Angel investors, young businessmen, and venture capitalists are the lifeblood of modern business, usually taking great ideas and leading them on to make huge profits, while also undertaking the greatest amount of risk. This is probably why drafting and successfully executing a funding pitch to potential investors can be a very hard sell.
While some experts argue that the ability to pitch and negotiate is a personal trait, many argue that the right mix of elements can lead to a successful pitch, allowing one to go from prospect hunting to fully-funded. Here are some tips to make a successful pitch.
Don’t Pitch until You Know You’ll Make It
What this basically means is that you’re never going to get an investor to back you when you yourself don’t seem confident about your venture. And although there’s no guarantee whether your business will succeed or not, you’re going to have to pitch to your investor in a way that says nothing else! So don’t approach a potential investor until you’re committed to the project or truly believe in the business. It’s also easier to build trust in a brand that you’re confident about.
Don’t Pitch Until You Know Your Competition
This is going to be a big part of your pitch, and you’re going to need a fool proof answer. Unless you’ve managed to create a micro-niche in an industry that has no competitors, which is highly unlikely, you’re should know your competition enough to crush their brand with yours, showing them that your product or service is better or unique.
Do Enough Homework on Your Investor
As young entrepreneurs, it’s important to know your target investor, their investment portfolio, and your ability to relate it to their needs. If you don’t know where your investor’s interest lies, you might never be able to make a successful pitch. For example, it’s way easier to pitch to an investor about something which they are truly passionate about. But sometimes, even basic preferences like the length of emails, or preferred time of communicating will affect the outcome of your pitch.
Highlight Your Success Stories
Investors are rarely in the mood for stories, unless you’re pitching one of your earlier successes. Sharing one of your earlier successes not only presents you with an opportunity to blow your own trumpet, but it also allows you to build up some credibility. Whether it’s exceeding sales targets or exceptional customer service, marketers should make sure their investors know what they’re bringing to the table.
Explain Your Revenue Model
This is the most important aspect of your pitch, especially from an investor’s point of view because they’re giving you their money and would want to know how you plan on paying them back. This is the part where you should discuss the gritty details about your products and their subsequent pricing. It’s also important to explain to them how you plan to achieve and sustain such a model.
If you’re prospecting for a large sum capital, over a million dollars, most investors will first ask you what your exit strategy is going to be; are you going to get acquired, or acquire another company and expand? An investor would also be interested in knowing whether you have a roadmap that plots a 5 or 10 year plan for their possible investment in you. How many people are going to invest in someone or something if they do not have a plan or have already thought about these scenarios?