Many ambitious entrepreneurs have great ideas that will change the world. But there’s a big gap between having an idea and turning it into a successful business. Most of that gap consists of funding.
No matter how brilliant your idea is, you need money to implement it. Many new businesses never get off the ground because the founders don’t know how to show that their ideas are valuable and worth investing in. They might do their research and show potential investors detailed reports of their financial history and market analysis but what matters most is knowing how to pitch it. This is what will motivate investors to actually read those pages.
You have at most 10 to 20 minutes, so what should you say in your pitch?
Project Description
Of course, you’ll want to start by giving a clear and short description of what your company is all about. This means its mission and products or services.
The most effective way to increase the appeal of your products or services is to first describe the problem they solve. Any company at its core makes money from solving a problem. Talk about this problem and show its impact because this is what will convince investors that there’s a market for your solution.
Then you present your company as the perfect-problem solver and share why it’s better than what competitors have to offer. It’s very important to keep this part short and sweet. Think about what works in advertisement. An ad is successful when it can show people what a product is and how it benefits them in a creative, clear, and eye-catching way. But most importantly, it shouldn’t take long because our patience and attention span can only take so much. Just like consumers can grow tired of watching ads, investors are also constantly bombarded with aspiring entrepreneurs such as yourself who want funding.
Talk About Money
What investors care most about is money. They’re not doing charity. They want to know what return they can expect from you. You can start by presenting the results from your target market research, which should include TAM, SAM, and SOM.
TAM or total available market refers to the number of businesses or consumers your products targets – the total demand for your product.
SAM or serviceable available market refers to the segment of the market within your reach.
SOM or serviceable obtainable market is the segment of SAM you think you can capture based on your research.
These pieces of information show investors whether your project aligns with their interests and if it suits the vertical and funding round they typically invest in. At this point, they’ll just trust your data, but if your pitch goes well and they seriously consider your project, they’ll have senior investment analytics experts review it.
Then you’ll want to talk about how you plan to reach these customers and how much your customer acquisition cost will be. Tell them about the type of advertisement you want, the channels, and even some examples of messaging. This will let investors get an idea of how you can put your research to use.
The next step is to build some credibility and show them that you’re someone they can feel safe investing in. Talk to them about what your company has achieved so far, including contracts, product launches, sales, key hires, and so on. If you’ve managed to secure funds like inventions loans, tell them how you used the money and how it helped you grow.
Once you’re done talking about your present financial situation, you’ll want to talk about the future as well and go through your financial projections for the next three to five years. You should be able to back up these numbers and don’t get intimidated if you see some of your investors take out their calculators to double-check.
Unleash The Power Of The Pitch And Close The Deal
Finish this part of your presentation by getting to the point and telling them how much money you need to get to the next level. If you have other investors, talk about ownership percentages and how much money has already been invested in your company. What’s even more relevant to investors is how you plan to use their money and your intended outcome.
If you’re looking for large sums of investment capital, you’ll also need to talk about your exit strategy. Maybe you want to go public, get acquired or something else. Whatever it is, potential investors will want to know. It will help you to close the deal and secure investor funding for your business.
What About Your Competitors?
There are so many products in the world today that can’t deny the possibility that there might be a few among them that address the same problem as yours. Does this mean you should give up? Of course not. There are different ways of approaching and solving a problem, and some are better than others. You have the advantage that you can learn from your competitors’ mistakes and create something better.
Many entrepreneurs try to leave this part out of their pitch because they’d like to pretend there is no competition. This is not the best move because investors are more likely to be concerned about products that don’t have competitors. They’ll tend to think that there is no market for it.
Even if your idea is so innovative that you really don’t have competitors with similar products, you should at least include some examples of companies that have products with similar features or address a similar problem.
Tell A Story
People are a lot more likely to remember stories over facts. Granted, you’ll be pitching to investors, so your audience will be particularly adept at remembering facts. Even so, presenting facts through an engaging narrative will help them relate to you and care about your success on a more emotional level, rather than purely financial.
Framing your business idea and company mission as a narrative will show why you’re so passionate about it and why you’re going through all this trouble of securing funding. All the facts and figures we mentioned above show how you work towards your goals. A story during your startup sales pitch explains why.
This is also a great way to talk about your team and why you believe they are the right people to lead this company to success. Talk about your key hires and why they are valuable to your startup organization. Sell your story and your startup during your investor pitch!
Pitch Perfect
Also, you shouldn’t be afraid to mention the type of skillsets you are missing from your team and that you need additional funding to get it. Admitting that you don’t know everything shows investors that you’re realistic and know where you stand in your startup pitch.
