Basics of pitching to investors
Apart from having a good business plan, which is of course the most critical thing, HOW you present your case to investors will determine whether you will get their attention and interest or not.
Because investors often listen to very bad presentations, good quality presentation itself offers a substantial edge while presenting to investors.
The most important thing to remember is that YOUR FIRST PRESENTATION IS AN ELEVATOR PITCH… NOT A FULL SCALE BUSINSS PLAN PRESENTATION WITH EXCEL SHEETS, TECHNICAL SPECIFICATIONS AND OPERATING DETAILS. In the first meeting, investors want to quickly judge whether they are interested in investing in the company. Hence, the focus should be on communicating the concept and the potential and not the finer detai
Here are a few quick things to keep in mind
Start by introducing what you do and for whom… without any preamble
Investors will be interested in the details AFTER they have got excited about the concept, the scale and the team.
Hence, while presenting, ensure that your pitch focuses on what you intend to do, how you plan to implement it, how you will make money from it, what your scale of aspiration is and why you and your team is the one they should bet on. In fact, your opening statement should clearly state what you do and for whom. I.e. “we are an online music discovery platform where independent artistes upload their music and consumers buy or listen” or “we help small companies manage their sales processes”.
Most entrepreneurs make the mistake of diluting the pitch with a lot of detail of the operations, which of course will be of interest to investors… but only after and only if they have an interest in participating in your journey.
The initial pitch presentation should not be more than 8 – 10 slides. Click here to see template of the investor pitch presentation.
Investors are interested in the business case… not just details of the concept or the product
A concept and product is different than the business case for the same. Most first-time entrepreneurs make the mistake of thinking of the concept as the business. E.g. for someone presenting for a e-tailing venture, the investor would be interested in knowing your competencies or plans on supply chain, warehousing, procurement, customer acquisition, etc. Not just about how cool your web platform is.
One common mistake made by many first-time entrepreneurs is to elaborate on technical details. Technical details of your product/concept, and operating details will be relevant in the subsequent presentation… which will come about only if the investors get excited about the opportunity and you as a team.
Focus on key aspects rather than fluff around your business case
In most cases you will get a 20-30 minute window to present. You will have 10 - 15 minutes to make your case with 10 – 15 minutes for Q&A. In fact, in most cases, you would have either got their attention or lost them in the first few sentences. Rehearse your opening lines… once you get through this, the rest is the easier part. If you don’t get their attention and interest in the first few sentences, the rest really won’t matter that much.
“According to Gartner the market is 8 bn USD globally” has no meaning
At startup stage, investors are interested in knowing what you are going to do in the next few quarters. Of course, they would be keen to know whether the market is large and how large. But in most cases, industry reports on the size of the industry is no indicator of the size of the opportunity you are addressing.
You should focus on your plans and what you intend to get to in the next few years.
Be prepared with answers to questions
It is critical for entrepreneurs to know your business better than anyone else in the room. Be prepared with answers to questions, especially around assumptions about your business.
Know your business inside out. Know who the competitors are, know their business models, know the size of markets, know why consumers buy, know what the problems are with what your consumers are solving their problems currently with.
Explain why you are qualified to do this business
Investors are keen to know what you and the founding team brings to the table. So, a listing of your resume and career graph is not relevant. What is relevant within that is what you have done to make you a good candidate to pursue this venture. E.g. for an online retailing company, that “you have 11 years of professional experience in blue chip companies” is not as relevant as “I have handled supply chain and established relationships with vendors across the country” is important for investors to hear.
Be passionate. Early-stage investors, angels as well as VCs, invest in people
At the startup phase, investors are largely taking a bet on YOU and your team. They are betting on your ability to create a large company around the concept you are presenting. Hence, it is critical for them to see your deep commitment to the domain and your passion for the space.
Be clear about what you expect
Tell the investors clearly about how much money you need and what you intend doing with the money and what milestones you will achieve with the money that you are asking for.
End with a recap – end strong
Don’t end the presentation with slides of excel sheet numbers. End with a strong recap of what you have told them. Summarize what your concept is and say why this is a good business case.
Remember all the basics of good presentation skills
- Few words per slide
- Good looking slides attract attention – put some effort in designing the presentation well… at least it has to be clean and well-structured
- Speak clearly and speak slowly
- Be confident and passionate
- Let one person present while the other handles the computers – don’t try to do all things together
- Decide who will answer what questions
- One person should present – don’t try to distribute the presentation among 2-3 co-founders – remember, the first meeting will be only 20 minutes or so. Others should participate in the post-presentation discussion.
- Don’t go with an army of people if the others are not going to participate in the discussions – but ideally all co-founders should be present