We're often asked the question, "What's the right way to pitch an investor? What do they want to see?" In this article, we'll offer some suggestions based on the experience of our founder Tim Berry, who is an angel investor himself, and some of our favorite experts on the subject. And we'll offer some helpful links for further research from our website, Bplans.com.
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Keep in mind three important things:
- Not all good businesses are also good investment opportunities. Try this Self-Assessment: Will Your Start-up Get Angel Investment?
- Your first pitch with an investor has one important goal: to interest the investor enough that they want to read your full business plan. In other words, the goal isn't necessarily to get funding; it's to get another meeting where the conversation about funding continues.
- You may need several versions of your pitch - some longer and some shorter - for different kinds of investor presentations. We highly recommend reading What to Say in Your 1, 5, 10, or 20-Minute Pitch.
Tell a great, customer-focused story
In a pitch, you'll have very little time to hook an investor's attention so they want to hear more. So don't begin with a dry recital of your financials. Start by telling a real story of a real customer, and what problem your company is solving for that customer. If you don't have a real customer yet, try making a customer persona, and tell a story about what you can do for that person.
- The Bcast: How to Pitch Your Business, and Brand Storytelling with Park Howell
- How to Make People Care About Your Business Plan
Demonstrate your solution
Make it as clear as possible how your product or service solves a problem for your customer. Show photos or a short video - or better yet, offer a short live demo if you can!
Validate your idea
Investors want to know that you already have some proof that your business idea really solves a problem and has a market. Have you already built a prototype and beta-tested it on real people? Held focus groups? Share those results.
If you don't have this data, then demonstrate your expertise. Share your accomplishments in your industry. What work experience do you have? What other companies have you started? What innovations have you created? Do you have a mentor or some existing customers who are willing to sing your praises?
Milestones are also useful here. What concrete goals have you set for getting your business launched? And what concrete goals have you already achieved?
Explain how you're better than your competition
Demonstrate that you know exactly who your competitors are, and how they gain, serve, and lose customers. Explain, in concrete terms, how your business will offer a better solution.
Outline your revenue model
You've explained how your product or service solves a problem. Now, how will it make money? Who will generate the revenue you earn - end users, advertisers, retail partners? What other details would best demonstrate that your idea will earn money? Consider data like:
- Monthly website visitors
- Conversion rate
- Customer lifetime value
- Customer churn rate
- Customer acquisition cost
Here's where you'll also share your forecast details, with a focus on the amount of profit your business will generate.
Introduce your team
Take a moment to brag about your team's individual accomplishments, including awards they've won, companies they've started or been involved in, and relevant industry experience. If there are key positions you haven't yet hired, describe these as well.
Ask for what you need
Be specific about the amount you're asking for, and break down in detail how you'll spend the money. It's usually easiest for investors if you list the percentage of the investment you'll spend on each item. (And this probably goes without saying, but your forecast should reflect these same percentages.)
Explain your exit strategy
You may be focused on getting your company started, but an investor typically makes their money back when the company ends. So they'll want to know what the end goal of the business is: will you sell it, pass it to your children, retire and shut it down? Investors want to know when they can expect to collect their return, and they often want to see a return within 5-10 years.