Gaining investment is notoriously difficult in every industry. Getting your pitch right is crucial if you want to secure investment into your product-based business. Luckily, it is possible to gain investment with a carefully planned and executed pitch.
Here are our top seven tips for nailing your investor pitch and securing funding for your business.
Tip 1: Investors need more than a product pitch
A business pitch is different from a product pitch. If you’ve been focusing on gaining customers, you’ve probably got a great product pitch. Don’t be tempted to make this the main focus of your investor pitch. Investors care about your business first and your product second.
Tip 2: Know your numbers
Leading on from tip one, make sure you know your numbers inside out. You’ll need to know where your money comes from, and where it goes. You’ll also need to be able to answer any questions about your current and projected revenue.
Tip 3: Keep your investor pitch snappy
Keep it focused and concise. You want to get all of the facts in, but make sure your pitch is not too long. Anything you do include should be directly relevant to making and keeping your business profitable.
You’ll only get ten minutes in most cases, so don’t ramble. Slides should be informative but concise. Add some visuals like graphs to keep their interest.
Tip 4: Cover all the key points an investor needs to know
When preparing your pitch slides, look to answer the following questions:
What’s the problem that your product solves for customers?
What pain points does your product address? Why do your customers need to purchase your product?
What’s the solution? Why is YOUR product better?
How does your product solve the problem for customers? What makes it the standout product in the market?
Who is your target market? Why does your product appeal to them?
Investors need to see that there’s a strong market for your product. Let them know who the target market is, how large that target market is, and (briefly) how your product appeals to them.
Who are your competitors?
Showing a good understanding of your competitors, and how your business compares with them reassures investors that you understand how to stay ahead of the competition. Even if you think you have no direct competitors, you need to show that you have thought about this.
If it’s an innovative product that nobody else is manufacturing, is it patented or trademarked? How will you make sure you stay the market leader if another company begins to make the same product?
What’s your business model, and your current revenue?
Investors want to see that your business model is scalable, so give them the details they need to see that your business has long-term potential.
Are you keeping everything in-house, or will you be looking to outsource elements like the manufacturing or the marketing?
Follow this up with your current numbers: What’s your revenue? What are your operating costs and debts? What’s your net profit?
What’s your marketing plan?
Impress investors with a specific plan for distribution and sales channels, and your budgets for different marketing platforms. Will you be using social media and PPC ads, or are you concentrating on different channels? How will you acquire new customers, and how much is it likely to cost?
What are your projected numbers?
You’ve covered your current revenue, so considering your well-thought-out marketing plans, what growth are you projecting over the next five years? What operating costs and expenses are you projecting? What does your cash flow look like?
It should be clear how you arrived at these numbers. Base these on past performance if possible and make sure it doesn’t seem that you have plucked impressive-looking numbers out of thin air.
What funding do you need?
How much funding do you need for your growth plans, what will you spend the money on, and how does that impact your growth?
What percentage of equity are you offering to investors in return?
Tip 5: Don’t make anything up
Don’t be afraid to say you don’t know. However tempting, if the investors ask a question that you don’t know the answer to, don’t make something up.
Let them know that you’re not 100% sure, but you’ll be happy to follow up in an email if they’d like. If you’ve followed tip four above, it’s unlikely you’ll get caught out in this way. However, if it happens, honesty and integrity are always the best way to handle a situation.
Tip 6: Practice delivering your investor pitch
Practice delivering your pitch until you know it inside out. Try pitching it to suitable people in your network, and ask for feedback.
When it’s your business you’re talking about it can sometimes be easy to overlook something that’s obvious to you.
Tip 7: Don’t take rejection personally
If your pitch is rejected, don’t take it personally, and definitely don’t respond rudely. It can be difficult to hear that investors don’t believe enough in your business and product to invest in it. However, there are always other investors, government grants, and other sources of funding. Importantly, the investment community is quite close, so irritating one investor could lead to others no longer being interested.
Instead, accept any feedback graciously and use that to refine your pitch before you pitch another potential investor.
Above all, be passionate about your product and your business. Being likeable can give you the edge over another business with similar growth potential, and there’s nothing investors like more than a passionate business owner.