If you are a startup seeking funding, engaging people with your business is the key to securing buy-in and obtaining finance.
When it comes to pitching to investors, you are selling yourself and your solution, with a focus on the needs of the investor to manage their investment risk and fund with confidence in the growth trajectory of their money.
As a target audience, investors are busy people who may see hundreds of pitch decks a month. Your dedication and focus will mean you are blinkered to the perspectives of your business, and your main job in communicating to investors is to come out of your shoes and into theirs. And often, the best way to do this is to tell a story.
In our blog, we suggest how you can provide the right narrative for your business, enabling investors to come along on the journey and engage with you.
- Introduce yourself
- Set the scene
- Explain your solution
- Describe your business model
- Communicate the impact
- The offer on the table
Introduce yourself
Investors often back the people rather than the business, so take a moment to introduce yourself and the team behind you, playing on your key strengths. Tell your story, how you came to being there and where you have credibility and are confident in your abilities. Present an inspiring leadership team with vast industry knowledge and expertise to deliver against this.
By doing this, you will show the humans behind the business, making a better connection with investors. It also indicates why you’re the perfect team to lead the venture to success – which is vital if an investor is willing to trust you with their money.
Set the scene
The first section of your pitch should showcase your business’s context – clearly explain what challenge you are aiming to help, for what target audience, how your solutions are unique, and any further impact that you make that aligns with your vision and purpose.
When you deliver the pitch, you will want to summarise the problem you have identified and demonstrate the gap in the market you propose to fill with your offering. Describe it with real-life examples, and use data to reinforce the importance of the market gap.
Outline your solution
When you describe your solution, you want to present it as the hero in the story. You will need to weave into your explanation how you have healthy and sustainable profitability, a strong competitive advantage, and how you manage any risks.
Your business and marketing plan is a long, thoroughly researched piece, but you need to deliver this as an elevator pitch. Quickly and succinctly, with references to the evidence you have already gathered in proving the effectiveness of your model.
Your ideal investor may know more than you about your market, but you will still need to demonstrate your understanding of it and an awareness of any assumptions you may have had to make along the way.
Describe your business model
Here you can go into more detail on the practical operations of your model; this will be the section that you cut out if you are suddenly given a significantly shorter slot. They will ask for more information if they want to hear more, so be confident enough in your vision and story that you can hold back some of the detail if needed.
However, with a ten or twenty-minute slot, you can drill further into the components of your business model to highlight how you will address the market with your solution. Make sure you have already challenged yourself on every element, but mainly on revenue generation, cost management, and channels – because they will spot any risks and will challenge you on your assumptions. If you have thoroughly validated your model, you will be prepared for any questions.
You will need to have demonstrated traction, if not sales, as many investors will not accept pre-revenue startups. As that’s not always possible, even with a very lean MVP, you should demonstrate traction with leading indicators to potential sales. This may be engagement or intent metrics, letters of intent, or even pre-orders from future customers. You should also show how you have been funded so far, how ready you are to go further, and where funding will unlock capabilities to grow.
Communicate the impact
Now you can start to show your growth trajectory and provide assurances on your projected revenue path. You need to know your success measures and critical dependencies, so you can outline what you will assess your business against. This will relate directly to the traction you have already demonstrated and shows what you then need to achieve to grow your company. You should show you have considered potential challenges or even opportunities, with contingency plans, and that you have an astute understanding of your competitive position.
Constant disruption in the global marketplace means you are never the only one. In some cases, you have an advantage if you’re not the first mover, so you are always better off being aware of who is out there now, who could be out there starting up, and what pushes and pulls your target customer to buy any given solution.
You may also present a best and worst-case scenario to show that you have an awareness of the variability in outcomes and the flexibility needed to achieve a sustainable business. You want to give the investors the confidence that they will get reasonable returns regardless of any situation that may arise.
At the earliest stages, in your first raise, you are making a lot of assumptions. As your business grows, in later fundraises, you will need to be sharp and realistic in your forecasting and show long-term sustainability. Show the investor when you are likely to offer a profitable return and to what scale. You will be held accountable for this, despite variabilities, so you need to make sure this is well managed as you go forward.
Do not forget to describe the impact on the people and environmental factors in your market that your solution addresses. This helps to provide an arc to your story in your given solution.
The offer on the table
You want your offer to be compelling to investors and hold onto enough equity to allow room for future raises against a realistic growth curve. Be explicit about what you want to achieve, as this will help you find the right investor to fund vital resources.
How much equity you are willing to give up can be an emotive subject, you should retain ownership and incentive, and if you have a good founding team, you will already be splitting that a few ways. Have your top and bottom end percentages worked out, and be prepared to be pushed by someone more experienced than you.
You must also recognise the value that investors can bring. They can open doors to customers and help you navigate inevitable troughs in your business growth, which should not be underestimated. Know the paths you need to unlock before you go into an investor negotiation, and you can leverage these to ensure you are getting what you need from your investor.
Get advice
It always helps to get another perspective on what you are creating, so take advantage of others’ experience and practice your pitch on them. Ask them as a potential customer, investor, or with a view on presentation style. Find someone who hasn’t read your deck before and ask them if it makes sense if it is sent by email with no introduction – as this is often the first introduction to your business.
We are streaming a pipeline of startups to investors and can use that experience to advise you, helping you to win that pitch. We also use our network of investors and the quality assurance we offer to them to find the right investors for you and take care of the due diligence and legal requirements of the raise. Even failures are a learning opportunity, but we can shape this with you to create a winning pitch.