By Estelle Blanks, Executive Director at Innovation SuperNetwork
If you read my first blog in this series, Research your Prospects, you’ll know that preparation is the fundamental starting point of any investor pitch. So now that you know who you’re pitching to, it’s time to take preparation to the next stage, focussing on the key messages you need to get across as part of the pitch process.
To achieve success, it’s critical to ensure you can effectively communicate a clear message that stands up to scrutiny. The last thing you want is ‘dead air’ when an investor asks you a question that you aren’t prepared to answer.
Think of this stage like revising for a test, any question could come up on the paper and you should know your subject area inside out. In this case your subject area is your business proposition.
What does preparation look like?
It may seem obvious, but you really can’t be too prepared to meet with an investor. Being ‘investment ready’ is more than building a few shiny PowerPoint slides with bullet-pointed highlights. You need to be ready with in-depth answers (backed up by tangible evidence) to the following:
What is the scale of your ambition and vision?
Give investors a good idea of the size and scale of this opportunity that they could be investing in. Can this be evidenced by your clear understanding of the problem you are trying to address? Is your solution better than anything else out there even the status quo? Do your motivation and passion for the business match the potential scale of your business? Can you convey this in your investor pitch? Remember, what you don’t say is as important as (if not more than) what you say.
Your product and service
Be clear on what it is, who will use it, and what problem it will solve. A key tip is to spend more time describing the benefits of your product or service rather than its key features.
Know your USP (unique selling point). What’s different about your product? What makes it unique to others on the market?
Understand your competition. Having an understanding of your competitors and being realistic about their strengths and weaknesses can be helpful in seeing how you’ll use this to make yourself more competitive. No competition is still competition: why are people doing without at the moment?
It can be easy to get so wrapped up in your product or service that you don’t take the time to actually consider who it is that you’re selling to.
Having a good understanding of your target market will show investors that you’re thinking strategically about who you’re selling to and that you have in-depth knowledge about your industry.
A revenue model shows investors that you’ve thought realistically about how your product or services can generate revenue. Be realistic about any challenges you expect to face.
Entrepreneurs tend to be incredibly passionate about their business and while investors certainly seek passion, they also want to be sure that you’re realistic about the expectations of your business. In your investor pitch, you need to show them the evidence for why they should part with their money for you. Most investors will understand that, especially for early stage businesses, financial projections are unlikely to materialise in the way they are presented in your business plan. However, they are another indication of your ambition, the potential scale of the business and your understanding of the challenges and opportunities facing your industry and its customers.
The point here is to think long-term. You may need money right now to help get you to the first stage of development, but if things go to plan/or don’t go to plan, how will your investors return their investment? Having an exit strategy shows that you’re prepared for if thinks don’t go as anticipated.
If you are pitching to investors, you need money. Therefore, you need to be clear on how much money you need now and in the future. What does your investment journey look like? What are you going to do with the money you need now? Where will this take you?
You may also need more than money, are you looking for industry expertise and connections? Many investors can bring a lot more than money. Be clear on exactly what it is you need from them.
So now you know who you’re targeting, and what you want to tell them, but how do you do that in a compelling way? My next blog will look at how to tell your story in a way that not only inspires cash investment but generates the emotional buy-in from an investor that makes them want to be part of your journey.
Remember, if you’re a North East business wanting more advice on how to perfect your investor pitch, or are interested in meeting with an investor, take a look at our Access to Finance programme for more information and free opportunities.