11 August 2015
6 Tips for Pitching to Investors
Listening to the “Dragons” on the BBC2 TV show Dragons’ Den is a good insight into the way your investors may be thinking when you present your ideas, plans and proposals to them. As all good scouts know, you must Be Prepared, i.e. be fully prepared for some intense questioning before investors will entrust you with their money. Here are our 6 tips for getting your pitch right.
1. Know every aspect of your finances – and your research data
Numbers must add up but, more than that, every figure that you use must be validated. You can’t simply base your first year growth rate on a competitor’s established business or make assumptions based on ‘gut-feel’. That is a certain way to get rejected at the very first stage.
How much money do you need and how will every penny of it be invested? What are your start-up/capital expenditure and initial running costs? Are these based on firm quotations from relevant suppliers? Know the best and worst case scenarios for your projected costs.
Who are your customers, what is the size of your potential market and how long is a typical purchase decision process? Why would your product be selected? What steps have you taken or are you planning to maximise the reach of your marketing and sales campaigns?
Importantly, when will investors begin to see a return and how much? What exit options have you considered? You will need to substantiate your claims with independent data.
2. Rehearse your pitch – and practice thinking on your feet
Enthusiasm and confidence are by-products of knowing that you are thoroughly prepared for any question – even if it’s one you hadn’t previously considered.
“He who hesitates is lost” has never been so true therefore you need to keep a clear head and be able to deliver a well-rehearsed pitch that briefly covers all important points. Practicing your delivery with a mentor or business associate, rather than in a mirror or with a close family member, may be helpful in a number of ways. Get them to ask questions, too. The tougher the questions the better prepared you will be.
3. Understand your investors and be open with them
Before you set the level of your pitch, find out about your investors, particularly what business areas they have interests in. If they offer advice, you need to listen because they are the ones with huge amounts of money and, presumably, some proven business acumen. As with all advice, you should take it on board, mull it over and act on it as appropriate.
Don’t try to hide pertinent facts and if you are not sure of the facts, don’t make them up!
4. Be honest with yourself about the value of your business
Excluding assets, the value of your business is calculated on its worth and profit potential to someone else and nothing to do with the amount of time and money you have invested getting to the current point. An entrepreneur will have devoted considerable resources to bring the venture to this point, and that is often considered as personal sweat equity. Investors appreciate this, but they will take it for granted and tend to focus instead on future cash-flow requirements rather than legacy costs.
5. Keep calm and be yourself.
It is easy to put yourself under pressure when big opportunities arise but keeping calm and not panicking will enable your mind to work clearly and your mouth to deliver a clear response!
Knowing that you are well prepared is a major calming factor but, if you are prone to nervousness, practice some calming techniques that will help you through the pitch – perhaps deep breathing or subtle rhythmic tapping of your thumb against your finger.
Let investors see the real you – the person who is driving the business. Believe in yourself and just be you. Investors are real business people, and they want to work with ambitious, driven and practical entrepreneurs.
6. Don’t forget to close!
When you’re finished presenting make sure that ask for the investment – that’s the real purpose of the meeting isn’t it? At this stage the investor may have some additional questions for you. Some may be business-related, others more personal in nature. They’re essentially trying to get a feel if they can work with you as a business partner. So don’t take this approach personally and answer their questions to the best of your ability. And then ask for the investment again.
The London Business Support Service is a valued Partner of the British Library in London. We conduct 1-2-1 confidential business clinics on the first Wednesday of every month at the Business & IP Centre at the British Library. Our business clinics are suitable for any type of business in any type of situation, and our experienced business advisors are here to provide you with cost effective business support services that result in tangible and measurable benefits to your business.