DDepending on where you are on your startup journey raising finance from investors might seem like a daunting prospect. Opinions vary on the best way of attracting investor attention so it makes sense to put yourself in their shoes and to consider what they are looking for.
Pitching to investors
While there is no golden formula for pitching, we explore some of the key questions to address when putting your presentation together for investors. .
Grab their Attention
Remember that people have short attention spans and if you don’t grab the attention of your audience in the first five minutes you will find it hard to secure investment. Consider TV programmes like Vikings or Game of Thrones- the reason directors spend so much time developing innovative opening credits animations is that they want to hook you from the very beginning. Start by posing some interesting challenges to your investors, make it relevant to their world. Grab their attention and then get into the details and explain how you will resolve those market challenges. You will need to know your numbers.
Start with 3 key points:
- State what’s changed in the market and what the problem is you intend to resolve
- Tell them what you do and how you will solve the problem (your elevator pitch)
- Give them some high-level facts to corroborate the above two points
Tell a story
You might have a lot of information to share in a short space of time so try to knit your presentation together into a seamless narrative. Never assume that the technical elements of your proposition alone will win over investors - you want them to see and understand the opportunity themselves. This is an opportunity to sell and to charm- even if you are typically more comfortable crunching code than standing in front of strangers.
A good idea is to try and tell a story. In doing so you are well advised to cover the following subjects:
Explain how customers buy, the decisions they go through and the challenges they face. Expand on the size of the market and the potential share you intend to secure. Talk about trends and areas of growth or innovation. Remember to back up your arguments with facts.
Keep it simple and provide an outline plan of potential revenues, margins and costs. Don’t forget return on investment- that’s why investors are there in the first place
Your Dream Team
Remember that investors are not looking to invest in you as an individual but rather into your venture in its entirety. As such you will need to convince them that the sum of the parts of your team is greater than any one individual. Not only will this communicate that your business doesn’t all depend on one person (hence less risk if that person takes ill) but also how the individual team members complement each other and bring different skills to the table. Explain the problem you are solving for your customers and the market research and testing you have carried out to corroborate the opportunity. Remember that investors are unlikely to invest in just an idea. Knock their socks off by showing that you have an excellent grasp of the market opportunity and what makes your proposition different to the competition.
Listen and adapt
If you have an hour slot keep your presentation to 20 minutes to allow plenty of time for questions. The best pitches are conversational in style. Watch your audience attentively and if you see raised eyebrows or furrowed brows pause to ask if they have a question, or expand on the point you are making in a slightly different way.
Make your pitch relevant to your audience
Ask how your potential investors go about buying a particular product or service. Ask questions like “have you ever wondered if there might be a better way of…?” Make good use of visuals and ensure that your slides are uncluttered and easy to scan. Don’t just read off the slides, remember that conversational pitches are best. See if you can get your audience involved from the outset.
Don’t try to blind you audience with science and don’t hold back from uncomfortable truths. If you have major competition tell your potential investors before they discover it themselves. Play to your strengths and don’t forget to be yourself. Don't shy away from showing your weaknesses (providing you can also explain how you will mitigate against them). Never be arrogant or cocky.
If investors ask really difficult questions face them head on and give it your best shot. Evasive answers will get you nowhere and the last thing you want is for investors to think that you are dishonest.
...It won’t be like TV
While Dragon’s Den is great,remember that it is there for entertainment. The real world is different. That said we thought we'd leave you with an example of a truly awful pitch from the popular BBC show. Click on the image below to watch: