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Best practices for pitching to investors

Posted by Shivali Anand

July 7, 2021    |     7-minute read (1401 words)

Pitching to investors is one of the most challenging and nerve-wracking aspects of becoming an entrepreneur. An effective pitch begins with a well-crafted business plan in which you must demonstrate the company's viability to possible investors. Crafting a pitch that gets people to turn their heads and listen might be the difference between your business taking off or disappearing forever. Follow our tried-and-true do's and don'ts for great pitches, drawn from the experiences of successful entrepreneurs and venture investors. 

Consider these pointers for a successful pitch:

1. Prepare a presentation: 

First, devote some time to thoroughly assembling your pitch deck. The goal is to create a simple presentation to get investors enthused about your company. Prepare a 10-minute presentation as well as a lengthier, more comprehensive one. Retain just those parts that are really important to your firm and leave away anything less interesting to investors.

2. Practice:

Rehearse your business pitch several times before giving it to investors to avoid any blunders and ensure that you can talk rapidly about each component of your company. To make investors grasp your proposal fast, practice describing different aspects of your firm rapidly and simplifying your message as much as possible.

3. Issues and a story should be sketched out together: 

To connect with your audience, begin your pitch with a captivating tale that tackles the issue or problem your company can solve. If you've tried, tested, or surveyed your concept, show the results. Also, conduct some research on the venture capitalists and investors to whom you'll be presenting to learn about their concerns.

4. Make a presentation of your solution: 

Showcase what makes your product or service unique, as well as how it will solve the problem your company is trying to tackle. Keep it brief, sweet, and to the point. If your investors are inexperienced with your sector, avoid using buzzwords and jargon.

5. Set a target market: 

Identify the possible target audience rather than stating "everyone on the planet," even if it is true in your head. Showing that you've thoroughly researched your target demographic can help investors visualize your prospective client base.

6. Describe your company or revenue model:

Investors and venture capitalists want to know about your business or revenue model to be confident that you will repay the cash. An essential thing your pitch receivers will ask is how the company will earn money.

7. To establish credibility, mention your accomplishments:

Demonstrate what your company or team has done thus far, such as initial traction, contracts, sales, product launches, essential hires, and milestone successes, to investors. Also, talk about your company plan as a road map for the subsequent phases, and emphasize how their funding would improve performance.

8. Describe your marketing and sales plan: 

One of the essential components of the pitch deck is to explain your marketing and sales strategy. Describe your customer acquisition methods, metrics, and expenses. Outline how you'll reach out to customers and what channels you'll use for marketing. Show investors what your firm will look like after it's up and running, assuming you've done your market research and know who your customers are.

9. Identify your rivals:

The most effective approach to demonstrate the value of your business plan above that of competitors is to show the benefits and characteristics that set it apart from the competition. Make a point of showcasing how your solution differentiates from the competition by highlighting the main features that your company provides that rivals don't.

10. Be open about financing requirements: 

It may seem uncomfortably direct, but you must be forthright about how much money your company requires, how much money has already been invested, who has contributed, and any ownership percentages. Explain to investors why you need the funds to move to the next level, what you plan to do with them, and how much money you expect to make.

Here's what NOT to do while pitching:

1. Don't send an unsolicited business plan or executive summary:

While some investors are clear about their approach to cold outreach, the vast majority of them don't read unsolicited emails. They get many of these emails and don't have time to sort through them all to discover your diamond in the rough. Referrals from others in their network, on the other hand, are taken seriously. Inquire with advisers with whom you work or have ties to see if they have any investment recommendations and could make a direct introduction for you.

2. Don't turn up without first doing some research on the investor: 

Ensure you're communicating with the proper investors or those interested in your industry. Biotech, mobile apps, the internet, and digital media are all possible areas of interest for investors. Some investors have specific requirements for the stage or location of a firm in which they would invest. Before the pitch, do some research to make sure your firm meets the investors' requirements. Knowing an investor's past and the firms they have invested in makes the dialogues smoother.

3. Don't make your first pitch to your ideal investor: 

Practice makes perfect, and this is true here as well. You'll get helpful feedback every time you deliver your pitch, allowing you to improve your pitch deck and presentations. Begin with favorable investors; since this will help you better position your proposal over time. Also, be prepared to respond quickly to questions, and practice making your comments brief.

4. Before giving information, don't ask for a signed NDA

: Nondisclosure agreements are generally avoided by most investors. If your pitch deck contains anything sensitive, remove it and don't distribute it. By requesting an NDA, you are effectively eliminating any prospects of receiving funding, and you must anticipate that as soon as you provide a pitch deck, it will be widely circulated. 

5. Don't send a long email introduction: 

If you believe this isn't significant, reconsider. Create a four- or five-sentence email opening that describes the firm and encourages the recipient to read the pitch deck. Instead of cramming technical information into the email body, explain why this is a fantastic investment opportunity.

6. Do not include more than 15-20 slides in your pitch deck:

Make the most of your time! The pitch must be concise and understood within a particular time constraint, as you will only have one hour to make your presentation. Overcrowding your deck with too many slides can bore your viewers. You may always offer more extensive information later if an investor appears interested.

7. Don't forget to provide information regarding existing customers and traction: 

Providing statistics on early traction or clients is one of the most crucial aspects of the pitch. Showcase your previous accomplishments or successes, and don't overlook the value of this knowledge. Inform investors about your prototypes or proofs of concept since this might provide a solid signal to potential investors.

8. Don't forget to demonstrate how your company can grow: 

Given COVID-19's economic and political turmoil, most investors and venture capitalists are searching for firms that will develop and become even more significant. As a result, be sure you solve this issue right away. Also, explain to investors how big the addressable market is and how much of it you aim to buy over time.

9. Showing unrealistic predictions and values is a no-no: 

If you present the company's expected revenue incorrectly as reaching $5 million in five years, it's likely to backfire and result in little investor interest. Investors want to put their money into a firm that can grow into something exciting and profitable. Avoid making any statements in your forecasts that are difficult to justify.

10. Don't make a pitch without a demonstration:

A demo is worth a thousand words. To offer investors a better idea of what your company is attempting to achieve, show them a prototype or a working demo of your product, service, app, or website. Make sure it works well and has no problems or lag time and try to amaze with its appearance and feel.

After the pitch

Regardless of whether you get another meeting, financing, or a rejection, check your ego and polish your message after every pitch. Always try to find methods to make things better. Request feedback and use it to improve your next investor pitch. Don't press the investor if they refuse. It has the potential to damage your image and negatively impact how your organization is seen. 

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