You might only get one shot to make a winning pitch to an investor, so do everything you can to get it right first time.
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As a veteran entrepreneur and serial investor I have been involved in countless pitches, and have seen the best and the worst the business community has to offer. Investors are looking for a golden ticket, and don’t want to part with their money for anything less.
Unfortunately a bad pitch can mark the end of a small business, even one with a good product.
To help avoid losing good businesses to bad pitches here is some advice taken from what I have learnt from being on both sides of the investor fence.
Ensure that you plan your pitch properly, you should not be asking for money when you really need it. Desperation can lead to poor decisions, and a poor decision when looking for funding can be the end of your business. A well planned pitch early in the business’s lifetime is best.
Practice makes perfect
This is a tip you’ll hear over again for good reason; practicing your pitch, and pitch techniques, is absolutely key to coming across well and inspiring the confidence of investors. The more you do it the better you will be.
As with anything in life, you get better with practice
Confidence is invaluable in a pitch. If you are not confident in your own business then an investor never will be. The most obvious indicator of confidence is body language.
A firm handshake is important; it starts the meeting well and will leave a lasting impression with your investors at the end. Ensure that you maintain eye contact while speaking, this lets them know that you believe what you’re saying and builds trust.
Finally make sure that you are standing up straight when you enter the room, and keep it up throughout the pitch. Good posture is key to exuding confidence.
Investors look at the people behind the business when making a decision. You need to have a team with relevant experience that shows the investors you can follow through on the plans you are presenting.
If you are a young team lacking experience, then you can enhance your position with the addition of non-executive directors and further credibility can be added by having a strong advisory board.
Ensure that the investors you are pitching to are right for your business; your plans need to align with their goals and ideals. Most investors will have a blurb on their website which lays out their long term strategies and alignments.
If they are the right fit, then consider asking for more than just a cheque. Perhaps they would be able to bring their extensive networks and experience to your business as a member of the advisory board.
Different company cultures need different kinds of investors
According to Bloomberg, 80% of all start-ups fail in the first 18 months, in part due to poor planning. Your pitch must demonstrate that you have considered all conceivable pit falls, and takes into account the competition.
An investor will want to see that you are doing something your competitors isn’t, which could be as simple as succeeding where they fail. Whatever it is, you have to be able to show what competitive advantages you bring to the table.
I would speculate that Richard Carlson never pitched a business idea to a room full of investors before writing his book “Don’t Sweat the Small Stuff”, because in my experience, the details or “small stuff” is exactly what the investors sweat over.
Where will the business be in 10 years? Do you have an exit strategy?
These are the questions investors will be asking and their decision can hinge on your answers. You must be able to share your long term vision, not just for developing but also for exiting. Some investors are only looking at the exit and so you need to show them that by backing your business they will not only get their money back but make a profit.
It is becoming increasingly commonplace for investors to look at the “green” credentials of a business or pitch. I always look at what sustainable practices the business has in place and how it will benefit society in general.
I expect a pitching entrepreneur to have taken corporate social responsibility into account, and to know what problems they can solve to make the world a better place.