There has never been a more exciting time to be an entrepreneur in ‘generation startup’.
In the current investment ecosystem, more and more investors are diversifying their portfolios and paying attention to big ideas that are ready to be commercialised.
For those early-stage startups looking to get noticed, it’s crucial to understand how to be pitch perfect and use your face-time with investors wisely to stand-out as an investible startup.
1. Hone your big idea and communicate it clearly
Your job is to convince investors that your idea falls into the small portion of ventures – less than 10% – that actually deliver.
With this in mind, the best advice for those starting out is to believe in your idea, hone it, and communicate it with conviction. One of the biggest mistakes aspiring entrepreneurs can make is lacking confidence in their business model, or on the flip side, being over-zealous in their approach, overlooking key details investors look for.
Do your research and be equipped with the necessary analytics needed to get investors over the line. This includes defining why the venture is credible, the market it’s playing in and the competition, how the business will make money and attract customers, and the resources needed to drive growth.
If you can’t communicate any of the those, you’re not ready to pitch.
2. Drop the “sales” pitch
Investors are not interested in marketing or sales ‘speak’. They’ve devoted precious time to consider your pitch, so make it worth their while.
Consider your pitch as an intelligent conversation with experts led by you, and often, taking a back-to-basics approach is helpful.
At CEA, we run workshops for investible startups to help them prepare for their face-time with investors. One of the first things we address is how to build a pitch deck and credibly present this to investors that covers all the market tangibles and pre-empts the questions they will ask. This makes startups appear one-step-ahead and well across their target industry.
Investors also want to be inspired by your idea and fully understand how they can help, so it’s ideal to position your pitch presentation to appeal to their goals and objectives. If you don’t know what these are, do your homework and find out which investors will be on the panel.
3. Practice intelligent improvisation
While it’s important to anticipate potential questions by investors, be prepared to expect the unexpected, and don’t get thrown off. Just as a sales pitch is a turn-off, so too is a “rehearsed” script.
If pitching ideas and answering questions in front of an audience is not your strong point, I encourage every potential startup to consider joining a local speakers group such as Toast Masters to develop your presentation and reactive skills.
4. Do your due diligence
When starting a new venture, investors want to know more than just the essentials, such as how you will grow and market your product or service. Other “must know” information might include the sources of funding you need, the corporate and management structures you have in place, and any legal and regulatory requirements – if your venture is disruptive you will need to consider how regulatory changes will impact operations.
It’s also worth investigating the social impact of your business, including measures you can take to develop a mindful, ethical and or ecological business.
5. Develop a strong execution plan
Investors want to know your business execution plans, including key actions, timings and milestone objectives. This should be backed up with market research to prove why you believe those objectives are realistic and achievable.
This can be provided through case studies, third-party research – or you could even compose your own research to appear entirely in control of the market sentiment.
As an aside, it’s also advisable to develop KPIs to help you achieve company goals and strategic plans. Investors will look favourably upon this as it shows accountability and enables measurable results.
6. Know your funding needs
This is absolutely key. Investors want to know what funds you need and how these will be used across the various business components; research, distribution, marketing or production. It must be a well thought out and realistic approach as they will challenge you on how you use their money and what value they should expect to see returned.
Investors will also want to know what additional funding you will require in the future and how your plans are to achieve this cash flow. Transparency is key.
7. Be prepared to take the journey and enjoy it
Doing your due diligence to be pitch perfect can take months, sometimes years. But don’t be disheartened. If you believe in your idea, and its commercially viability then it’s worth the time and effort.
Despite appearances, most startups are not overnight successes.
Ultimately, you want to build a business that is sustainable, and can withstand any growing pains and market unpredictability, so take the time to develop the right business model and operating systems so you have a solid foundation to begin with.