This concise guide outlines the most important strategies in pitching for investors for your startup business. Startup culture has inspired some of the most innovative technology shifts of the past decade. Whether you’re trying to become the next tech giant, or just a niche company, your startup idea is going to need money to get on its feet. It can take years for a startup to become profitable because quickly scaling a business requires all available resources to be reinvested into the endeavor. This is why investors are so crucial to the success of a startup.
Pitching for investors: 5 Tips for pitching your startup
Here are the most important strategies and tips for pitching for investors.
1. Show why people want your product
It doesn’t matter if you’re selling fancy soap or software, it’s crucial that there’s a demand for your product when pitching for investors. Otherwise, you’re going to have a difficult time convincing investors that they should give you money. At the earliest stages, your startup will likely have limited data to back up your claims. It’s important that you can show investors the value of your offering even if you don’t have sales numbers to back it up. Anecdotal evidence from people who have used the product can help with this.
2. Give a taste of your goods when pitching for investors
Your product might not be in its final form at the time you are pitching for investors. That doesn’t mean you should neglect to offer them some kind of sample. It’s important for investors to get a demo of something before they put money into it. Even if you’re still in the prototype stages of your startup, people will be much more receptive to you if they can see you’ve made progress on your own. This shows your initiative; but also gives investors a clearer sense of your idea.
3. Highlight your business acumen
You don’t need to be Bill Gates to get money for your startup. However, you should show potential investors that you’re serious, and have considered key variables related to your idea. For example, if your startup has a lot of extra expenses, it might be wise to factor those in to your general business model when pitching for investors. You can estimate costs of office space, or include general liability insurance quotes. Your business model may very well change over time. Still, it’s important for investors to see that you’ve thought about potential expenses, as that’s a key component to reaching profitability.
4. Be concise when pitching for investors
You’re going to lose investors’ attention if you ramble on and on about the minutia of your startup idea. Make your presentation short—around ten or 15 minutes — when pitching for investors. You can fit all the most important information into that amount of time if you move at a reasonable pace. Investors will be turned off if they feel that you’re wasting their time. Definitely don’t go on for longer than you promise them. Additionally, by fitting your proposal into a condensed time frame, you will inherently have to do a better job of relaying on the most relevant information.
5. Sell yourself
Like it or not, you are part of your product. Investors want to see someone who is extremely excited about their ideas when pitching for investors. Make sure you convey enthusiasm when you’re pitching your startup to people. It’s also a good idea to present yourself in a professional manner when working with potential investors. They want to see someone who will be a good product ambassador. You will lose a lot of investors if you don’t come off as likeable, or aren’t dressed up to expectations. While you want your idea to be the thing that sells, remember that you are also part of your product.
Top 10 mistakes to avoid when pitching for investors
Ideally, pitching for investors should be left to the professionals. People who really know what it takes to convince investors to write a check and invest in a company. But in the real world, we all know that this is rarely the case. Here are the top mistakes to avoid when in the spotlight.
1. Don’t make the presentation simple enough
As a moderator, you want your audience to be competent, reliable and trustworthy. As a result, you may think that you need to convince them that you know your industry inside out. While this is perfectly acceptable, the first thing you need to do is verify that your audience is familiar with your industry. In most cases, they won’t be.
If you flood your presentation with technical jargon, your audience will lose interest. What you say will just fly over their heads and they won’t interrupt you to explain what you mean. So the trick is to keep your presentation as simple as possible. Use simple words to convey complicated ideas. Use simple transitions and animations in your presentation slides so as not to turn your audience’s heads! There really is no point in complicating your presentation as it will only block your path to success.
2. Boring and outdated pitch deck design
You don’t need any design knowledge to create a visually appealing and professional looking pitch deck. But you certainly can’t use your lack of creativity as an excuse to go out and come up with slides that look like they were made in the 90s!
When it comes to pitching for investors, you want to get your audience’s attention. An outdated design may get their attention, but it will be for the wrong reasons. They are likely to write you off as someone unconnected to the modern world, who will not know how to handle their investments and financial contributions.
If you don’t want potential investors to see you this way, you need to make sure that your pitch deck design is visually appealing. The good news is that you don’t have to redesign your pitch deck from scratch. For starters, you can use free PowerPoint templates, and these templates will help get your pitch deck off to a great start. You can edit it however you want and have your own high quality pitch deck in minutes!
3. A poor introduction will not get you on the right footing
There is no shortage of startups looking for investor funding. They want to get the best bang for their buck, so to speak. So if you want to get a check for your startup, you need to get their attention from the start. Otherwise, they’ll end up funding someone else!
It doesn’t matter if you have the most incredible business idea. If you can’t capture your audience and win them over when pitching for investors, then your great idea is wasted. Unless you have some way to improve your presentation strategy. A strong introduction will bring her to learn more about your business and what you can do to them to help , their reach financial goals. You don’t run a charity, after all. They need to know that they can trust you with their sizeable investments.
