Starting a new business can be challenging on many levels, but one of the most common challenges that entrepreneurs face when starting a new business relates to funding. You may have full faith in the potential for your venture, but somehow you must convince investors to contribute a substantial amount of their hard-earned money to your project.
Having confidence and believing in your project can go a long way toward convincing others that they should invest in your company. However, you must also have a strategic, well-formed plan to showcase your venture as being appealing to the investor. By focusing on a few tips, you can improve your presentation to enjoy enhanced results from your efforts.
1. Research the investor
When you are preparing to pitch your venture to a new investor or venture capital firm, it is imperative that you understand who you are talking to.
Each venture capital firm or investor is unique. Some prefer to invest only in specific niches or sectors, and others only jump in when the venture project reaches a specific stage. You should also understand how much money they may realistically invest in your venture.
These are all important factors that can help you to form a customized pitch to the specific firm you are about to present your venture to.
With most venture capital firms, you can find a substantial amount of research information about the companies as well as about individual players in the firm. You may also speak with other entrepreneurs who have successfully obtained capital from them so that you can understand what to expect.
2. Know your market and what sets you apart
Another important factor that you need to hone in on when you are preparing your pitch is your venture’s individuality. What makes your venture unique from what is already out there?
You absolutely must know who the competition is and what they are offering. You must know what is fundamentally wrong with your competitors’ approach, and you should present your pitch in a manner that focuses on how you will be better than the competition.
Essentially, you cannot bring the exact same product into the marketplace and expect to entice customers to make a purchase from you. You need to offer something better or at a lower price point to stand out. You need to show that your customers have a problem and how you plan to solve that problem.
Rather than make a bold claim, back your claim up with a demonstration, hard data or something tangible. More than that, you need to showcase your growth strategy to your potential investors. Your investors want to see that they will generate a great return on their investment. Remember that your presentation should be no longer than two pages. Every word should have meaning so that you can create a focused, concise plan.
3. Show them your passion
The best venture for investors to contribute funds to is one that has a passionate owner.
You need to wholeheartedly believe in your product or service, and you need to show that you live and breathe this venture. It is also helpful if you can talk about how successful and devoted your team is to indicate that you have the infrastructure for success.
Focus on something that is unique about your business, such as how many patents you have or how engaged your customers are, and illustrate this. Tell the story about how you got involved in this niche area, and show your passion, enthusiasm and experience through this story. Remember to be concise as well as passionate.
4. Know how much money you will need
Before you present your pitch to investors, you need to know exactly how much money you need as well as the split that you are comfortable with. Some entrepreneurs will low ball a request because they think it is easier to raise a smaller amount of money. However, you ideally need to request enough money to get you through the next 18 months.
Create a plan for how you plan to use the money, such as to invest in larger space, to hire skilled team members and more. Investors need to know what their return will be, but be prepared for them to make a counteroffer to you. You should fully analyze various scenarios before the presentation or pitch so that you know what your rock bottom minimum acceptable offer would be.
5. Be transparent and true to your beliefs
Some entrepreneurs get so passionate and excited about their product or service that they ultimately oversell. They may end up being untruthful about claims or overpromising what they can do.
Venture capitalists understand that some people do this, and they may ask a question without a feasible answer just to test your level of honesty and transparency. You should also present yourself as being comfortable and confident, and focus on your body language, tone of voice and wording.
Defend your views or products when necessary, but also remember your company’s limitations. You should always be enthusiastic, but you should also be realistic and concise. Venture capitalists can grow short with you if they feel as though you are wasting their time by being too wordy or seeming not to know what you are talking about. You should always remain in presentation mode, and avoid getting into a chat with the venture capitalists.
As you can see, there is a lot of work for you to do before you are ready to seek venture capital or investor funding. Investors are more inspired to contribute funds to projects when the business owner is knowledgeable and confident.
Remember that each presentation is a learning experience. You may flop on your first few presentations, but you can improve on your skills through each experience. Eventually, you will be able to better anticipate questions and present your project in the best possible light. You will soon be able to find the long-term investor relationships that you are seeking.
