Pitching your startup to investors isn’t everyone’s idea of an easy sell.
Pitching can be nerve wracking, and it’s heartbreaking to watch an entrepreneur with a fantastic business absolutely bomb in their pitch.
I’ve worked with clients who have collectively raised over $10 million in funding, and I can assure you it’s not a gift that you’re born with and there is no right or wrong way to pitch.
But the biggest weapon you have in delivering a knockout pitch is selling your startup as a huge business opportunity for the investor.
Here are the most important things you need to include in your pitch:
Start strong by selling your grandiose vision for the company in 30 seconds or less.
This isn’t small fry stuff – this is your big, audacious goal for where you want to take your startup in the next 50 years.
Do you want to completely disrupt a stagnant industry? Make the current market leader irrelevant? Expand to have a presence in every country?
Don’t worry if you seem overly ambitious or unrealistic – if your vision doesn’t make you feel nervous, it isn’t big enough yet.
This will grab investors’ attention and inevitably ready to hear the answer to “how will you do this?”
2. The problem
Every sustainable business idea fills a gap in the market.
By persuasively framing the problem you are showing investors that there is massive untapped demand that your business caters for.
Use free resources like government and industry data, self-conducted surveys with your target market and web tools like Google Trends to demonstrate how big the problem is, and more importantly, that the market is growing.
Make reference to the current solutions and alternatives to the problem – this will demonstrate you understand your market.
Using this information, estimate the total available market by multiplying the number of available customers by the value of each customer – this will show the scale of the opportunity to investors in hard terms they understand.
3. The solution
This is where the art of the sell comes in.
Draw directly from the problem you just stated and justify your tech startup as the best possible solution.
Break down your product into three to four bite-sized chunks of core features and functionality.
At this stage, you should only be communicating Minimum Viable Product and appealing to investors’ emotions to tell a story of the customer and how they will use your product.
4. Revenue model
This involves identifying KPIs, your primary customers, your monetisation model, showing basic maths on estimated revenues, ROI and conversations and estimating the average lifetime of your customer.
Your revenue model is likely to change throughout your startup’s life, so it’s OK if you haven’t figured it all out yet.
But it’s a good idea to state two immediate revenue streams as well as two possible future revenue streams.
This shows you’re grounded enough to understand what you can execute now, but still forward thinking enough to be open-minded to changing business models and pivots.
5. Marketing strategy
Your marketing strategy will explain how you target end users.
Quickly paint a picture of who your ideal customer is based on demographics – age, income, location – and psychographics – attitudes, values and beliefs. All these insights will manifest in a sentence like: “Our customer is a man aged 25-55 who enjoys amateur, recreational skiing with friends”.
Then, drawing on the customer you’ve just defined, come up with two tactics for how you will market to your end user. It’s important to provide some context around these strategies to help investors understand why this tactic has been chosen, and why it will work.
Use this to justify your choice of communication channels and marketing materials.
Finally, define what your target growth rates are and how will you achieve them using this strategy.
6. Financial projections
Investors are looking for a financial plan that illustrates how profit and loss will be impacted by everything you’ve just pitched them.
Use a graph or chart to show three to five years of growth projections.
Be conservative with your numbers – investors can immediately tell when they’re inflated – and explicitly state any assumptions you’ve made in your forecasting.
Never say that you don’t have any competitors.
All this will tell investors is that there is no market for your product, or you haven’t done any research – neither looks good in a pitch.
Instead, this is a chance to show your product’s differentiating factor or ‘unique selling proposition’, and illustrate where the gap in the market is.
List your top three competitors and in a few dot points, briefly list what each of them do well, what each of them don’t do well, their brand positioning and their target audience.
8. The team
Never underestimate how important the team is to investors.
A smart investor knows that the people behind the idea are just as important, if not more important, for the success of the business.
Sell your team as hard as you can, explicitly stating why you have chosen them based on the skills and qualifications they have, connections and clients they bring and any big projects or clients they’ve worked on in the past.
Don’t just limit this to your co-founder – include all immediate team members, mentors, advisors and other investors you have on board.
This will serve as valuable social proof that your startup is backed by a team that has what it takes to make it.
9. The master plan
Your master plan is your high-level plan of attack to reach those growth targets you laid out for the next six months, year and two years.
Don’t bore investors with small tasks – just stick to milestones so investors can see you have a flexible plan in place.
10. The investment opportunity
Anyone who has seen Shark Tank knows that you close with your investment offer – ask for the money.
First say how much you are looking to raise in total and from who, then say what you are doing to raise that money.
Explicitly say what you are looking for from that investor specifically, and at what cost per share.
Show that you have a plan for how you’re going to handle that investor’s money.
List in dot points (or a pie chart) the breakdown of where that investor’s money will be going, as well as what will happen to it if you can’t raise the full amount you need.
After that, open the floor up for final questions.
The key to pitching is passion, projection, confidence and above all, preparation.
Remember that the goal of a pitch isn’t to close immediate investment; the goal is to start a conversation.
Follow this structure and you’ll cover all the foundations that investors are looking for, getting them excited about being involved in your business and start opening doors.