Named Founder Friendly Investors 2021 & 2022 by Inc.
Maybe your business is on the cusp of becoming the next big thing, or perhaps it’s just a solid concept with plenty of room to grow. In either case, you are seeking investors to take it to the next level. You know you need funding to get it where it could go, but you are unsure what you need to make the money move in your direction. Here are some helpful tips on how to pitch to investors.
Step one is creating your business pitch; either an informal 30-second summary (often called an elevator pitch) or a formal slide presentation that covers all the details. The best path would probably be to produce both, beginning with the long-form pitch that covers all the detail and then summarizing it for your shorter pitch.
When you begin putting your presentation together, don’t just wing it. Your investors will expect and deserve to see the details, and putting in the time and effort necessary to create a quality presentation will assure them that you are serious and present your investment opportunity in the best light.
The goal is to have a clear, easy-to-understand pitch that covers all the bases, beginning with who you are, who’s on your team, what purpose your business is serving, and how you differ from your competition.
To be able to project confidence and capability, you will need to practice your presentation over and over. You should perform it in a mirror alone and then in front of a friendly audience of family and friends and listen to what they say or ask about what you just presented. When you feel like you have a solid grasp, give your presentation in front of your professional colleagues; staff or trusted associates can give you a different kind of feedback.
How to present a business plan to investors is just as important as what goes into the plan. Every business is trying to solve a problem. Customers seeking a solution to that problem should flock to your business. A very effective way of demonstrating that idea to potential investors is to illustrate it with a story where your product or service is the hero. For the same reason that storytelling has been shown to boost consumer sales by 30%, your presentation should tell a story where you explain a situation and a challenge that emerges from the situation. Then, your business emerges as the hero transforming the problem into a huge success.
Your story includes the solution that customers may or may not be aware of and demonstrates its effectiveness. By telling your story and making this reveal, you can explain how your competitors differ and detail your competitive advantage. This is also an opportunity to share your marketing plan so you can show investors how you are selling your solution and why customers are (or will be) clamoring to buy.
It’s not enough to say you’re targeting everyone who wants to buy what you offer. You need to specifically identify those who are most likely to buy from you. You should narrow it down to a specific group of people that your product or service is intended for. This is your target market, which is identified by characteristics such as occupation, age, and gender. Your target audience, on the other hand, is the people you want to reach with your marketing. Correctly identifying your target market requires research, preparedness, and thoughtfulness. Focusing on those particular targets is a much more efficient and effective way to generate business and achieve success.
How does your company acquire and serve its customers? In short, what is the plan for future profits? Your investors will want to know you have done the research and that there is a well-founded framework and a planned course of action that will deliver the results you suggest and the return investors desire, especially if the results are predicated on explosive growth. Your business model should describe the rationale of how your business creates, delivers, and captures value. The plan should include information on your products or services (particularly their costs and how you price them), all expected expenses, and a description of your business model.
You may function as one (or more) of the following model types: retail, subscription, franchise, fee-for-service, bundling, leasing, manufacturer, distributor, advertising, or product as a service, among others. Take the time to determine which model types best support your goals, and make sure to incorporate that into your plan. Be prepared to explain why pivoting to a new business model will be beneficial if that is something you are considering.
According to business theorist Alex Osterwalder, there are nine building blocks covering three main areas of a business: desirability, viability, and feasibility. Consider using this strategic planning tool and including his business model canvas (BMC) in your presentation to demonstrate the logic of how your company intends to deliver value and make money.
It’s a given that as you grow your business, you’ll need to acquire new customers as you compete to increase your brand’s awareness in the marketplace. Especially for a startup, growth could be an integral ingredient in the recipe for its very survival.
Finding ways to acquire new customers inexpensively and as quickly as possible relies on having a solid acquisition strategy. While this strategy may continue to evolve, there are a couple of key factors to consider as you include yours in your presentation.
The founder is often the person who came up with the idea for the business, and they have probably been the key element in getting the business to where it is today. But few go at it truly alone. There are likely partners, staff, advisors, and consultants who have contributed to the company’s current state. When you are pitching investors, recognize these important people in your presentation, but not with just a simple gratuitous mention. Instead, detail their talents and abilities and describe how their unique gifts have contributed to your concept. This not only gives investors insight into how your organization works and fits together but also gives you credibility as a leader capable of assembling a winning team and one who is humble enough to share the spotlight. Having a strong team also provides investors with comfort that the business stays viable even in your absence.
When you are presenting to investors, your presentation is nothing without an explanation of its bottom line. Here, you will explain the costs of operating your business and achieving the growth and success you outlined. You must demonstrate your mastery of the numbers and be clear about how you plan to spend the money you are asking for from the investors. At a minimum, be sure to include your startup costs (if applicable), revenue projections, fixed and variable costs, your net profit or loss for each of the next three years, and your break-even analysis.
When considering how to pitch investors, be sure to address your competition and show that you are ready with a plan of action to take them on. Never try to sell investors on the idea that there is no competition. That’s a red flag that implies there is either no market for what you are proposing or that you are simply not immersed in the market enough to know. Neither is good when you are pitching to investors.
Consider what you are asking for carefully. Have you included funds for staff, new product research and refinement, sales and marketing, and overhead/infrastructure? Investors will be more confident if you can articulate milestones you intend to hit along the way. A good rule of thumb is to ask for twice what you think you need because it can be difficult and awkward to ask for more money at a later date.
Your investors want to know how they will be compensated if there is a liquidity event: you sell the business, take it public, liquidate, or pass it on to your family. It’s a good idea to include how the business will transition, with or without you attached, and how the transfer will impact their investment.
After you make a presentation, wait a few days and then reach out to see if there are any questions or if there is additional information you can provide to help the investors with their decision. Getting back in touch not only shows your serious interest and diligence; it also serves as a prompt and reminder that you are seeking an answer. A quick call or short email will suffice; this is not an opportunity to pitch all over again.
Each time you present your investor pitch, you will get feedback—verbal or non-verbal—and you should take all of it into consideration. Sift through it and consider how you might improve your presentation next time. Each iteration of your pitch should be stronger and smoother until you get the response and investment you seek.
Finding the right investor for your business often requires you to prove that your organization is one worth investing in. By building a coherent and thoughtful presentation that can introduce your business to investors as a worthy recipient of their attention and funding, you are taking the first step in establishing a relationship that can help you, your company, and your investors grow and profit together.
On November 11, 2022 Fabian Couture Group, LLC Completed Its First Add-On Acquisition in Executive Apparel Group, Inc.Read More