How to deliver a startup pitch that investors won’t be able to refuse
Friday, February 19, 2016/
By Nick Bell
Each year I’m approached by numerous startup founders who are looking for one of two things: a mentor or an investor.
Having built WME into a global digital marketing agency with 450 employees and a turnover of $45 million, I am now in a position where I can give back and assist others to get their ideas off the ground.
I’ve encountered many pitches that fail to address some key points but the ones that do really stand out.
In 2014 I was invited to Richard Branson’s Necker Island where I joined 15 other entrepreneurs and investors to hear pitches from various founders. The team from Ideapod caught my attention and gave me confidence in their plan for a new kind of social media platform. They presented well and provided realistic figures based on facts, so much so that I decided to invest in their business, and Richard Branson publically endorsed their platform.
But asking someone for their time and money like this can be a daunting task, so here are some things to consider if you want to build a pitch that an investor can’t refuse.
Be professional and thorough
Present your business idea in a polished and professional manner. Have an executive summary on hand as well as your lengthier business plan for when we ask the more detailed questions.
Your business plan has to include all of the elements that will contribute to its success. When I’m listening to pitches I want to hear what your business model is, what state the market is in, who your competitors are and, crucially, how I’m going to make money out of my investment.
Tell me how you’ll go about attracting those first few paying customers, and what unique opportunity your business presents.
And it’s true what they say about elevator pitches – they work because they get straight to the point as to why your business works.
Understand the financials
While I will need to have a thorough understanding of your concept it’s also crucial that you show me the solid facts and figures.
It’s important that you know how much you have personally invested in your startup and how much revenue you’ve generated to date.
Don’t be unrealistic in your financial projections – present both a best and worst case scenario so I can see you’re prepared for all situations. And base your figures on real facts – facts that are obtained from competitor analyses and your own performance data.
Know where your strengths lie
My experience as managing director of a multinational company has taught me the importance of surrounding myself with a strong management team that covers all bases. If you’re no good at a certain business area then bring someone on board who is and the earlier the better.
A potential investor wants to know that you know where your strengths lie and what you plan to do to fill the gaps.
Create a connection
While confidence is good, arrogance is not looked upon fondly. Learn to know the difference and try not to let nerves take away from a great presentation. Build rapport with your prospective investors, because ultimately if they don’t like you, they won’t invest in you.
While I get great satisfaction from helping businesses with potential not all of my investments have turned out to be successful.
My biggest lesson for founders is to know the industry in which they’re launching, and to know it well. Too often, unfamiliarity leads to failure, no matter how sound your costings are. So gain real-world experience in the industry before you attempt to disrupt it.
Unfortunately seeking funding can often be a long process. If an investor doesn’t say yes the first time, don’t throw in the towel. Ask for feedback and use it to refine your pitch. Then take it back.
There will always be someone who is willing to back your idea – you just need to keep working on it until it hits the right note with the right investor.