by Caroline Cummings
I know what it’s like to pitch to investors—both angels and venture capitalists. I’ve raised close to $1 million from angel investors for my previous technology start-ups. Sometimes you only get 10 minutes to pitch your business opportunity to the investors (or less in some cases). Below is a format I’ve successfully used, as well as helped many other first-time start-up CEOs raise investment capital.
If there’s one thing I can’t stress enough, it’s the importance of rehearsing your pitch. I’ve seen too many entrepreneurs think, “Oh, I know my business inside and out—pitching will be a breeze!” Good luck! I’ve also seen many entrepreneurs crash and burn when delivering their investor pitch—and ramble on and on. There’s nothing more frustrating then being told, “I only need 10 minutes of your time,” and then 20 minutes later you’re still on slide #5.
Additionally, investors will want you to be able to back-up your claims. Have a well thought out business plan on-hand to share, so investors can read more if they’d like to. The intention, after all, is that you deliver a powerful pitch, and their hands are out asking for either your executive summary or your complete business plan.
These are the most important things to keep in mind when you prepare your pitch:1. Tell a Story
Begin your pitch with a compelling story. This will engage your audience right out of the gate. And if you can relate your story to your audience, even better! Your story should address the problem you’re solving in the marketplace.
2. Your Solution
Share what’s unique about your product and how it will solve the issue you shared in the previous slide. Keep it short, concise, and easy for the investor to explain to others. Avoid using buzz words unless your investors are very familiar with your industry.
3. Your Successes
Early in the presentation you want to build some credibility. Take some time to share the relevant traction you’ve had. This is your opportunity to blow your own horn! Impress the investors with what you and your team have accomplished to date (sales, contracts, key hires, product launches, etc.).
4. Your Target Market
Don’t say that everyone in the world is potentially your market, even it it could be true one day. Be realistic about who you’re building your product for and break out your market into TAM, SAM and SOM. This will not only impress your audience, but it will help you think more strategically about your roll-out plan.
5. Customer Acquisition
This is usually one of the most skipped sections of an investor pitch and a full business plan. How will you reach your customers? How much will it cost? How will you measure success? Your financials should easily allow you to calculate your customer acquisition costs.
6. Your Competition
Again, a VERY important part of your pitch, and many people omit this section or don’t provide enough detail about why they’re so different from their competitors. The best way to communicate your value proposition over your competitors’ is to show this slide in a matrix format—where you list your competitors down the left side of the page, you have your features/benefits across the top, and place check marks in the boxes for which company offers that service (see example in presentation above). Ideally, you have check marks across the top for every category, and your competitors lack in key areas to show your competitive advantage.
7. Your Revenue Model
Investors tend to care about this slide the most. How will you make money? Be very specific about your products and pricing and emphasize again how your market is anxiously awaiting your arrival.
8. Your Financial Projections
Show what you’re projecting in revenue (per product) over the next three to five years. You MUST back-up your numbers by sharing your assumptions. You’ll see investors taking out their smartphone calculators to make sure your numbers make sense, so give them the information they need to see that your calculations are accurate. If your financial chart shows “hockey-stick growth,” be sure to explain what happens to cause those inflection points.
9. Your Team
Investors invest in people first and ideas second, so be sure to share details about your rock star team and why they are the right people to lead this company. Also be sure to share what skill-sets you may be missing on your team. Most start-up teams are missing some key talent – be it marketing, management expertise, programmers, sales, operations, financial management, etc. Let them know that you know what you don’t know!
10. Your Funding Needs
Clearly spell-out how much money has already been invested in your company, by whom, ownership percentages, and how much more you need to go to the next level (and be clear about what level that is). Will you need to raise multiple rounds of financing? Is the investment you’re seeking a convertible note, an equity round, etc.? Remind the audience why your management team is capable of managing their investment for growth. In the presentation above, I picked the image of a homeless person holding a cardboard sign that reads “Britney’s sister is going to have a baby and I need money for a nice gift” for a reason. The only thing missing out of this “ask” is the exact amount he needs to buy the gift! This is the level of detail you want to include on this slide: how much you need, why you need the money, what it will be used for, and the intended outcome.
11. Your Exit Strategy
If you’re seeking large sums of investment capital (over $1M), most investors will want to know what your exit strategy is. Are you planning on getting acquired, going public (very few companies actually do), or something else? Show you’ve done some due diligence on this exit strategy, including the companies you’re targeting, and why it would make sense 3, 5, or 10 years down the road.