Although it’s certainly evolved over the years, starting a small business is no simple task. There are a variety of issues you typically have to tend to and anticipate.
Startups that make it past the initial phase might need external funding to grow. Money from outside investors can be for expansion, marketing, research, development, or even to pay off the initial debts from the startup process.
However, investors can be selective with their investments (there’s a reason why they’re rich). Often, there will be several competitors you have to contest with.
That said, you need to stand out from the rest by convincing investors that your business will give them a higher return on their investment. You’ll need to address all their concerns and show that your business can handle competition, and overcome growing pains.
Here are ways you can prepare to pitch investors to get funding for your startup.
Investor relationships can affect the direction of your company, so you should deliberate carefully when choosing who to approach.
When doing so, be thorough in your research, as this may come in handy during your presentation.
During this stage, lean more heavily on investors that share the same passion as you, or investors that operate within the same industry as your business. These investors are more likely to come into the presentation with a favorable opinion of your company. At the very least, they will be interested in what you have to say!
By researching their career, education, past investments, and interests, you can determine if a pitch is worthwhile. This groundwork will also save you time so you don’t waste your efforts on a pitch they won’t care about.
Investors will rely on data and information to make their decision about funding your business. However, a visually-appealing presentation can also prove convincing.
Here are tips for making a balanced, appealing, and information-rich presentation.
Regardless of your industry and audience, you should be specific about the amount you’re asking for, and what you intend to do with the money. This gives investors confidence about your ability to prioritize your finances.
When making your pitch, tailor your presentation to highlight your investor’s interests and previous investments, and how they may apply to your business.
In addition, prepare versions of your presentation for different settings and scenarios — anticipate moments of improv! For example, you may find yourself in an elevator with a potential investor and have to do an elevator pitch.
You should also perfect different lengths for your presentation. Prepare to make minute-long, 10-minute long, and hour-long versions of your pitch — each of which should explain your startup and highlight your plans, needs, and past successes. You never know when your presentation could get cut short by their busy day!
You should also rehearse your pitch, and this practice may also involve writing a script or using flashcards to capture the essence of your points.
You can give the presentation to family members, friends, or colleagues to get feedback. If no one is available, you can record the presentation and play it back to critique your performance.
In addition, practice your presentation in a way that’ll keep your audience’s attention. Your investors lead very busy lives and you don’t want to bore them to tears since you didn’t practice. After a few practice sessions, you should be confident enough to deliver your pitch.
One way to keep your investor’s attention is to go beyond the hard facts —weave a story into your pitch.
Stories contextualize and humanize products, making them easier to understand and more endearing. Perhaps you illustrate a relevant pain point within the industry and demonstrate how your product or services will solve the problem. Or take the vulnerable route and explain how your life experiences lead towards the creation of your business idea.
Ultimately, create a story around your company’s mission, what its culture is like, what makes your brand unique, or how you picture the future for your company. With these approaches, you can highlight how your company stands out from competitors.
While a good story can be compelling, there’s beauty in the details. More than that, details should be a core part of your presentation. Details like your business’s unique selling point (USP) will help differentiate it from competitors. You should also include a short business plan, sales strategies, and financial projection and growth plans.
If your business is already earning revenue, you will want to highlight earnings data, as well. It lends credibility to the business and shows that your ideas are already bearing fruit. Even if you began by operating the business as a side hustle, this information can show proof of concept and scalability.
Don’t forget to talk about essential details, such as how your company is organized. Investors will want to know this so that they can plan how to invest and understand when they will get a return on their investment.
In all moments of success, there lies confidence and respect. Although your presentation will heavily rely on your practice and the information you provide, it will also rely on your mindset.
At the same time, investors will often ask difficult questions. This isn’t a personal attack — they just want to be certain they’re making a wise investment. The best approach to these questions is listening carefully and then answering respectfully, even if you think the explanation is obvious.
To decrease the likelihood of buckling under the pressure of difficult questions, you should anticipate and prepare for them.
Get family members, peers, and friends to play the “devil’s advocate” and come up with difficult questions. You can then prepare honest and diplomatic answers ahead of time, because you’re not going to get funding that easily – they will have questions.
Even when you think you’re done with your pitch, you’re not. The days following your pitch are just as important as the actual presentation. Reach out to your investors within 24 hours. When you do so, don’t ask for a decision. Instead, request feedback on the presentation.
You can take this step through an email, phone call, or video chat. A follow-up will help you identify aspects of your presentation that you could improve on for future investors, and it can help you gauge your current investor’s interest. Who knows? They may not be interested until you put in that extra nudge of effort.
The information provided on this page is for information, educational, and/or editorial purposes only. It is not intended to indicate any affiliation between Tailor Brands and any other brand or logo identified on this page.
Natasha Ivanovic is a Vancouver-born creative writer that started her writing career as a freelancer while studying for her Master’s in Investigative Psychology. On the weekends, she writes short stories for her blog, TheLonelySerb, and cuddles with her bulldog, Bob.