When an entrepreneur has a new idea for a business, it is an exciting time in his or her life. Usually, by then, they have pinpointed a source of demand and legitimized their idea for a new startup that is bursting with life and energy. While it is customary to enjoy the excitement, discuss the idea with friends and loved ones, and even start counting profits, do not get too ahead. Coming up with a great idea is half the battle, but now it is time to delve into the concept more deeply. It is time to discuss the elements of your business and how you see it really coming together. Who are your potential clients? Can you identify who you would like to see as investors in the future? What about suppliers? And, of course: who do you envision will be your customers? That part is essential!
Even more importantly, have you figured out how to capably and efficiently get across the promise and benefits of your new business and its effect on the market?
Pitching a business is a challenging process that stymies many promising, eager entrepreneurs. However, pitching your business is also a necessity because if you cannot quickly and effectively communicate why your idea stands out, no one will want to buy in or invest. An excellent pitch is what links your raw vision to the actual financing, investment, and good faith that can get your company thriving.
Like other business tasks, there are specific steps that individuals can take to create an excellent pitch and find a straight path to success in the business world. Here, we will go over the ins and outs of pitching your new business idea. By the end of this article, we predict you will be full of ideas and ready to get out and pitch your idea and business to the world.
Brad Nakase, Attorney
1) Your Idea is Your Business Identity
We’re only going to say this once: personality matters. Clearly, your idea is the focal point, and the skills that have brought you this far are an essential part of the equation. However, the way you present yourself and your unique personality is also a significant aspect. Research tells us that when venture capitalists look into companies in the startup phase, they focus on character traits such as honesty, trustworthiness, and even a moral compass. Think about it: when someone is debating whether or not to invest their hard-earned money, they want to be sure that the person who they are dealing with is someone they want to be around.
Often, there is more than one person behind a new and emerging company, and investors will want to meet everyone and carefully look at who they are entering into a partnership. When you are pitching your idea, do not be afraid to show the interested parties the team dynamic you have established. For example: have you and your partners worked together on other projects before? Do you have complementary skills? Brainstorm ways that your presentation to investors can casually show that you are driven yet flexible, open-minded yet calculated. Investors love to see that the product they are interested in is built by a team that gets along and supports each other. Different people bring different perspectives to the table, and while no team exists in perfect harmony, the best companies support each other and have skill sets that work together.
As you prepare for your business pitch, reflect on these ideas. There are difficult moments during any sort of pitch, and it is best to be prepared for those, too. For example, if an investor points to a weakness in your proposal, is it in your nature to grow nervous, angry, or defensive? What does this say about your personality? If an investor asks a question that stumps you or that you simply do not know the answer to, what will your reaction be? Will your emotions take hold? If, for example, you are a passionate and emotional person, it makes sense to practice staying calm, using reason and continuing to believe in yourself. You know your idea is good—do not let a few difficult moments throw you off your path!
Also, consider the fact that investors and firms are seeking company founders who they can not only trust but who are open to being mentored. Sometimes, you can showcase a great personality and have a plan that is not 100% perfect—the investors may want to work with you because of your potential. They might think that you can create future profits together with their guidance.
Experience tells us that experienced, savvy investors thoroughly examine the concepts and ideas within the pitch, but they make their decisions based on the people involved in the company. Remember that when you practice, your pitch should serve you well.
Tip: Ask a friend or family member to tell you what they consider the top aspects of your personality. Then, ask them for two weaknesses. This type of awareness will help you see yourself in the same way the investors will.
2) Knowing Your Audience is Essential to Pitching A Business Idea
Despite a lack of industry experience or not understanding what the investment firm is looking for, some overly eager entrepreneurs place themselves in front of every single investor. The thing is: more is not always better. Accepting an investment in your startup immediately creates a new partnership, and it is crucial to know everything that you can about your new and potential business partners.
Investors usually do their due diligence. They will have conducted research about your idea and probably yourself as an individual. Just as they are curious about your personality and want to see what you are like in person, they want to hear you explain the ins and outs of your new idea, its viability, the demand, interest, and so on. Now, it is time to think about the reverse. What do you know about the investors you are pitching to, and how can you find out?
Sometimes, it makes sense to make a list of the investors you are interested in pitching to. Which one is your top choice, and why? Which firm are you still a little unsure of? Where are you getting your information, who have you talked to, and is the data you are using legitimate? Here are a few more ways to research and vet the investors before you pitch. While it may seem presumptuous to narrow down the list or to even “choose” your firm, it is not. More and more entrepreneurs are coming up with a well-reasoned and targeted list of investors. This helps them not waste their pitches, time, and energy on people who simply have no interest in their product, goods, or services. Competent business owners know that the correct “match” is everything.
