As an entrepreneur, one of the hardest presentations you’ll ever do is the pitch for startup investment.
The problem is, venture capitalists, angel investors, and even rich uncles are heavily predisposed against you. Why? Because 99% of the pitches they hear sound like sure-fire ways to lose money!
If you’re getting ready to pitch for startup investment for your new venture, make sure you follow these seven simple rules:
1. Explain exactly what your business is within the first thirty seconds
Many entrepreneurs waste valuable time giving loads of data, background and other info—all the while investors are left scratching their heads thinking “What does this business actually DO?”
This is what’s known as an elevator pitch. It’s a crucial piece of information for any startup, and allows you to explain your startup idea in one or two succinct sentences.
Nail this, and you’re already miles ahead of most pre-investment startups.
2. Give an outline of your ideal customers
Paint a vivid, specific picture of these people, as they’re the ones who’ll be parting with their hard-earned money.
Investors want to know that you’ve identified a target audience, and that you have a strong understanding of the overall market.
3. Explain who your competitors are
You’ll either have direct competitors with the same offering as you, or you’ll have competitors who are at least doing something similiar.
Saying that there are no competitors is a surprisingly common mistake that entrepreneurs make when they pitch for startup investment. Whilst you may have no direct competitors, saying that you have none at all will give investors the impression you haven’t done your homework.
Make sure you reference competitors and ‘near-competitors’ and outline how your business differs from theirs. Venn diagrams are a useful way to visualize this.
4. Explain why you are the ONE to make this happen, and make it convincing
As the leader of your startup, investors want to know that you have what it takes to be a CEO, chief salesperson, HR director and more.
They want to see that you can convince the world of your dream—not just them.
If you can’t convince investors that you’re the person for the job, then how can you convince people to buy your product or service once it launches?
5. Share any existing sales or partnership prospects
Has a big retailer already agreed to distribute your product? Have you got letters of intent from future customers that’ll have their credit cards ready as soon as you launch?
Investors feel much more comfortable knowing that you already have guaranteed income once you launch.
6. Tell prospects how much money you need, and what it’ll be used for
Investors want to know where their money is going, and how long it’ll last.
Make sure you include details of the top-level costs you’re expecting to incur, when they’ll be paid, and what impact they’ll have.
Focus on the big stuff, and try to combine smaller costs into one category that you can explain if necessary.
For example, let’s say you need:
- $200 for a logo and branding design
- $100 for business card designs
- $500 for a website
- $50 for Ubers to local meetings
- $100 for train tickets for out-of-town meetings
Combine it together into a simple version:
- $800 for website and branding
- $150 for travel costs to meet with clients
Be open and honest with costs, but try not to bore them with the details during the pitch for startup investment. You can go into more detail once you win over an investor and start working with them.
7. Use each pitch presentation serve as a focus group for your next presentation
When one group of investors asks you a series of questions after you pitch, write down all of those questions and make sure most of them are answered in your next pitch so that the next group doesn’t have to ask them.
Keep pitching and keep improving your pitch and eventually you may get funded!
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