You have a great idea. You’ve tested the market response via Sandpit. You’ve even written a knockout sales pitch and secured enough money to start selling your product or service.
What you need now is the support of a seasoned business person – someone who can guide you on how to grow and invest the capital needed to do so.
But just because you think your business is the next big thing does not mean that backers will be jumping into bed with you. Pitching for investment is a lot like interviewing for a job: you need to prove that you can fulfil the remit of the role – which in this instance means turning money into more money. Something which is only marginally less difficult than turning water into wine.
Here are some tried and tested tips on delivering an investment pitch that excites and inspires:
Investment Pitch Tip #1: Pick an Appropriate Audience
Investors come in all different shapes and sizes, so to stand the best possible chance of securing seed funding you need to ensure you approach the right audience. Arranging meetings with investors at large venture capital firms, who are used to dealing with established companies (and trading in multi-millions), may result in dashed hopes and broken hearts. Instead, targeting angel investors who specifically work with early-stage startups will likely bring more options (and offers) to the table.
Ultimately, the stage of your business and the amount you’re looking to raise will dictate the type of investors you should target, so do your research and take it one step at a time.
Investment Pitch Tip #2: Perfect Your Elevator Pitch
Sure, they might have money and power, but investors are also human. As such, they have a short attention span and lots of people vying for their time. Convince them you are worth putting their iPhone away for in the first five minutes and you will be on to something.
Your elevator pitch should provide a concise and easy-to-understand description of what your business does. Introduce your idea in a manner that’s short, sweet and to the point (remember the KISS principle here: “Keep it simple, stupid”). If an investor doesn’t grasp your concept in the first few minutes of your meeting, they may presume your customers won’t either. Prepare a one-page executive summary, and a five-slide elevator pitch, that leaves listeners interested in – or at least familiar with – your business.
Investment Pitch Tip #3: Present Facts, Not Fiction
Investors want to hear about, and be excited by, the future – but not a nonsensical one. Show that you are a low-risk, high-potential prospect who has a grasp on reality. Demonstrate how you have tested your business’ viability on a shoestring budget; an entrepreneur who can prove some cash flow and audience interest has a better chance of securing investment than one who simply presents a business plan.
A great way of demonstrating your viability in the real world is through a crowdfunding campaign, which will help you test your ideas, grow your customer base, and take your first steps. Use this information to present three financial forecasts: best case, moderate case, and worst case. Base each of these predictions on facts, performance data, industry and competitor analysis, and a series of thoughtful, defendable assumptions.
Investment Pitch Tip #4: Walk Before You Run
Rome wasn’t built in a day. And your business won’t be either. Investors are wary of entrepreneurs who can bite off more than they can chew. Instead, they look for sustainable businesses – ones in which processes can be repeated over and over in order to drive growth. Even if you have big expansion plans, start by seeking funding for one product/service and prove that you can create, manage and fulfil demand; investors want to see that your sales will be self-generating and your customers easy to acquire, rather than the fact that you have 50+ product ideas.
Investment Pitch Tip #5: Channel Otis Redding and Show Respect
Yes, you know the most about your business, but that is where your authority ends (and in any case, after your elevator pitch, your potential investors should know almost as much as you). See investors as more than the sum of their money: as seasoned business people, they also have a wealth of knowledge and advice to impart. If they grill you during your meeting, think about why they have asked such questions and what it teaches you. Remember, they want what you do – to make money – so be gracious, be passionate, and remember that you are a representation of your business: a smile and good manners go a long way.
If you looking for a way to test the viability of your business, we can help. Crowdfund Campus offers both a live marketplace through which to raise capital, and a simulated tool through which to trial ideas in a safe environment. For more information and a free demo, please contact us today.
Photo Credit: Conor McCabe Photography