Getting an investor to put pen to paper and finally write you a cheque is often difficult, but WGP Global’s guide on a few things that you need to know before pitching will make your life a whole lot easier and the process a little less fraught. Your pitch will, ultimately, be successful with our help.
As a starting point, imagine you are the investor. Turn the mirror on yourself. What would you be looking for from a company that you’re being asked to plough money into?
Often, startups fail to secure investment from the minute entrepreneurs open their mouths. The site of angel investors, venture capitalists or bankers sat in front of them can be an intimidating one for many, and once investors detect any kind of nervousness, your pitch is as good as dead in the water.
If you’ve done your homework on your pitch, then you should stride purposefully into the centre of the room and confidently deliver it. Know the key areas to hit in order to pique an investors interest, and stick to that script.
Here are the five most important things you have to know if you want that all important investment.
Get the numbers out of the way as soon as you go into bat. Thrill investors with your acumen. If the financials stack up and your presentation is on point, you’ll be off to a great start.
Always remember that you need to prove to potential investors that your startup will be capable of meeting any financial obligations placed upon it. That includes debt repayment. No one likes surprises, least of all someone who has placed their investment with you.
Your revenue streams will be pored over with a fine tooth comb, and you must be prepared to answer some, often difficult, questions.
Ensure your responses are measured, clear and factual. There’s no need to elaborate unless you are asked to do so. To that end, bear in mind proving that your current assets can cover your liabilities is a good start.
Financial stability, company growth, decent return on investment and clear exit strategies are all areas you should be fully au fait with, and able to articulate accordingly.
Background and experience in the industry
What’s your track record like in the industry in which your business sits? Would you consider yourself a failure or a success in business? Do the facts back up your standing?
When placing their investment, investors need to be assured that they’re backing a dead cert. If there are genuine reasons for a prior business failing, be sure to acknowledge that during your pitch. Everyone has failed at some point, investors included, and it’s how you deal with those failures that will give those in the room big hints about your character.
Given that ‘investor fit’ is considered hugely important, it’s vital that a rapport is built between entrepreneur and potential investor. Lack of honesty from the get-go would kill that stone dead.
Be passionate about your company. A flat, uninteresting pitch is going to get you nowhere. Invite potential investors to research your background. If necessary, provide some reliable references to be contacted.
Make sure that your business experience backs up everything you claim in your pitch. Any gaps or unexplained issues are a sure fire way to turn off an investor. Don’t wait for an investor to uncover any potential mistakes either. Be up front, bold if necessary, but completely transparent.
If your product or service isn’t unique, then it needs to be amongst the very best available to ensure an investment. Competition for investor money is hard won, more so when a rival company is offering much the same as you.
Can you prove to potential investors that what you have to offer is unique enough for them to invest in? What would distinguish you from the competition? Is there anything about your company that would give it a clear advantage in the marketplace with the right kind of investment?
If you’re able to offer IP (Intellectual Property) protection or exclusive relationships with distributors, by way of example, that’s hugely attractive to a potential investor. Having patents granted for your services or product is another sure fire way to prick up an investors ears.
Always be mindful that your pitch will be one of many heard by investors, so you must bring something to the table to make it stand out.
Effective business model
It might be stating the obvious, but having a proven and effective business model is a pre-requisite for any pitching round. Having said that, the amount of startup companies or entrepreneurs that are ill-prepared in this regard is staggering.
Ensure that you know enough about your potential investor(s) to be able to tweak your business plan accordingly. That’s because you’ll find that your business plan, in general terms, won’t be a ‘one size fits all.’
Produce your current business model and make the pitch attractive enough for investors to want to find out more. Be aware that you’ll need to be able to demonstrate that once your company generates profit, this will show a potential investor its true strategic value.
It’s arguably at this point where you need to be your most persuasive.
Large market size
The bigger the impact your company has in its target market, the more attractive it becomes to potential investors. It serves as proof that there is a stable, and large, customer base, which is something that an investor can tap into.
This is done by growing the company quickly and significantly, whilst also being able to manage that growth. Investors will always gravitate towards startups or companies that already look to have a competitive advantage and brand awareness.
Should you be able to demonstrate that the company can generate multiple revenue streams and have reliable financial projections, which in turn would offer potential investors the chance to maximise their own profits, you’re onto a winner.
Regardless of your business size and complexity, WGP Global provide our clients with solid business advice and connection with the right and proper types of capital, combined with 40+ years of professional experience and an international business network. You can rely on us to deliver. Get in touch with us at email@example.com.