After validating your business idea and refining it through a business plan, it is now time to pitch your business potential to the investors.
Now, pitching is a nerve-wracking job. Even the most promising business ideas will fail to secure funding if they aren’t pitched properly.
According to Forbes, less than 1% of businesses are successful in acquiring funds through their pitch. This puts you in an intensely competitive market space where you cannot afford to mess up.
Well, don’t sweat. If you too, like most startup entrepreneurs are struggling with how to pitch to investors, this article is for you.
It covers everything that you need to know about making a successful pitch and if you follow it thoroughly, you are most likely to increase your chances of getting funded.
Ready to get started? Let’s dive right in.
What do investors look for in a pitch?
Everyone says a captivating pitch deck sets you on the right path in capturing the interest of potential investors. But what is it that actually makes a pitch interesting?
Well, here are 4 distinct key elements that an investor looks for in a pitch deck.
Business Idea
Investors want to get a clear overview of your business idea and evaluate it based on its viability, growth predictions, market demand, and target market.
Problem and the solution
A clear understanding of the problem you are solving and the solution you have to offer. A pitch deck must reflect your unique position in the market.
Financial projections
Investors want to know that the financials of the business are as good as the business idea. They want to see financial projections for the next 3-5 years, the business’s profitability, ROI, and its exit strategy down the lane.
Business plan
Pitch decks are concise. However, investors would generally prefer they get a detailed business plan after the presentation to understand minor nuances of your business in detail.
And most importantly, an investor is looking for a simple, easy-to-grasp pitch that serves all the essential information with no fluff.
How to make a business pitch for investors
Now that you understand what an investor looks for in a pitch deck, let’s create a solid pitch for your business.
1. Create a stellar pitch deck
First things first, you need a stellar pitch deck to get the investors excited about your business idea.
A pitch deck primarily explains your business concept, captures the investor’s attention, and propels them to offer funding for your business.
However, creating a compelling deck from scratch is a bit taxing. In fact, most startup entrepreneurs have no understanding of how to create a successful pitch deck. In such cases, a poorly made deck will be the reason you lose potential investment from the investors.
To avoid getting into such situations, build a fool-proof presentation using an AI pitch deck generator. This tool offers AI assistance, a pitch deck template, and step-by-step guidance that will enable you to prepare a stunning business plan presentation from scratch in less than an hour.
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2. Know who you’re pitching
Before you approach any investors, take a step back and evaluate if that particular investor or VC firm is even suited for your business.
You see when you accept the investment, you are entering into a partnership with someone. This partnership will go in vain if your interests, fundamentals, and values don’t align with them.
So, here are a few things you need to analyze about an investor before approaching them:
Industry of operation
Certain investors and VCs usually limit their investments to specific industries and business sectors. It is better to research and evaluate beforehand, whether the investors of your liking are open to investment in your segment or not.
Stage of Investment
Investors usually have a pattern of investing in a specific business stage. While some invest in growth stages, many investors only invest in startups and incubators. Know the investment stage for your business and then find investors that align with your needs.
Investors’ track record
Your chances to secure funding increase substantially when you pitch the right investors. Before pitching someone, gather certain details like the type of companies they invest in, their usual investment amount, core philosophies, etc.
It’s better to get as many details as possible on a specific investor before you approach them with a pitch request. Such research will help you customize your deck and thereby increase your chances of getting funded.
3. Deliver your elevator pitch
An elevator pitch is a crisp snapshot of the entire pitch summarized in less than 60 seconds. Consider it as a pitch that will probe the investors to know more about the business idea.
Now, an elevator pitch must include details about your business, its product, and the business owner. It should sell your USP and highlight your value proposition to pique the potential investors’ attention.
Lastly, it’s mandatory to add a clear CTA emphasizing the amount you seek for a steady launch.
4. Explain the problem with a story
Adopt the art of storytelling if you want to be heard, resonated with, and valued at your presentations. However, don’t beat around the bush and get straight to the problems.
While telling your story, talk about your inspiration to launch a particular product or service. Highlight the pain point of your market and bring interesting data points to make your story relatable and relevant.
5. Present your market research
A thorough market research solidifies the foundation of your business idea making it more of a concrete plan. It instills the faith of angel investors in your business idea and its potential scope of growth.
Now, whenever you include market research always back that data with relevant sources to prove that the research is relevant and fruitful.
For instance, when you include details regarding your market size, show a clear demarcation of your TAM (Total Addressable Market), SAM(Serviceable Addressable Market), and SOM(Serviceable Obtainable Market) through numbers.
Further, offer a brief understanding of who will be your ideal customer, their potential income, hobbies, interests, and pain points. The investor should be able to visualize your target market and its potential size to contribute to your growth.
Also include any industry-specific trends, risks, challenges, and how you plan to overcome those strategically.
6. Introduce your product/service as the solution
Introduce your product or service and show how it manages to solve the problems mentioned earlier.
In this section of your presentation, you can offer a practical demo of your services or a beta version of your product. If it’s a certain type of app, ensure that its core functions are perfectly adept to be presented during the presentation.
If you don’t have a product or service for demonstration, at least embed a video of how it works or plugin the testing results to gain some credibility for your solution.
