A five-step process to perfecting your investment pitch
By Estelle Blanks, Executive Director at Innovation SuperNetwork.
As we adapt to the impact of Coronavirus, some businesses may be looking for investment to support a diversified business model, whilst entrepreneurs may be rising from the rubble with a new start-up in mind. Whatever the situation, securing finance can be a daunting prospect, but with some careful preparation you can deliver your pitch with confidence, charisma and clarity.
For many people pitching resonates with “Dragons’ Den” scenarios of “The Apprentice-style” grillings. Not to mention that this meeting is the difference between getting funding or not. It’s a big deal and can be overwhelming knowing where to begin or how to do it right.
We’re here to put your mind at ease. I see pitching as a lifelong skill. You never know who you are going to meet next and being able to answer the “so what does your business do” question in any circumstance, in a professional and concise way, can make a huge difference.
This 5-step process will help you build the tools and skills that you need to deliver a compelling, succinct and unforgettable investment pitch.
Let’s get started.
1. Research the people that you’re meeting
Think of pitching to an investor like going for a job interview.
The key to preparing your pitch is to step into the shoes of your potential investors. Who are they and what do they need to know to decide to take the decision further?
You need to learn more about them, what they can offer and if that suits your needs.
This is a two-way street. You may potentially be working with them closely if they do decide to invest in you, so you need to make sure that it’s a relationship that can work for you.
You also need to understand the funding that they’re offering and how that will work with your business plans. We recommend doing some research into the following before your meeting:
- See if they have any knowledge or experience in your industry.
- Find out if they’ve got any similar businesses in their portfolio.
- Are they an investor on behalf of a business or an individual investor?
- Does the type of funding they offer suit your business goals and needs?
- Find out if they’re a hands-on investor or if they’re happy to just receive progress reports. Make sure this process suits your expectations.
Investors will appreciate that you’ve done your research, that you understand the type of funding on offer and the value of investment to your business.
However, it is not always possible to know who you are pitching to. When this is the case then make sure that your pitch is crystal clear and answers the questions above so the right investors approach you.
In an ideal world, your access to investment journey starts well before you need the money and pitch. Educate your investors before you even meet them. Speak at events or send them relevant industry reports. Make them aware of your business even if you don’t need investment yet. Become part of their potential pipeline.
2. Be prepared
This may seem obvious, but you really can’t be too prepared for a meeting with an investor.
You need to be “investment ready”. This means having the answers (backed up by tangible evidence) to the following?
What is the scale of your ambition and vision?
Give them a good idea of the size and scale of this opportunity that they could be investing in. Can this be evidenced by your clear understanding of the problem you are trying to address? Is your solution better than anything else out there even the status quo? Do your motivation and passion for the business match the potential scale of your business? Can you convey this in your pitch? Remember, what you don’t say is as important as (if not more than) what you say.
Your product and service
Be clear on what it is, who will use it and what problem it will solve. A key tip is to spend more time describing the benefits of your product or service rather that its key features.
Know your USP (unique selling point). What’s different about your product? What makes it unique to others on the market?
Understand your competition. Having an understanding of your competitors and being realistic about their strengths and weaknesses can be helpful in seeing how you use this to make yourself more competitive. No competition is still competition: why people are doing without at the moment?
It can be easy to get so wrapped up in your product or service that you don’t take the time to actually consider who it is that you’re selling to.
Having a good understanding of your target market will show investors that you’re thinking strategically about who you’re selling to and that you have in-depth knowledge about your industry.
This shows that you’ve thought realistically about how your product or services can generate revenue. Be realistic about any challenges you expect to face.
Entrepreneurs tend to be incredibly passionate about their business and while investors certainly seek passion, they also want to be sure that you’re realistic about the expectations of your business. You need to show them the evidence for why they should part with their money for you. Most investors will understand that, especially for early stage businesses, financial projections are unlikely to materialise in the way they are presented in your business plan. However, they are another indication of your ambition, the potential scale of the business and your understanding of the challenges and opportunities facing your industry and its customers.
The point here is think long-term. You may need money right now to help you to get you to the first stage of development but, if things go to plan/or don’t go to plan, how will your investors return their investment?
If you are pitching to investors, you need money. Therefore you need to be clear on how much money you need now and in the future. What does your investment journey look like? What are you going to do with the money you need now? Where will this take you?
You may also need more than money, are you looking for industry expertise and connections? Many investors can bring a lot more than money.
3. Tell a story
While statistics and data are key to an investor pitch, when they walk away and tell other people about your business, they’re most likely to talk about your story rather than your number of Twitter followers.
A good story is your chance to capture their attention, share your journey and most importantly, show how passionate you are.
Share the story that helped you come up with your business idea. Whether it was using clunky software, an expensive product or a time-consuming task, weave a yarn about your entrepreneurial journey.
