Getting investors to fall in love with your pitch and cough out their hard-earned money is beyond being eloquent, fancy with words or looking sharp. Typically, you must catch their attention within 60 seconds by saying the right things fast.
It can be intense pitching your idea to investors, whether bankers, venture capitalists, or angel investors because you’re expected to convince these professionals within the shortest time possible. Therefore, prepare by putting yourself in their shoes. Think about a non-sentimental reason that would make you invest in someone’s business. The fundamental reason is always that the company would multiply your investment.
Here’s a rundown of the five things investors want to hear from any entrepreneur seeking funding at pitch meetings.
The most important thing to all investors is the numbers. What’s your current net revenue? What’s your projected revenue? How do you intend to achieve it?… These are the essential questions investors want an entrepreneur to answer and back it up with numbers that add up. The investor is interested in this information to know if he’d get his money back, with interest, or not.
A Nigerian-British investor, Tomi Davies, says, “the first thing any investor is listening to is how I get my money back. That’s question number one, ‘How do I get my exit”?
In bolstering the point, Davies emphasised three things: “The product service offering that you have, the customers who see value in that product service offering and the nature of the relationship in terms of channel and price offering.”
Hence, you need to know your numbers. Demonstrate to potential investors that your business idea has a solid financial track record, especially if you’re looking for bank financing. On the other hand, venture capitalists will search for high-return potential and a clear exit strategy.
Prepare to give realistic answers to questions about your company’s financial stability backed with proof. They will want to know if your company is growing and if you have a plan B to boost your growth, such as issuing stock or borrowing money. To ensure you get the fund, provide a well-presented debt repayment method as investors want to see a financially responsible company and a good exit.
Background and experience in the industry
Investors don’t want their money wasted on mistakes made by entrepreneurs. Investors seek out experienced entrepreneurs and management teams who have demonstrated excellent performance and leadership in the company’s industry or previous endeavours. Therefore, passion and devotion must be heard when talking about your experience and expertise to inspire confidence in investors when pitching.
Tim Ferriss, an entrepreneur and angel investor, says he seeks founders who have done something high-stress, where failure or rejection occurs practically daily on a small or large scale.
Investors want you to tell them what makes your business stand out. This is why they should invest in your company since investors are all about figures. Back your narrative with concrete evidence.
Venture capitalists are attracted by product characteristics such as proprietary features and competitive advantage. They want to hear features that differentiate your business from other existing ones and how these features are to your advantage.
Effective business model
When presenting your business plan, use the existing one and explain how it will further boost the productivity of your business. Showing the working business plan will help measure the growth of your business so far.
Different kinds of investors are looking for other things in a business plan. It’s critical to tailor your business plan when pitching to each potential investor. For example, when engaging venture capital fund managers and angel investors, you should emphasise market and finance difficulties.
Large market size
Angel investors often invest in solutions that address critical issues in the large target markets. Venture capitalists look for market qualities such as high growth and low competition for investment.
Hence, when pitching, ensure you create a well-defined customer base impression on the investors. This is because a more extensive and more consistent customer base will demonstrate that your business has a significant impact on its target market.
Investors are looking for companies that can scale up quickly and manage expansion. Therefore in your pitch, the investors must see that the company can create considerable profits beyond the initial product idea with sufficient financial predictions and a plan to integrate several revenue streams.