When researching, ask the right questions:
- What industries do the investors prefer? Has that changed over time? Take a look at their history of investments if you can; this may tell you a lot. For example, some venture capital funds are dedicated to education, others are committed to cryptocurrency, and still others have an interest in and preference for completely different business sectors.
- What stage of the business do they prefer? For example, some investors enjoy getting in on the ground level, even though they will not receive growth equity at this early stage. Growth equity usually goes to more evolved, older companies that require funding to expand, acquire another business, or spread out into a new market. Other investors are wary of investing in startups too early. This also relates to your startup’s specific needs to make sure that you have a specific idea of the approximate amount of funding you need and what resources are essential for your company to enjoy a successful launch. This will help to whittle down your list of prospective investors to pitch to. Do not waste that great pitch on uninterested parties!
- What do you know about the investor’s record? What is their experience level, and what defines their investment history? By doing some research, you should be able to determine if your startup aligns with the prior investment opportunities. While it is true that you could be a new interest or mark a change in philosophy, the chances are that you will be able to draw some conclusions about where your business might fit in. Better yet, by looking through the investor’s portfolio and identifying trends, you should be able to tailor your pitch to their interests.
Finding the right venture capitalist for your business is not just about the numbers. It is about forming a successful partnership with similar interests and a concerted desire to succeed. If the startup heads in the right direction, all parties will be pleased. Investors can also go beyond simply supplying the cash. They can help recruit new employees, locate and target new customers, and even raise more capital. Sometimes, they can even bring other investors on board; if they do that, you know you’ve found a winner. Remember, this all traces back to having a successful pitch, so let’s not forget to focus on the knowledge that will make your pitch shine.
3) Be Determined to get the Details Right
Personality is paramount, and knowledge of the audience and their interests is necessary, but no pitch has succeeded without specifics. If your pitch is high on enthusiasm but low on details and know-how, investors will not have enough substance to go on. Attitude is critical, and style and delivery are important, but investors also need logistics, as in the “who, what, why, and how.” Who is involved in the project and why? What is the main goal of the startup? Why will people want this product or service? How is it viable? These are just a few of the questions you may be asked while on “stage” performing your pitch.
Don’t get nervous if you do not yet have all the answers because the main idea is to be ready for the pitch, and let this article inform you as you prepare. Here are a few tips to help you include all the necessary information in your pitch:
- Make sure to understand the concept of a “pitch deck,” which is basically a document—often shown visually—that quickly provides investors with the key information regarding your startup, including the business plan, identification of the goods or services, demand, needs for capital, and other important metrics and goals.
- Include a memorable motto, slogan, or tagline that leaves investors wanting more. If it is catchy enough, perhaps they will walk out of the meeting repeating it. Of course, you want this tagline to resonate, so spend some time thinking about how to summarize and encapsulate the value of your business in just a few sentences. This can be a challenge, so take your time.
- Another key detail to include is what you see as the market’s current size. This finding should be based on research. It always helps to have experts weigh-in, for example: “Last year, Michael Smith of the Wall Street Journal reported that there was a unique and unfulfilled demand for X computer software that does Y….” This type of backing adds legitimacy to your claim.
- If you plan to attract customers and, even more importantly, keep them coming back, that is a pertinent detail to add to this list. The ability of your startup to appeal to consumers, ideally right off the bat, is important to investors at large.
- Competition is one of the most important aspects of any business pursuit, and investors want to see that you have not only considered who your competition is but thought about how to navigate the waters of a possibly crowded and aggressive sea. How will you be able to compete, and better yet, how will your startup be able to distinguish itself from the rest of the competition?
- Is your product ready for the market, or does it need more time and more tweaking? Ideally, it is ready; the more detail you can provide, the better. It is important to think about how you can run some rapid, insightful tests involving your product, the market, and potential customers—this will give you detailed statistics and ratios to report. The data is in the details! Or is it the other way around?
- Every single investor wants to leave the pitch meeting understanding this key detail: how does the entrepreneur plan to create revenue, and how confident are they? Your pitch deck should not only include this; it should emphasize demand and show a clear path from creating the product, goods, or services and then selling them to the public at large. A good plan for profits can make even the most discerning investor hungry dive right in.
- Specific figures matter, and when you are putting together your pitch, it is crucial to include several tried, tested, and true figures. While you can still remain a little fuzzy on some of the statistics, the amount of capital investment the business needs is not one of them. So, what is the approximate amount your startup needs? But, wait, you are not finished! Where will the money go, and what will it accomplish? Seasoned investors want to know what their money will specifically accomplish, so they can check back on the progress of the business whenever they see fit.
