Knowing how to pitch to investors is crucial for startup founders and entrepreneurs.
Lack of money can be a huge problem for early-stage companies; of startups that fail, 29% cite insufficient funds as the reason why, according to CB Insights. Investment funding can help you avoid this pitfall and give you the resources you need to grow a successful, sustainable company.
To get this funding, however, you first need to create a pitch deck that covers all the information that an investor wants to know about you and your company. Then you need to nail your investor pitch.
7 Pillars of Pitching to Investors
The investors sitting across the table need to have complete confidence in you if they’re going to give you their money. Follow these steps to make that happen.
Get to the investor pitch meeting a few minutes early. Understand the connection issues if you’re presenting slides. There’s nothing worse than wasting five to 10 minutes getting set up. Also, be prepared by knowing who you are in the room with. Know what investments they like. Know their investment ethos, etc. That will go a long way in instantly building your credibility.
Own the Agenda
You are here to pitch. Lead the meeting. Start with introductions to establish context, but don’t let the investor ramble. This is an opportunity for you to show how you can command a room. But, of course, don’t be a jerk or a know-it-all.
Have a Big Vision
Tell the investors what your grand plans are — and have a path to execution. Some entrepreneurs think too small. They have a great plan on how to execute the vision, but if it is so small, why are they raising capital? Others have a massive vision but have literally know idea how to get there. Nail this and the rest of your investor pitch will be taken seriously.
Know Your Market
Many founders know their product but they don’t understand the market they’re playing in. Only by knowing the rest of your market can you know where your profitable areas of growth are. And only then can you know what your differentiators are and the moat you need to build.
Have Plans for the Money
There is a reason why you’re raising money. Articulate what you’ll do with it and how far it will take you. Will you need to raise again in 12 months? Is this the last time you’ll need to raise, as in six months you’ll be cash flow positive? Those answers lead to you knowing what kind of business you’re building.
Listen and Take Feedback
At an early-stage investor pitch, the investor is investing as much in you as they are in the startup. You need to convince them that there is a large enough market opportunity to go after and that you are the right person to lead the company to the promised land.
Remember, this is a two-way pitch. There is a lot of money out there. You need to make sure you’re getting the right money. So just as much as the investor is evaluating you, evaluate them. Beyond a check, what other value do they offer? Network? Experience? Complementary skill set? Too often new entrepreneurs forget that they have leverage and power too.
I shared more advice about how to pitch to investors on the $100 MBA podcast. Click here to listen.