The best ways to present an idea to investors
In this blog post, we discuss what a business pitch is and how you can successfully deliver one to potential investors.
So you probably want to develop your business further, and you have a great idea in mind that's too good to pass. You want to show investors, as well as potential clients and customers, that your company has potential and can become bigger and stronger. That's where pitching comes into play.
Pitching a business idea may seem nerve-wracking for many. But there are steps a startup owner can take to ensure a greater chance of success. Unlike a business pitch deck, a regular pitch usually involves minimal visuals, with business owners outlining the details of their company and its idea to investors through speech. Additional documents are also provided, offering a text form of the pitch.
So if you are wondering how to pitch a business product to investors for funding, we have outlined the best ways to do this and some tips for practising your pitch before the final delivery.
What is a business pitch?
A business pitch depicts a business idea to potential investors and clients to persuade them that your company is the right choice. It is usually delivered in person, while a written pitch is offered as a supplement. It can be pitched to one person or a large group of people. Business pitches differ slightly from a pitch deck, which is a visual presentation used to gain funding from investors.
What makes a good business pitch?
A clear and thorough understanding of your business idea is an absolute must to ensure your pitch succeeds. Ensure your business plan is ready, as this will outline your company's aims and target market. Proving to be confident, convincing and compelling in your delivery will enable investors to see the potential of your business and the steps needed to make your idea a reality. It's also a bonus to display approachable body language.
How to pitch an idea to investors: a step-by-step guide
1Know who you are pitching to
Before you pitch your startup, you must research potential investors who may be interested in your idea. First, ask yourself these questions about potential investors:
- What industries do they invest in? Specific firms will focus on particular sectors. Make sure you understand the types of companies firms invest in, as this will help you tailor your pitch to the correct investor
- What stage do they invest in? It would help if you had a rough estimate of the money and resources needed to launch before your pitch, so choose an investor who can help you at that stage
- What's the investor's track record? Research the investor's history and take a look at the companies they finance and the background knowledge they have
When outlining your target market, try and develop a user persona, which will help investors visualise the potential customer base for your business.
2Know your revenue or business model
How will you make money? Investors will want to know this before they decide if your idea is worth it. So be specific about your products or services and their pricing.
3Know your competitors
Highlight which other companies your business is competing with and how your products or services may differ from those of your rivals. Show why your customers have chosen your business over another, as investors will want to see how you can gain a fanbase.
4Show your success
You will want to build some credibility early on in the pitch. Discuss with investors what makes your company successful and what you have accomplished so far. This will help create a complete snapshot of your business.
5Introduce your team
It's not just about you. Tell investors about the rest of the people who work for you, their roles, and why they are such an asset to the company. Discuss any potential skill sets you could be missing out on and other positions you want to fill within the business.
6Consider how you're presenting yourself
As well as ensuring you deliver an appropriate and exciting pitch, consider your personality too. Remember that you are also looking for a potential partnership, so investors will want to see that they can get along and work well with you. When preparing your pitch, ensure that your information will be accurate, as investors will never work with a liar. They want to partner with business founders they know they can trust and mentor along the way.
7Tell a story
Similarly to a pitch deck, your business pitch should be presented like a story. First, describe the problem that your company is addressing and how you are willing to solve it. Then, present a real-life scenario where the problem is the main focus and how your product or service will fix the issue. This can help investors get to grips with what your company is about and connect with your vision personally. Ensure you have spreadsheets, charts and graphs on hand to illustrate your points, helping to demonstrate the future of your startup.
8Cover the details
Outline the key points briefly in your pitch. You don't want your information to lack too much detail, but it should not be overly complicated, either. Define your value proposition and share a tagline or memorable statement that will leave an impression on investors.
When pitching, you should outline the following:
- The size of your market
- How you plan to attract customers and retain existing ones, if you have any
- Your competitors, and how your products or services are better compared to theirs
- Your plan to monetise the business and make revenue
- The amount of capital investment required
9Show the roadmap
Showcase the journey your business plans to take. Highlight your exit strategy and the options available. Three of the most common exit strategies highlighted in a pitch include:
- Acquisition: when a company buys most or all of another's shares to gain control of it
- Merger: when two existing companies come together under one single entity
- Initial Public Offering (IPO): when a private business issues its first sale of stocks to the public and can raise capital from public investors
Although, if you are pitching for your pre-seed or seed funding, don’t include that. It’s too early to talk about it, and mentioning it will only reduce your credibility.
Have a business plan on hand to back up the claims of your pitch. The business plan should outline more detail about your company and will be handed to investors following the pitch.
What should my pitch look like?
There are many ways to display your pitch, although there are three which are the most commonly used among businesses.
- Elevator pitch: this is a brief summary of your presentation pitch deck that an investor can quickly read through in less than a minute. You can also forward an elevator pitch to investors to pique their interest.
- Short-form pitch: you will need to summarise the most critical aspects of your business idea in an efficient way to attract investors and clients. Highlight the problem, how you will address it, your market size and competition, and how much financing is needed. These are slightly longer than elevator pitches, lasting from three to 10 minutes.
- Long-form pitch: this is a much longer pitch where you can address every aspect of your business plan in greater detail. You can also use this form of pitch to tell a story and share a real-life scenario to address the problem at hand. You can also share your exit strategy and the amount of capital needed to achieve it.
Ensure to plan all three pitch lengths, as you may need to present pitches of varying lengths, depending on the investor.
How to practise a pitch: a step-by-step guide
Make sure what you have written down is accurate and does not contain any false information. In addition, ensure any figures and financial information is correct, as investors must use these for reference.
2 Learn and practise your script
Practise your pitch over and over again until you know it by heart. Are you able to deliver the information convincingly? Can you share the key things you want potential investors to take away from the pitch? Pay close attention to particular parts of the pitch you keep forgetting and continue to practise.
3 Record yourself
Another good way to practise your pitch is by recording yourself and then playing it back. You could use an audio recording device or even film yourself delivering the pitch if you are comfortable appearing on camera. Pick up on areas where your intonation might need to be corrected or where you trip up on words. If you video record yourself, notice the eye contact you make and keep an eye on facial expressions and body language. Continue to record and film your pitch until you are satisfied with your delivery.
Depending on the type of pitch you are delivering, you will need to make sure it can be delivered in the appropriate amount of time. Ensure that the information you explain in the pitch is brief. Otherwise, you may run out of time, and people will lose interest. But if it's too short, it will look like you don't have much knowledge to share about your idea. Time yourself accordingly. Speak clearly, but you don't want to talk too quickly or slowly. If you're under or over your time limit, you may need to make some changes to the content of the pitch.
5Pitch to others
Treat this like a dress rehearsal before the play. Deliver your pitch to your work colleagues or even friends and family. You want to ensure that the pitch will resonate with who you deliver it to. Colleagues can also offer you any necessary feedback before the final pitch.
Investors and clients will usually want to ask you questions following the pitch. It's a good idea to prepare potential questions they could ask and how you would answer these. Ask colleagues, friends and family for any questions they may have when practising your pitch to them.
Knowing your company and the content you will discuss is the key to getting the pitch right. Therefore it's essential to spend time learning your script and understanding the information you will talk about. Expect to make changes to the pitch script when practising, as it will reveal any inconsistencies. Remember that practice makes perfect; before you know it, you will have a confident pitch in no time.