Again weave a compelling story and present your solution in a distinguishing light.
7. Explain your revenue and business model
This is the most important section of interest when you pitch investors with funding requests. Explain your business revenue model answering how will you make money.
In this section, lay out a clear pricing plan for products and services. If you are planning a subscription model, show the prices for different subscription plans and their monthly and annual fees.
With data points and figures, show how the prices are perfectly in line with your sales and revenue goals.
8. Your customer acquisition strategy
Earlier in your market research you proved that there is a sizable target market for your solution. It is now time to explain your strategies to capture that target market.
Begin by explaining your acquisition plan highlighting your overall process of sales from lead to conversion. Elaborate on this section by defining your sales channel and marketing strategies.
For instance, cold calling, email outreach, paid advertisements, social media marketing, etc.
Now professional investors are interested in figures that demonstrate your cost of acquisition, conversion rate, retention, and related financials to measure the success of your overall business. So be prepared with these growth metrics and prove your point statistically during the presentation.
9. Early traction and milestones achieved
Win your potential investor by sharing your early business achievements in terms of sales, growth, revenue, contracts, product launches, and much more. This will help you build credibility amongst the investors.
However, don’t stop just yet. Go on and talk about the milestones you plan to achieve with the investment capital. Show them the roadmap to the future and present granular details of different milestones.
10. Introduce your team
When you pitch your business idea to investors, they would like to know that their money is in the right hands. Moreover, they want an assurance that you have the right people with the right skill sets to turn your business idea into reality.
Romanticize your team and talk about the interesting skill sets and achievements they bring to the table. At the same time, also talks about the shortcomings be it in terms of limited teams or lack of expertise in certain areas.
Bear in mind that you want to show a realistic picture and not something that just sounds ideal.
11. Present financial projections
A successful pitch is incomplete without thorough financials offering an overview of your revenue projections over the next 3-5 years. So while you do that, make sure that you back those financial numbers by sharing your realistic assumptions.
Investors may have a couple of complicated questions at this stage to get a clear understanding of your financial position. To not fumble then, ensure that you have a thorough understanding of what these numbers interpret.
Now, don’t complicate this deck by adding way too many numbers. Attach your key reports and detailed financials to your extended pitch and refer to that when the investor asks you to dive deep.
12. Discuss competition
The competitive analysis section of your business plan presentation will help the investors understand the competitive landscape of your market.
An effective way to present this section is by evaluating your key competitors based on their strengths, offerings, target customers, pricing, expertise, and revenue. Ideally, the slide should subtly indicate the areas where your competitors lack and you excel.
That being said, discuss your competitive advantage over other players by highlighting your USPs, strengths, and opportunities.
13. Funding requirements
It’s now time to get to the point. Clearly state how much funding you will require to achieve your business goals. Justify your funding needs and convince investors by presenting your key metrics.
Talk about the funds you have already invested and where they come from. Explain the current equity distribution and the investors’ stake if they agree to invest in your business. Also, clarify if this would be one-time financing or if you plan to raise money through multiple rounds of financing.
Overall, the investor must know where the money will be used, the company’s position after receiving the finance, and whether they will be investing in the early stage or growth stage of a company.
14. Explain your exit strategy
The investors would be interested to learn about your exit strategy, especially if you are seeking large funding. Down the lane after 10 years, do you plan to get acquired or go public? Do you have any other exit plans?
Well, whatever it is that you plan, explain why it is in favor of an investor to venture down your path. All in all, they are interested to know if they will get their money back before the exit.
And that’s pretty much all the information pitch decks must include. However, let’s now talk about the mistakes you should avoid during the presentation.
What are some common mistakes made when pitching to investors?
Let’s have a look at a few common mistakes you should avoid to enhance the efficiency of your overall pitch:
1. Not practicing the presentation
If you don’t practice your pitch, you will take an unnecessarily long time and lose the attention of your target audience. So, always practice your pitch and time your presentation to make it short, crisp, and informative.
2. Not backing up the data
Always back the data with reliable high-end sources. This is essential to prove that your business and growth strategy are built on relevant research and analysis.
3. Not pitching to the right investor
Take your time identifying the right investor and venture capital for your business idea. Pitching alone is not sufficient. You have to pitch the right investors to ensure maximum funding approvals for your business.
4. Poorly designed presentation
While pitching, if your presentation is crammed with long slides with no visual aesthetic, you are likely to lose your investor. Follow Guy Kawasaki’s 10/20/30 rule while designing your presentation, where 10 is the maximum number of slides, 20 is the maximum time of presentation and 30 is the minimum font point.
5. Not leaving time for questions
Ideally, your pitch should be concise and brief touching on all the essential informative topics. However, always leave room for Q&A towards the end where the investors can probe further into topics they want additional information about.
How can Upmetrics help?
By now, you must have a rough understanding of how to pitch your potential investors. However, unless you go out and make your first pitch, all this information will just remain a theory.
So, let’s take the first step and create your pitch deck with the Upmetrics AI pitch deck generator. With features like AI assistance, a customizable pitch deck template, and a step-by-step guide, you can create your entire presentation in less than an hour.
Sign up now and unlock the features that will help you strengthen your overall business planning.