Practice telling this story to a friend, family member or colleague and see if they have any feedback.
Try and keep it concise, practice it as much as you can, and time yourself.
4. Prepare a short pitch
Most of us are more comfortable talking about our business over coffee or a one to one presentation. Basically when we have a bit of time. Many pitching situations do not offer the luxury of time. Whether you are in the famous “elevator” or part of a pitching event, chances are that you will be offered less than 3 minutes to present all the elements that we have discussed so far. This is tough but absolutely possible and the skill of being able to pitch within a few minutes can help you open many new opportunities for your business.
And this is all a pitch is, the opportunity to open a new door. Once it is open, you will be able to bring in more detail and information but for now, the task is to capture the essence of your business succinctly.
There are two parts to a pitch. The things you say and the things you don’t say. They both matter. When you prepare your pitch, think about them in equal measure. Let’s have a look at what you should consider saying:
- A compelling introduction
We’ve all been there. The speaker comes on stage and within the first few seconds you are completely hooked up just by what they’ve said in their first few words. Experts in pitch coaching will tell you that a good introduction should include some magic ingredients. They can be:
- A mention of current or historical events
- A positive statement telling your audience what the world is going to look like
- A shocking statement
- A quote from research
- An invitation to imagine a different world (What if… imagine…)
- A short story
These can be useful introducing your pitch. Make sure that it is relevant and not controversial or so far-fetched that you can lose your audience. For this reason, try and avoid humour or big statistics that have nothing to do with your business.
Your compelling introduction is the one part of your pitch that you will know by heart. It is the first couple of sentences that you will say. In a short pitch, the information you give in your introduction is crucial for people to understand what your business does.
- A statement of the problem or challenge you are resolving
This can be mentioned in your introduction. Clearly framing the challenge or the problem your business solution is addressing is going to help your investor understand your market and customers and establish your authority in your subject.
- A clear explanation of your solution
In my experience, this is the part that most entrepreneurs find challenging. Some of you will have spent years of your life developing a particular product or service. Explaining this is in a few seconds can be really challenging. However, this is the one part of the pitch you must nail. Your potential investor needs to understand your solution without being dragged into details…remember the details are for later. I find it useful to describe the solution by its benefits. What will your product and services do better than what currently exists in the market?
- Your business model and key financial information
If you are pitching to investors, this is the core of your presentation. What are your financial projections and how are you going to make money? Too many pitching skip or skim over this element of the pitch.
- Information on existing traction, routes to market and competition
We have already discussed some of these elements. What connections have you got within your industry, supply chain, potential customers? How strong is that connection? If you have competition, how are you better, different, faster, cheaper…Investors need to know that as it can give them a good indication on how close you are to making money.
- The team
In a short pitch, you haven’t got the time to roll out the full CV of every member of the team but it is essential you explain who you are andhow big the team is and their complementary skills. It is also a good opportunity to identify missing skills that the investment or investor may be able to bring to the business.
- The Ask As discussed before, a short pitch should conclude with the funding you are looking for and explain what you will do with it.
- Add jazz hands (the things you don’t say)
Now that you’ve shown what you do, why you’re different, and given the proof, think of any other ways that you can make your short pitch that little bit jazzier, just to help nail the pitch. Think about your pace, your posture, the tone of your voice, the expression on your face, how you look at your audience, the pauses and silences in your pitch.
5. Practice, practice, practice
You can never practice too much for a pitch. Because life happens, even the most confident of presenters may find themselves all flustered before a pitch. If you have rehearsed it thoroughly, your brain and muscle memory will work their magic.
Here are some ways to help you practice getting pitch-perfect:
- Practice your pitch out loud. This will help identify the parts that flow or that you stumble on. If you keep tripping up on the same point, think of a different way of articulating it. Also learn to get out of tricky situations. You won’t have a second chance in real life.
- Record yourself. Either video or voice recording will work – you can do either of these just using your phone. No one likes watching or hearing themselves, but it will help identify the strengths and weaknesses in your pitch.
- Time yourself. We all know how time can fly once you start talking. Practice your pitch and time it to see just how long it takes, you may be surprised with the results. Edit your pitch until you have reached your target time.
- Practice in front of people. It can be awkward, let’s not deny it, but nothing will build your confidence quicker. Start by practicing in front of friends, family, or business-minded friends you may have.
- Ask for feedback. If you do practice your pitch in front of people, ask them for feedback or advice. Ask them to comment on your content but also your authority and body language (i.e. the things you don’t say).
If you’re a North East business wanting more advice on how to perfect your pitch, or are interested in meeting with an investor, take a look at our Access to Finance programme of events for more information. https://supernetwork.org.uk/sme-finance/