As a startup founder there will be times when you need additional investment to scale your business and take it to the next stage. Pitching for an injection capital could very well mean standing in front of a panel of investors who’ll have the ability to turn your dreams into reality, provided your pitch and your team make a great impression, of course!
Let’s be clear: the odds aren’t in your favour. Investors and business angels hear many pitches and a good rule of thumb to bear in mind is that only 1 in 10 pitches are deemed investable propositions. Once due diligence and the like are factored in, some claim that investment funds invest in as little as 2% of the total plans they receive.
The individuals you’ll be dealing with are rarely minded to beat around the bush and will have no qualms about telling you if they’re not interested. So, the stakes are high, and the chances are slim. That said, promising ideas are funded all the time, and the accelerator and incubator models that culminate in pitches for investment are becoming increasingly ubiquitous.
So, what can you do to make sure you impress your potential investors, sell the opportunity and have the best chance of securing the capital you need?
Keep to the Key Points
Presenters can sometimes think that a longer pitch makes them sound more knowledgeable and credible. On the contrary, the best pitches will get straight to the point and not waste time by meandering or beating around the bush.
You’ll need to hit all the key points of course, but the extra stuff is often best conveyed during the Q&A that follows. Investors like to be a part of proceedings and love to talk, so give them the opportunity to. Being able to have a conversation with potential investors as opposed to delivering a one-way pitch will endear you to them and quickly build rapport.
Be Pitch Perfect
It should go without saying, but you really do need to commit to rehearsing and fine-tuning your pitch. We’ve seen many BioAccelerate participants come on leaps and bounds over the course of an accelerator programme only to come unstuck at the final pitch day because they haven’t put enough practice in. It’s a crying shame to make all those great strides and then not stick the landing because of something so avoidable.
There are no shortcuts or ways around it: you’ll need to deliver the pitch a good few times before the real thing takes place in front of investors. Good accelerator and incubator programmes should allow times for these rehearsals in front of your cohort peers to get you used to presenting to an audience, but if not, make sure you make time to practice on your own or with friends.
Tell your Audience a Compelling Story
While your facts, figures and forecasts are undoubtedly important, try to avoid delivering a forensic, dispassionate pitch that’s wholly devoid of emotion or personality.
To really engage your audience, you need to tell a compelling story. Not only will this make your pitch impossible to forget (a big plus when you consider how many pitches your audience has to sit through) but a story that conveys your background, your inspiration, your expertise and your passion also sells you. Don’t forget that investors are investing in you or your team as much as your business idea, so any rapport you can build is sure to stand you in good stead.
Know Your Stuff
While potential investors will know a lot about the business world in general, it’s highly likely that they won’t know much about the specific sector that you’re seeking to disrupt. They will want and expect you to know your industry inside out.
This will include having information on the market size, market value, competitors in the same space and prospective customers to hand. In short, you need to come across as the expert in the room to inspire their confidence in you and your product or service.
Remember the Exit is Important
A common mistake made by startup founders pitching for investment is to neglect offering a compelling and attractive exit to investors. Having worked on something for so long and become so emotionally invested, it’s easy to forget that investors won’t have the same attachment to your new product or service and will want to know how you plan to monetise your product, and by extension, deliver to them a return on their investment. Startups can sometimes get so seduced by their own dazzling new product that they cannot possibly conceive of there ever being an ‘exit’, but failure to show due consideration here is a mistake.
It’s always worth bearing in mind therefore that while you may have developed the product for a variety of reasons, an investor’s primary concern will be maximising his or her returns over an acceptable timeframe.
Pitching for investment is an important step in the lifecycle of any startup. So, put in the time to hone your presentation, get ready to field questions and engage in a conversation with your potential investors and be ready to show them the exit! That way you’ll have the best chance of getting the input of capital you need.