June 4, 2019
When delivering an elevator pitch, what is the essential information you MUST get across?
A few years ago, I carried out research with venture capital investors from across the country. The aim was to find out what they thought were the most important features of businesses they invest in. The number one answer, from every single one, was the strength of the management team. A good team can improve an average idea to make it work, but an average team will likely fail even with a good idea. So, if you’ve got two minutes to impress an investor, make sure they go away with a good impression of who you are and why they should want to work with you.
What information should your pitch contain and what’s the most effective way to present it?
Your opportunity to engage investors will be different every time. You might have 60 seconds, ten minutes, or an hour – no matter what, it’s crucial you demonstrate your grasp of risk and opportunity while communicating your business in a way that engages and excites a potential investor.
Get the basics right and start with a pitch that succinctly tells the ‘story’ of your business. What problem are you solving? Who for? What’s your solution? Why will people buy from you? How does this make you money? Once your core storyline is created – if you do have more time – you can add in the detail and evidence to back it up.
Who should be involved in the pitch process – what about the actual pitch?
If there’s an opportunity to bring in more of the team to demonstrate expertise across all aspects of the business, that can strengthen your pitch. Ultimately though, if you’re the CEO you’re who the investor wants to hear from. It is you they will be trusting with their money and they have to believe that you are going to make things work. If you need to bring in advisors to help with specific aspects, make sure you’re clear in advance about their role and that they don’t dominate the meeting.
How can you make your pitch stand out?
Active investors are pitched to hundreds of times each year. They will expect a certain level of polish – which you can achieve through practice – but still want to see your genuine passion for the business. Investors will want to know that you are committed to its success.
What are investors looking for when they’re being pitched to?
Understanding the investor landscape, the funding and finance options available, and what proposals will appeal to investors, is vital to achieving success. Take the time to understand who you’re pitching to. If, for example, it’s a fund that invests based on specific criteria, ensure you cover how you meet that criteria. If you’re meeting an angel investor, look at what other types of business they have invested in and think about how your business might align with the individual angel’s business interests.
What are the most commonly asked questions from investors? How best do you answer these?
The content of questions will vary considerably but it’s essential to be open and honest from the start. If you try to gloss over something it will come out eventually. If you don’t know the answer, it’s better to say how you’ll find out and get back to them. If nothing else, it gives you a reason to get back in touch.
What’s the worst mistake you can make when pitching for investment?
The most common mistake is to focus so much on your product and forget about the business opportunity. Just because your product is excellent, it doesn’t mean that people will buy it or that you can make it profitable. Don’t forget that you’re pitching the business as a whole, not a single product.
What’s the biggest turn-off for investors?
Confidence is great but arrogance is not.
Any other advice?
The process of raising finance is often slow and it can distract managers and founders from vital tasks like proving their products and winning new customers. But, unless you carve the time out to refine your proposition, research the landscape and build the connections that matter, the chance of success will be slim.