Many entrepreneurs have sought answers to the question “how to pitch your business idea to investors” at some point along their journey. Why? Because to start a business, you’ll need to know how to pitch your idea to investors so they’ll fund it. In order to obtain funds for a new business start-up, all entrepreneurs must be adept at making pitches to both clients and investors. There are a lot of TV shows that make it look like pitching is all about having an amazing business idea that could make millions in the first year. The truth is, though, that it doesn’t always work out that way.
If you want funds to start a company, real business plans and ideas are what serious investors are looking for. The best way to get money for your start-up is to show that you have a great business idea with a great pitch.
What Is a Business Pitch?
To pitch your business idea to investors successfully, you must first understand what it means by a “pitch deck.” When an entrepreneur wants to encourage someone or an organization to invest in his or her business concept, he or she must provide a credible argument on why the investor should do so. Business pitches come in many ways. It can range from a short sales pitch that lasts 20–30 seconds or the length of a short elevator ride to an hour-long slide show.
Ideally, a business pitch should be concise and persuasive while also highlighting the value of your company and the product or service you are selling to potential customers.
How to pitch your business idea to investors properly?
Making a good pitch starts with a well-thought-out business plan. In the next step, it’s your job to figure out what makes your business valuable and worth your money. Despite the fact that you may have several pages of documented financial history and have conducted a thorough study of how you compare to the competition across a wide range of sectors, you simply cannot cover all of the bases.
Angel investors and venture capitalists don’t usually have a lot of time to hear your pitch when you’re pitching for the first time. So, here’s how to successfully pitch your business idea to investors:
1. Make a presentation
A pitch deck (PowerPoint presentation) is one of the critical things you must have at your disposal when you pitch your business idea to investors. First, make your pitch deck. Creating a deck that gets investors interested about your business is the ultimate aim. It’s important to keep this in mind: You should have a short version (mind map) that you can speak to in 10 minutes and a longer version that includes everything you want to show investors.
If you want to get started, you can use a PowerPoint pitch deck template to get started and look through available galleries of industry pitch decks on the Internet. You can also look for online resources to assist you in preparing a flawless presentation if you’re having trouble bringing it all together.
2. Get some practice with your pitch
It’s important to practice your pitch and improve your ability to speak clearly and concisely to get investors to back your business idea. You can’t use any of the other tips on this list unless you can quickly talk about every aspect of your business. Too many entrepreneurs think that just because they know their business, they can quickly and concisely explain its value, which is not true at all. And this results in their arriving at pitch sessions with nothing planned.
At the beginning, you may say, “I only need 5 minutes of your time.” But you will soon find yourself blabbering for 20 minutes, having only made it to slide 5. To improve, simplify your message, keeping only the parts that help your business, and practice a lot before you do the presentation. Don’t waste your time on anything else.
3. Tell a story about the problem to show how it’s going to happen
A good story is a good way to start your pitch. Investors tend to pay more attention to the story you tell when you do the presentation rather than to a set of facts. Make sure it talks about what you’re trying to do in the market. In the beginning, this will get people excited about what you’re going to say. There should be some actual data here if you’ve done any surveys.
Even better if you can relate your story to your target audience—in this scenario, the investor. What businesses have they previously invested in? How do their previous business ventures make them feel? Research the investor so you can adapt your pitch and storytelling to their interests and concerns.
4. What is your solution?
You might be in love with your business idea. Your product prototypes are all outstanding, and you’re happy with the direction your business plan is taking you. In the end, if your product accomplishes nothing for consumers, investors won’t be excited.
Describe how your solution addresses the problem you described in the preceding slide and how it does it in a unique way. The investor would appreciate it if you kept it brief and simple to understand. Keep jargon out of the equation unless your investors are well-versed in your sector. It’s also a good idea to plug in survey results here to make your solution seem more credible.
5. Demonstrate your knowledge of small business concepts
Investors are more likely to have faith in your business plan if you have real-world experience and a competent management team behind you. You should back up your idea with two things that will make you feel more confident:
Business evidence
Show that you have money coming in, that you have a good track record with customers, that you have testimonials, and that you did market research. Investors are more likely to give money to a company that can show that it can make money.
Show them what you’ve done
Prove that your business is in competent hands with an experienced management team that is familiar with the industry. So, they all have previous experience operating or working in comparable firms to those in which you are investing. The skills you show on your CV or that of your team, if you have one, are important. They include accounting, marketing, sales, and other things.
6. When you show off realistic forecasts, people will believe them
Investors aren’t looking for a get-rich-quick plan, so don’t pitch your business idea to investors that way. A lot of “sensible” investors won’t believe that you can make a lot of money and be profitable. Stating realistic revenue growth forecasts and including three potential outcomes (the worst case, the medium or projected scenario, and the best case in terms of revenue) is a better method.
Check to see if there is any evidence to back up your revenue forecasts, such as market data and competitor analysis. It is also possible to use regression and time series analysis in this context for predictions and estimations. Moreover, make sure you clearly explain the assumptions you used to come up with your revenue forecasts.
7. Keep your startup expenditures as minimal as possible
You shouldn’t come up with costs that are too high when trying to raise funds for a business idea. New businesses that concentrate on cost management are sought out by investors who are aware of the need to keep expenses in check. Avoid giving yourself a big salary, and try to keep capital expenditure down. For example, don’t buy the newest PCs with expensive features you don’t need. Ensure that you have a financial buffer in your marketing and operational budgets but keep your expenditures to a minimum.
Treinetic’s special note on how to pitch your business idea to investors
Investors like it when you show that you can deliver. You should show that you can make things on a smaller scale first, or that you can deliver your services to a small group of regular customers, before you try to get money for a big business. Having success makes you more confident. So, if you can show that you can deliver, then you’re more likely to get the money you need to grow your business even more.
Consider how you can make improvements no matter what the result of your pitch is: whether you obtain financing, a second meeting, or rejection. Do not hesitate to ask for feedback and incorporate it into your future pitch. Avoid pressuring the investor if they aren’t willing to provide any feedback. It’s a delicate balancing act because you’ve already spent their time, and now you’re asking for more of it from them..
Have another member of your team take notes and discuss them with you after the event if at all possible. Look for areas where you slipped up or slides where the investor expressed displeasure. Keep refining and practicing, no matter how good the pitch is that you have now.