So, you have a million-dollar idea and crafted a perfect business plan. Naturally, you are thrilled and ready to make your big-time vision a reality. But how exactly are you going to get the funding to set your plans in motion?
New businesses usually can’t kickstart and sustain the momentum they need without some serious cash. 13% of failed founders cited running out of funding as the reason they had to shut down.
Therefore, in order to get funding, entrepreneurs must understand how to pitch their business idea to investors. And this article will talk about exactly that. We will dive into a few steps and tactics that will help you pitch your idea to investors effectively and confidently.
So, without further ado, let’s take a look!
Steps to pitch your business idea to investors
If you have a successful startup idea and are ready to find potential investors for your business, check out the below-mentioned steps for designing and presenting a successful business pitch:
1. Create an elevator pitch
Make sure that you can sum up your business idea in a way that’s easy to understand. Your elevator pitch is a 30-second or less summary of what you do. The goal of your elevator pitch is to describe your business idea or product and get the prospective investor interested enough to ask follow-up questions. It should tell them everything they need to know, even if they have no knowledge about your business.
Here are the key things your elevator pitch needs to cover –
- What you do: Keep it short. It could be as simple as, ”ABCD creates state-of-the-art analytics for…”
- What problem you solve: Describe what problem your product solves for its target customer.
- Why you are different: Why should customers use your product or service over your competitors? Your product may have a unique feature that helps you stand out from the crowd, or maybe it’s just easy to utilize. Whatever your key differentiator is, you should have knowledge about it.
After your speech, ask them questions, and be ready for follow-up questions. Also, stay in touch with them. Growing your professional network should be a key goal for you as a founder. You never know who can provide your next funding source or opportunity.
2. Practice your pitch
Pitching to investors can become much easier if you keep practicing it. Spend some time preparing your presentation and the tone you’ll use to present it. A successful pitch is presented with comfort and confidence. Practice in front of a mirror, give a fake presentation to family and friends or record it. When you watch the video, make notes on what you can do better.
3. Know your investors
Before presenting your pitch, do some research on who you’ll be presenting to. Some investors may be prominent figures that you can find out a lot about online. Many others prefer anonymity, so it might be difficult to find out any information related to them. If you can, try to get in touch with founders who’ve dealt with that investor before.
Some investors want to be involved with the company and want a seat at the boardroom table in exchange for their investment. Other investors would just prefer quarterly reports on profitability, but otherwise not be involved.
If you are pitching a room full of investors, find out as much as you can about them.
You should be able to answer the below-mentioned questions:
- Do they have prior experience in your industry?
- Have they invested in your industry?
- Are they new or seasoned investors?
- Are they an individual investor or belong to an angel investment network?
- What companies did they start or come from before becoming an investor?
4. Don’t start with your ideal investor
It might be a bit difficult to secure a deal with your first pitch right then and there. It’s possible to hear ‘no’ from several investors before you finally get funding for your business.
However, it’s crucial to keep in mind that from each interaction with an investor, you learn something even if it’s a no. You’ll learn several things such as how to pitch your idea, how to answer follow-up questions, and the types of information investors expect from you.
Therefore, it can often be wise not to start with your ideal investor.
By meeting a few other investors first, you’ll refine your story and pitch and be better prepared when you meet the investor you most want to work with.
5. Show realistic data
When pitching to investors, you need to present solid data and how it applies to your business plan. Share the data on how many customers you currently have and how many new ones you are expecting each month or quarter. It doesn’t matter if you are attracting 10 or 1000, the fact that you’re giving real data shows you’re transparent.
Also, discuss how your business plan will generate income and how much revenue you expect to see going forward. Make them confident in their decision by making data a key part of your pitch.
6. Tell an engaging story
Pitch investors with an engaging narrative. Brands that use storytelling in their marketing consistently outperform those that don’t. When creating your pitch, focus on telling a story that addresses the problem and how your business solves it. This will immediately catch the interest of your investors. Try to put real stats here as well, especially if you’ve conducted any testing. Better still if you can connect your tale to your investors.
Conclusion
Learning how to pitch to investors successfully is a process.
While the steps discussed here will put you on your way to building successful pitches, the most effective learning tool is actually getting in front of investors and refining your presentation.
Make sure you do your research and make comprehensive business plans if you want to attract investors and raise funds for your startup.
The post How to successfully pitch a business idea to investors? appeared first on Datafloq.
