Did you know that angel investors sunk more than $20 billion into startups last year? The era of venture capital and angel investment is stronger than ever. And the results are staggering. The likes of Apple, Facebook, and Google all shot to fame with the help of venture capital. If you’re running an exciting startup, with a great product, there’s no reason you can’t become the next success story.
Of course, there’s one big hurdle in the way: pitching to investors. For some individuals, it’s the most intimidating and daunting thing they’ll ever do. Not only are you pitching your company to intelligent and intimidating individuals, you’re slicing up your company. Giving away a percentage is never an easy decision, but that money is essential for growth. Without it, it’s very hard to build a coherent business. So, how do you nail the investor pitch?
1. Short, Sharp Elevator Pitch
The first step is getting in the room. And you’ll never get your chance to speak to investors properly without a killer elevator pitch. This is a 30 second summary of your company that entices and intrigues VCs. The idea is to make it so compelling and intriguing that it lands you the bigger meeting. The elevator pitch is named because you’d traditionally pitch it in an elevator to the boss. Nowadays, a cocktail party or networking event is more likely. But, the premise is the same. You’ve got 30 seconds to convince them. Go.
2. Short Presentation or Video
So, your elevator pitch worked like a dream, and you’ve landed the big meeting. But, the hard part is just beginning. Our advice? Take the same approach as you did with the elevator pitch. Keep the meeting short, sharp, and straight to the point. A powerpoint presentation or video will really help keep things succinct here. A baseline suggestion is 10-12 key slides or a ten minute video. You should be in and out of the room within 20-30 minutes. You can start things off with a slick corporate video that describes your team, and shows your product in action. Visit http://tinkertaylor.tv/what-we-do/corporate-video-production/ to find out more. Use a powerpoint to highlight key stats and figures.
3. The Executive Summary (Business Plan)
You’re never going to get a ‘yes’ or ‘no’ answer in the room. The angel investors are looking to take some literature home, and consider the proposal you’ve made. The key aspect here is your business plan. This is your chance to get more specific about the business and the stats. In particular, highlight the market opportunity, your target audience, and your timeline. The VCs are looking to see that you’ve understood the market, and its problems and opportunities.
At the end of the day, investors are buying into your company for one simple reason: the prospect of returns. Most investors are looking for a tangible return within 3-7 years. Without a strict plan for monetisation, you’re unlikely to convince any venture capitalist. No matter how emotionally connected they are to your company or idea, an investment must make financial sense. Whether we like it or not, money is the heart of business. With that in mind, explain exactly how you startup will make money, with a strict timeline.
5. Show Them an Exit Strategy
Most entrepreneurs can’t imagine selling their company or ‘exiting’. Entrepreneurs are optimistic people. They want to change the world, and stay on as CEO until the end of time. Unfortunately, that attitude isn’t always what investors are looking for. They’re looking for a more realistic approach. Investors want to know that you’ve considered an exit strategy. In other words, how your company will make money, so the investor can ‘exit’. This might mean selling to a larger firm or (ambitiously) going public as an IPO. Visit http://www.entrepreneur.com/article/78512 to find out more about viable exit strategies.
6. Don’t Forget to Connect Emotionally
For all this talk of realism, and facts and figures, VCs aren’t heartless money hoarders! They are real people, with families, passions, and emotions. So connect with them on an emotional level. Their head might control the money, but if you can sway their heart too, you’re in a good position. Do some research on the potential angel investors. Find one that will connect with your product and company. Passion and excitement is a very powerful force when it comes to business.
7. Present a Fantastic A-Team
Angel investors aren’t just investing in your product and your company. They’re investing in you. After all, you’re running the company, and your team is driving the business. Every venture capitalist is going to take a long, hard look at your boardroom before they make their decision. Who’s on your team, and what experience do they have? VCs invest in people, so set yourself up with the best possible team at the helm. Leave your ego aside, and hire the best to support you.
8. Explain Exactly What You’ll Do with the Money
Angel investors didn’t get to where they are by throwing money about randomly. They make sensible, conscious decisions. And that means understanding exactly how you’ll spend their money. This isn’t the time to spell out vague expansion plans and throw around rough figures. Explain precisely how their money will break down to fund your next marketing campaign. Or hire specific new talent, or develop the next product.
9. Be Open to Suggestions
Entrepreneurs are always very close to their own business. They feel passionately about every small part of it. However, that is both a blessing and a curse. For instance, some entrepreneurs can’t see the wood for the trees. They’re unwilling to take advice or suggestions. Remember, these VCs and angels are smart and talented. Listen to what they’re saying. You don’t have to agree with them, but take their ideas on board, and think about them objectively.
Follow this advice carefully, and you’ll craft the best possible pitch for venture capitalists and angel investors. It won’t take away the nerves, but it might just help you land the money you need! Good luck!