The best businesses are successful because they understand the needs of their customers. When preparing for a funding pitch, aspiring entrepreneurs need to follow suit – to understand what investors (their customers in this instance) need to make a decision on their business.
Pitches can bring up tough questions from potential investors, but a thorough approach is required due to the risk of investing in startups. But if your idea is solid and you highlight the potential for growth in the pitch, the opportunity will outweigh the risk and you can expect the money to come rolling in. That is if you nail your pitch.
So how do you show that your business is worth investing in during a 20 minute pitch meeting? This handy guide will help you structure your pitch to maximise your chances of success.
How to structure your funding pitch
Your pitch is a once (or twice, or three times…) in a lifetime opportunity to showcase your startup and encourage a panel of investors or a VC firm to back you. Typically, a 20-minute funding pitch should follow this structure:
You should open by providing an overview of the presentation with numbered sections and a clear outline of the structure.
2) Identify the problem you’re tackling
This is your opportunity to highlight the problem or issue you’re solving, show that there’s a gap in the market for the solution, and demonstrate that you have an in-depth understanding of the marketplace in which you plan to trade. Explain how your startup provides a solution, and identify potential for growth and adjustment to cater for changes in the market in the future.
3) Explain your solution
You’ve highlighted the problem, now explain exactly how you’re going to solve it (a pitch is your chance to tell a story to hook investors). Talk about the product or service in detail, making sure that everything you say is relevant to the fundamental problem. Show that your company is different and outline your USPs. Use case studies and facts and figures to back up your points and provide specific details about your target market.
4) Talk about alternative solutions
At this point, you can cover alternative options and solutions customers could use to approach the same problem. Consider your competitors, review the landscape, and explore other avenues. If you consider a chocolate bar, for example, this is not a novel product, and competition doesn’t just come in the form of other bars or bags of sweets. It also comes in the shape of alternative snacks, for example.
5) Introduce your team
Every successful business is reliant on an effective team. Take a moment to talk about your team, your vision, and how you plan to work as a unit to achieve objectives. Be prepared to answer questions about recruitment and your role within the business. Would you be prepared to appoint a new CEO to optimise growth, for example?
6) Explain your business model
Provide a detailed, but succinct description of how your business model has worked up until now, how it will evolve in the future and how you plan to alter the structure if this is applicable. Cover all bases, highlight the most pressing or complex difficulties you face, and show investors how you plan to solve or overcome them.
7) Discuss forecasts and provide numbers
Discuss forecasts, provide honest projections, and back up what you’re saying with facts and figures. Be realistic, and provide an insight into how much money is needed to take the business to the next level and when investors could expect to see returns.
8) Your valuation and how much money you need:
At this point, you should cover the valuation of your business and how much money you need from the investor to make the venture work. Explain how you calculated the figures and how much cash is needed to take the business to specific points or milestones. It’s also wise to discuss what happens if there is a problem, for example, a product is delayed. Investors will almost certainly have more knowledge about this area than you will, so it’s crucial to seek advice and make sure you’re ready for tough and awkward questions.
Lay out the major milestones and discuss how you’re going to ensure you reach them. This should include plans like hiring extra staff, and also any evidence you have from past achievements, which could further your cause.
9) Outline the exit strategy:
Investors want to make money, and they won’t sign up to anything without having a plan in place to exit. Explain your strategy, showcase the idea in all its glory, and make a final push to persuade the panel that this is the best opportunity out there.
When you’re pitching to investors, it’s vital to remember that people talk. If you make a good impression, this could open doors for you. Take this structure as a guideline, use imagery and clear bullet points to make the information you provide digestible, and highlight your best points first. Be passionate and enthusiastic and really sell your idea.
The perfect formula for a successful pitch
Investors hear pitches day in, day out, so although it’s a singular opportunity for you, it can just be another pitch in their minds. Your quest is to hook them with your idea and excite them, then to encourage them to have trust in you and your business model so they will take the risk to invest with you. Here are some steps you can take to perfect your pitches:
Be confident but not arrogant
There’s nothing wrong with being confident and passionate (that’s an attractive trait in a pitch), but don’t cross the line to arrogance. You’re at the beginning of the journey and are looking for their investment and expertise in helping your business grow. Don’t sugarcoat the facts or create hype around figures that are based on metrics that don’t exist. It’s much better to be honest than to present graphs or charts that showcase completely unrealistic growth curves, for example.
Keep your cool and prepare for a little criticism
It can be difficult to listen to an investor criticising you or your idea, but resist the urge to get involved in heated conversations. Keep your cool and try not to get defensive. If flaws are identified, accept that your pitch has holes, and focus on working on them and offering solutions. Try not to get too involved in the idea or take comments personally. It can be beneficial to treat the pitch as though it were somebody else’s baby, rather than your own. And accept that not everyone will be on board with your idea or fully understand the importance of problem you are solving. Take each ‘no’ pitch as an opportunity to improve on your delivery for next time which will hopefully be a ‘yes’.
Be clear on why you want the amount of money you have asked for
All too often, entrepreneurs go into a pitch asking for money that they don’t necessarily need, and this causes investors to question what they’re going to use the cash for. Calculate how much you need and provide a clear outline of where the money is going. Think about how much money you need to achieve your primary objectives, and balance this figure with the portion of equity you’re willing to give away. It might be better for you to ask for less and retain more of your stake.
Provide facts, not promises
When pitching, you want investors to trust what you’re saying, so avoid making promises, especially if there’s a high risk you won’t be able to deliver on them – you’re an entrepreneur not a politician! Use facts and figures to back up your projections and try and avoid statements like ‘we will do this.’
It’s very common for people to take on a persona or a role when they’re standing in front of a panel looking for an investment. Try and avoid any kind of metamorphosis, which sees you transform into a caricature. Be true to yourself, tell your story, be honest, and let the people in front of you get to know you. If you suddenly switch off the bravado and become a different person when the pitch is finished, a panel might question how genuine and trustworthy you are. Investors are looking for ground-breaking, interesting ideas, but they’re also keen to invest in the people behind those ideas.
How to get in the room in the first place?
Decksender has thousands of investors waiting to receive your pitch – just follow our guidance on how to perfect your deck then identify the right investors to send it to on our platform. We’ve even added functionality to enable you to upload a video pitch for your startup, so you can hone your delivery as you go!
Pitching is not a simple task, but it offers a platform to show off your ideas, and try and get a business venture off the ground. Be prepared for questions, take time to listen as well as to speak, and stay true to yourself. Good luck!