Basically, savvy investors want to know how entrepreneurs envision the opportunity they have come up with instead of focusing on their presentation skills. Attributes such as confidence and enthusiasm are great, but when it comes down to investing a good deal of cash, the focus is on realism. So many projects are initiated and then lose not only their momentum but everyone’s money—no one wants that. So, be confident, but support that confidence with hard work, research, data, and facts.
4) Tell an Interesting Story
Great business ideas depend on demand. Investors often can be heard asking, before or after a pitching session: “who needs this product?” As a concept, demand in this sense is usually created by a problem, and an entrepreneur who has found what he or she is certain is the right solution. Once you have these ideas, they must be included in your pitch. But how? The key here is to realize that human beings rely on storytelling for various things. From commercials to movies to stories that we tell ourselves, our world is mainly parsed out in stories. They are the foundation of our belief systems and help us make sense of the mysteries of the world around us. But, back to business: there is a reason that certain TV shows grow wildly popular and that there are certain books that we simply cannot put down. This element of the story can be included in your pitch.
How can this be done? In order to focus on the problem, or the demand, think of a real-life scenario that shows exactly when a customer would need your product. For example, show us the situation that led to the customer’s purchase. What problem did they have? What need did the product fulfill? How did they feel afterward? This scenario can be rooted in fact or purely hypothetical. The point is that you are telling a realistic, believable, and backed-up story that shows us exactly why we should believe in what you are offering, just as much as you and your team believe.
Stories impact our emotions, and they remain memorable long after the meeting is over. The story you tell is not in contrast to the data and numbers you present—they should work together to show the value of your concept. Pitch-wise, your story should only be a fraction of the presentation or pitch deck, but hopefully, it will be the most evocative and entertaining.
When you know there exists an opportunity in the market for your product; your duty is to tell a story that inspires us. That is your mission. Do you choose to accept it?
5) End Strong, and Highlight Your Exit Strategy
Although it is not possible to truly generalize, investors usually have one eye on the future. Savvy sponsors and financial backers like to get the sense that the entrepreneur who is pitching has also thought about the future. But, wait, you have supposed about the future, right?
If you have not, head back to the drawing board, but we are willing to guess that you have some ideas about how you will leave the business with cash in hand. As your pitch nears the end and you prepare yourself to answer what will surely be some perceptive questions, make sure to discuss your exit strategy and how you see the last stages of the business playing out. Investors are a wary bunch, and they usually like to know that if things take a turn south, they can cash out without losing too much. Here are a few strategies that are popular with investors and entrepreneurs alike:
- Initial Public Offering (also known as an IPO): A private company issues an initial sale of stocks to the public at large. The company can now raise capital from investors in the public sphere, which is a large and notable change.
- Acquisition: One company buys some or all of another business’s shares and therefore gains control of the business.
- Merger: a merger unites two unique companies, creating one larger business.
There are variations of these strategies, but choosing one is essential and documenting how you envision it working for your startup. This way, when investors raise their hands and ask about your plans for the exit, you will be ready.
6) Be Yourself, Before, During, and After the Business Pitch
No one wants to see an entrepreneur with a great idea stand up and try to pretend that they are the next Steve Jobs or Elon Musk. Most investors are also rooting for you to succeed, so be cognizant of that. They have probably already heard of your idea and are now interested in hearing more. We all have different strengths and weaknesses, and for some of us, public speaking is notably not one of them. Perhaps you can ask your partner to get up there with you if you are not comfortable.
Let your true self and authentic personality shine through whatever you decide to do. When your passion for your startup idea begins to shine, it will be communicated without much trouble. That is, as long as you are passionate about your idea and have done all of the market research and other tasks at hand. Look at your pitch as a celebration of the idea, and also know this: if all of the investors pass, there will be additional opportunities. Request feedback concerning what you did right or wrong, and use that feedback to create an even better pitch deck for the next opportunity that arises.
7. Finding the Right Investor For your New Business
Good luck with finding the ideal investor for your new startup business. This process all begins with choosing the right group of people to pitch to. Make sure that you choose wisely and find an audience that is receptive. Then, use all of the tools at hand and this article about pitching your business in the best way possible. We know you will pass with flying colors and secure the financing your company deserves. Lastly: just as you are concerned with finding the right investor, there are investors out there who are concerned with finding the newest and most exciting investment opportunity. Stay positive and good luck.