Guest post by Alex Fraser of Invenfin
Unless you’re very lucky, you only get one opportunity to pitch your business concept to an angel or venture capital investor. So you’d better make it good. This article focuses on how to pitch to investors, rather than the content of an investment pitch, which is a separate topic.
Perfect your micro-pitch.
Every entrepreneur should have a one sentence pitch that conveys the value proposition of the business simply and succinctly. This micro-pitch should focus on who you are, what problem you are solving with your solution and how you are going to make money. You never know when you may meet a potential investor and a good micro-pitch is key to securing a longer meeting or pitching session.
Know your audience.
It is important to know whom you are pitching to, how your business meets their investment mandate, what previous investments they have made and what they may be looking for. This is especially important in South Africa as there are limited funding options and opportunities to pitch.
Edit the slide deck.
There is nothing worse for investors than sitting through a pitch that begins with the entrepreneur reading word for word from slide 1 of 50. You need to grab attention from the first minute. Only include essential information in your slide deck and if possible keep it to 10 slides. You need to be able to get through your slides, as well as answer questions, in under 30 minutes. If you cannot do this, you are not yet ready to meet with an investor. A great guide is Guy Kawasaki’s 10-20-30 rule for PowerPoint: 10 slides, no more than 20 minutes, using size 30 font.
Use graphics, charts and diagrams.
Images and graphics are an excellent way of conveying a large amount of data or a concept, clearly and powerfully. They liven up a slide deck and allow you to tell the story or explain the model rather than repeat the information on a slide.
Do your homework and be credible.
Be careful of quoting statistics, making sweeping statements and ignoring your competitors. While your investor may not be an industry expert, don’t assume that they are ignorant of the market. They will expect you to have a deep understanding of the space your business is entering and to be aware of other players in the market. Never embellish your own background or the business’s successes. Investors can easily verify these facts and will lose interest if they feel that you are not being entirely truthful.
Keep it simple.
Try to avoid using jargon, buzzwords and technical terms that may alienate or overwhelm investors, especially if they are unfamiliar with the technology you are employing.
Practice, practice, practice. Pitching is an art and should be a combination of story-telling, a conversation and a sales pitch. Getting the balance right takes time; you should take every opportunity to practice your pitch and get feedback, before meeting with investors. It is also important that you pitch to someone outside your industry to gauge whether a non-industry expert will understand your pitch.
Hope that you are interrupted and anticipate questions.
Be prepared to be interrupted: If your audience asks questions, it shows that they are engaged and interested in your pitch. Prepare back-up slides on every aspect of your business that can help to answer questions an investor may have. For example, in your pitch deck you will have a slide providing a company overview; include back-up slides on each of the founders, your advisers or previous investors.
Stick to time.
Ensure that you practice your pitch beforehand and that you leave time for questions or a discussion at the end. For example, if you have a half-hour meeting with an investor, prepare a 15-20 minute pitch, leaving 10 minutes for questions. Investors often run pitching sessions back to back, so if you don’t complete your pitch in the allocated time, you might be cut short. If an investor is interested they will spend longer with you or may arrange a follow up session to learn more about your business.
Have a realistic development plan.
It is important that you are able to explain why you are raising funding, what the development plan is for the business and roughly how much funding you will need to implement this plan. The plan must include development milestones for each stage of the business, which are actionable and realistic. Remember that early stage funding is often milestone based, and will be released once you meet the objectives of each stage of the development or growth plan.
Mad Libs For Pitches: How To Perfect The One Sentence Pitch (Evelyn Rusli, TechCrunch)
365 Days, $10 Million, 3 Rounds, 2 Companies, All With 5 Magic Slides (Tim Young, TechCrunch)
An Introduction to Pitching Investors (Ben Yoskovitz, Instigator Blog)
The 10/20/30 Rule of PowerPoint (Guy Kawasaki, How to change the World)
What I Learned About Entrepreneurship Through 15 Angel Investments (Neil Patel, Quick Sprout)
The ABCs of pitching investors – Always Be Credible (Jeff Bussgang, VentureBeat)