4. Your pitch is running a little too long
Investors are busy people. You need to show them that you respect their time by making sure you don’t hold them up for too long when pitching for investors. If you only have a 10-minute appointment, make sure to finish your presentation well before the time runs out. You don’t want people to keep checking their watches or, worse, leave your presentation.
Time your presentation as you practice pitching for investors. Do you mention all the important details? If not, then cut out the fluff and stick with the important things. Remember our first point in this article – you need to get your presentation simple and straight to the point.
Do not discuss the history of your startup or your founders for too long. Don’t bore them with details. Instead, do your best to keep them updated and look forward to learning more about your startup. If they want to know the most important details of your company, you can email it to them later.
5. Don’t pull random numbers out of thin air
You cannot bluff data on your pitch deck. This is just the absolutely wrong way to build your business. You need to have specific numbers on your slides. Otherwise you are just wasting everyone’s time. You don’t want exaggeration when pitching for investors. Sure, you can come up with something that sounds good, but what do you think will happen if you get caught bluffing? It’s definitely not going to come out good.
You could ruin your reputation by lying about your startup’s data. The best way to avoid this mistake is to take the time to research your market and go into the real world to prove that your idea is workable.
In a nutshell, you need to have specific data first before even attempting to get funding from angel investors and venture capitalists. There’s just no better way to prove the possibility exists. Let the data speak for itself when pitching for investors and you will have investors knocking on your door!
6. Not a convincing vision
Many startups fail because they don’t have convincing visions. The founders themselves may think they have something special ahead of them, but investors may disagree. If they think you are just presenting a reworked version of another successful startup’s efforts, then they are not going to give you any money.
When pitching for investors, your job is to convince them that if they show a little confidence in your company, they will make a lot. Convince them with facts and real key figures and show them what the future could look like. If you don’t have much success in your first few presentations, you may want to refine or reconsider your vision. Again, don’t forget to make sure it’s based on reality and not a fantasy that is almost impossible to achieve!
7. No story to tell
Investors, like most people, love to hear stories. They particularly enjoy hearing stories with happy endings. For example, stories in which they invest a certain amount of money and potentially make huge profits in the near future! When you tell your story, you have to make it understandable for everyone. Find the common denominator in your audience and use it to create a story they’ll relate to very well. Weave your narrative from beginning to happy ending.
Another reason stories work so well in pitching for investors is because they’re more memorable than a presentation using dry facts. But be careful not to overdo it. Your pitch deck should correlate with your story. It will take a lot of work and practice, but your chances of success can be much higher!
8. Ask prospective investors to sign a nondisclosure agreement or NDA
It is understandable that people would be wary of sharing their billion dollar ideas with almost anyone. And many think the best way to protect yourself is to get investors to sign an NDA before they even present their pitch. If you think this is a good idea then you will be surprised. The truth is that no legitimate investor will sign an NDA. They are pitched all the time. You have probably heard a variation on your idea from one or the other startup.
Investors are not your competitors. They invest in startups because they want their money to work for them. You don’t want to invest the time building a business exactly like yours. It is true that they may have the finances to build a better product than you, but they won’t have the passion to build it. So, no, asking investors to sign an NDA is a big no.
9. No exit strategy available
It probably sounds strange to talk about exit strategies when you are still in the funding process. It’s like letting people go away before they even start! But it’s actually a good idea, especially when presenting to venture capitalists.
Here’s why: Venture capitalists are looking for ways to increase their investments. They don’t want their money to be idle in a bank that earns a small interest a year. You want an excellent return on your investment. One of the best ways to convince them to spend a small fortune on your startup is to show them how much their ROI will be in just a few years. If you come up with one or more solid exit strategies, it means you’ve done your homework. It helps build your credibility and assures them that their money is in good hands.
10. No clear value proposition
Last but not least, most pitch decks lack a clear value proposition when pitching for investors. Make it easy for your audience (potential investors) to visualize your value proposition. Why should they choose you over your competitors? What makes you unique Why would they write a check for you instead of another startup? Your value proposition should be relevant to your target market, solve specific problems and have specific benefits, and explain why they should choose to invest in your business.
You need to get back to basics to define a clear value proposition for your audience. Without them, your amazing story, visually stunning pitch deck, and charming self won’t be enough to convince your audience to do this check for you. Identify your startup’s value proposition and create a compelling story about it. Do not focus on the features of your product. Instead, focus on the benefits. You may need to tinker with the copy or hire a skilled copywriter to bring your product to life.
Pitching for investors is an intimidating process for people who have never done it before. However, there are a few key things you can do to immediately give you and your proposal a greater sense of legitimacy. If you can, try to pick the brain of someone who has successfully gotten startup funding. This can provide you with some additional, specific insights.
