarily put your business ahead of the game either. It is perfectly normal for entrepreneurs to fine-tune as they go, and see their pitch as a perpetual work in progress.
That being said, if you find your startup needs extra funding that only venture capitalists or angel investors can provide, you will need to know how to pitch to investors and present your pitch confidently. You, and your pitch, must reflect your business inside and out. This can easily be a make-or-break moment for a small business. However, the secret to pitching to investors is that it’s not nearly as intimidating as it would be if you didn’t conduct due diligence beforehand. Ready to draft and deliver a pitch like a professional? Follow these guidelines for pitching success.
Before you focus on your startup’s story, make a pitch deck or time your pitch’s length, learn as much as you can about your audience. This particular audience will be made up of investors, many of which have heard hundreds, if not thousands, of pitches for businesses. Conduct due diligence in the following areas, so you don't get swallowed whole when you wade into the proverbial shark tank:
Know your investor
Are they a venture capitalist or angel investor? You may already know the answer, depending on your startup. An innovative app, for instance, is more likely to pitch to a venture capitalist that can secure them millions in funding versus the more limited funds available from angel investors.
Understand an investor’s interests
Why would this investor want to fund your company? Why do you want them, specifically, to fund your business? If you’re pitching to a venture capital firm, review their portfolio. Do you see established businesses you admire, or those in emerging fields on the rise? Study the success rates of these companies. This will give you a better understanding of the kinds of businesses, and industries, their investments go toward.
Are you at the right stage to pitch?
If your business is barely a month old, you may want to wait to pitch investors. (High-growth businesses tend to be the one exception to this rule.) Consider joining a startup incubator to grow and refine the business first; then look into accelerator programs where you can pitch to investors during demonstration days.
Thoroughly explain the details of your business
Here’s a quick pitching pro tip. If an investor has questions early on about your business that you can’t back up with data to answer, your pitch likely won’t receive funding. An excellent pitch thrives on thorough explanation and details of the business. Crafting a pitch deck? Make sure to include these six non-negotiable essentials:
- Outline of the business model
- Products or services, and an explanation of what makes them unique
- Target audience
- Revenue model
- Growth strategy
- Financial forecast
Then flesh out the six essentials by answering the following questions:
Can you provide a brief synopsis that describes your business model? Some details to include would be what it offers, how it works, the markets it reaches and how it generates revenue.
What is your product or service? What makes it unique from competitor offerings and anything else on the market? Could you bring in a sample of your product, so investors can hold it, try it out and review it?
Who makes up your customer base? Have you created customer personas, and if so, what do they look like? How did you reach your first customers? How do you plan to continue reaching this audience?
What does the return on investment look like? Do you have a detailed financial forecast or sales numbers you can share with investors?
How will sales be maintained and continue to grow over time? Do you have additional data to share about areas such as site traffic, unique visits and conversion rates?
Is there an exit strategy, such as an IPO or acquisition, in the works for the business?
Master the art of storytelling
All of the data in the world doesn’t make for a compelling pitch. Your pitch should be steeped in data, but also allow you to tell the story of your startup. This story doesn’t need to be complicated. It should be simple, relevant and structured with a beginning, middle and end. Your passion for the business must be able to easily shine through its narrative. A good example may be of a time when your offerings solved a problem for a customer. That story allows you to share more about the customer and their situation, what your product did to help them out and the lasting end result. This story should pique the curiosity of an investor and command their full attention.
Pitches aren’t designed to take up a great deal of time. Do not expect to keep investors trapped in a room for more than 30 minutes. Respect their time. Focus on the essential details of the business and tell a simple story.
Practice, practice, practice
You may be nervous before delivering a pitch, and that’s perfectly natural. Practice pitching with friends and family before meeting with investors in person. This will help cull any nerves and anxiety before you head in for the real thing. Speaking of nerves, it’s almost time for you to deliver your pitch! You’ve done your research, crafted a detailed pitch deck, have a story ready to tell and practiced beforehand. You now know how to make a pitch for investors. Breathe and go on — you’re ready to pitch like a professional.