Small businesses are big business in the United States, employing 58 million people. That's nearly half of the private workforce: 540,000 people start a new business every month.
If you're hoping to join that group of people, you know it takes money to start and money to operate. 83% of small businesses fail because of cash flow problems.
Investors are critical for the success of most small businesses, and attracting those investors can be challenging. We've put together 5 pieces of investor pitch ideas to help you succeed.
1. Be Specific About Your Product or Service
It sounds obvious, but not everyone can explain their business to investors. Be as specific as possible. What problem exists, and how does your product or service solve it?
Whenever possible, have a product available for the investor to see and touch. It can be difficult for an investor to see your vision for what could be. Better to show the money people what is.
2. Watch Your Time
Investors are busy people, and the longer you take to make your pitch, the more likely it is that you'll lose your audience. A good rule of thumb is to come in 5 minutes under the time allotted.
So, if you have 15 minutes to pitch your product, create a 10-minute presentation. Time management is essential for a couple of reasons. It demonstrates your respect for an investor's time. And, it forces you to get very specific, very quickly.
Practice your pitch with a timer. You'll find out pretty quickly where you're going long, and where you can tighten things up.
3. Tell a Story in Your Investor Pitch
Imagine yourself as an investor who sits through dozens of pitches every month. Would you enjoy watching a PowerPoint and sifting through page after page of spreadsheets? Wouldn't you rather hear someone's story?
The key to any successful pitch is to make an emotional connection with your audience. Let the investors know to get to know you through your story. Where did you get your business idea? Why are you passionate about your product?
4. Show Them the Money
You don't have to shower them with cash literally, but you do need to explain in detail how they're going to make money. Investors don't invest because they like you and think you're a neat person. They want to make money, just like you do.
Walk them through your revenue model and explain your business plan. Remember to include your marketing strategy, so your potential investor will understand how you plan to attract customers. If you've already had success with a social media marketing plan, show it to them.
Include any intellectual property you have, like a patent. This demonstrates that you've already planned for a successful product and have protected your idea.
5. Anticipate Questions and Have Prepared Answers
When you're practicing your pitch and timing it, you might ask a friend or business associate to weigh in. Ask them to ask questions - the more, the better. You want to be able to answer any question an investor might throw at you. Another set of eyes and ears on your presentation can help with this.
Sometimes we're so close to our business that we miss the obvious, and a trusted friend or colleague can help ferret out the missing pieces.
Wrapping It Up
Before you deliver your investor pitch, you want to make sure you're pitching to the right people. Do some research on potential investors to make sure you're meeting with the appropriate people for your business.
Once your pitch is perfect, we encourage you to apply with us. We connect entrepreneurs with investors through our network of companies and organizations. You can read more about our process and apply here.
Contributing Writer: Diana Jordan
You’re excited. You’ve prepared for this moment for months, maybe even years. The market is oversaturated with bad ideas waiting to fail but yours isn’t one of them. Your concept is innovative, your passion is contagious, and your gumption to transform it all into tangible success is unstoppable.
Now, you just need to convince investors to believe it too. ‘Just’.
No question, a potent pitch is the bridge between dream and reality. Without seed money from crowdfunding, even the best ideas suffocate.
Here’s how to get your first pitch right.
Be Transparent: Answer all the 5 Ws and keep it concise. Investors are smart and busy; they’ll see filler-fluff for what it is. Don’t inflate results or forecast what you can’t deliver. Elaine Pofeldt writes on CNBC, "To ace a pitch, by all accounts, it is essential to build trust with investors right out of the starting gate."
Make it Easy: Offer the big picture explanation in user-friendly terms. Intricate technical specs can be a sidebar for those who want them. Your pitch isn’t the platform for it; don’t be cryptic and overcomplicate things. Problem -- solution (AKA your product) -- result.
It’s Personal: Not every investor will champion something because its good. In fact, most want to support a Startup that’s relevant to their values. Don’t skimp on establishing the human connection for them.
Spotlight the Innovation: Your idea is unique/different/better from ‘the other guy’ because (your answer here). It’s imperative that you create a clear and piercing differentiator for potential investors.
Show the Evidence: People love facts and figures because they want proof and reassurance. Statistics are extremely convincing and powerful. Weaponize your research to anchor your purpose.
A recent post from HIPGive states, "A few objective facts or statistics will please the rational thinkers in your audience. They’re also a useful way of anticipating objections and/or answering concerns that people have about whether your approach really works."
Tell a Story: Take the five points above and deliver them in an eloquent narrative. Words are electric, and the right combination will carry a lot of voltage. Persuasive, sticky language will engage your audience.
A Strong Ask: It’s called ‘closing’ for a reason. Wrap it up with a compelling call to action. Make investors feel the time to act is now. If you lose them down the rabbit hole of contemplation, they may not resurface.
The Visual Resources: Yep, a picture is still worth 1000 words. Use colorful, quality images that vividly compliment your story. Charts, infographics, and campaign cards can quickly and effectively illustrate large amounts of data.
The Video: Aim for 120 seconds. Yoav Hornung explains in his article on The Next Web, "One minute videos are usually too short while five-minute videos are too long, even for the engaged audience. An optimal length of a crowdfunding video would be around two to three minutes.”
Finally, and it’s easier said than done but try and relax. Confidence (or lack of it) will seep through into your communication. Be approachable and present yourself and your brand with pride and conviction.
Remember, investors that frequent crowdfunding sites do so because they want to give. It’s up to you to grab their attention, persuasively convey your message, and gain their support. Your pitch is the X-Factor. Do yourself justice and bring it home.
"Don't worry about failure; you only have to be right once." - Drew Houston, co-founder and CEO of Dropbox
Article by Diana Jordan https://dianajordan.ca