Pitch Perfect: Successfully Selling Your Idea To Investors

“The secret to success is to be ready when the opportunity comes.” – Benjamin Disraeli

In business, there are few things more scarier than approaching investors to raise funds. Yet one cannot do business without having to raise money at one point or another in their entrepreneurial lives. As such, it’s important that we learn what to do when pitching our ideas to investors for funding. Here are some of the things that come to mind:

 

Photo Credit: MaRS Discovery District on Flickr

Photo Credit: MaRS Discovery District on Flickr

1) Believe in your idea

Before anything else, believe in your idea. True passion in an idea is easily recognized even before you unpack your pitch & can sometimes be the difference between getting the money or not.

Believe in your idea such that if you don’t win the investors over, you won’t walk out wondering if you were building castles in the air.

2) Know your investor

Know the type of investor you’re approaching to know how to best sell the right thing to the right person. Are you approaching an angel investor who’s typically interested in start ups? Are you approaching venture capitalists who typically prefer already established businesses looking to expand? Knowing who you’re talking to helps you tailor your material in the best possible way.

3) Be confident & dress appropriately

It might seem insignificant but people tend to judge not only the idea but also the person presenting the idea. When you come across as confident and also look the part you gain some initial credibility that will make someone be willing to hear you out.

Rehearse your pitch to perfect your delivery. Don’t rely on winging it simply because you know your idea, many have crashed while doing that.

4) Show the value in your idea

There are a lot of business ideas out there. Investors are always looking for business plans to have an edge over all the others that they have seen before. Walk into that presentation with an idea that will make anyone open to parting with their hard earned money, sit up and listen.

Show the need that your idea will be meeting in the market place and why you’re the person best suited for it.

5) Know your competition

Any investor considering your idea will want to know who your competition is and how you are going to differentiate yourself from them in a sustainable enough way to thrive.

Know what will make you different and how you plan to leverage that, in order to make your idea more credible.

6) The money

Clearly spell out how much has been put in, if there have been prior investors, and what the ownership structure currently looks like. You should also clearly state how much you’re looking for and what you intend to use it for.

This should of course be supported by a thoroughly researched and well prepared written business plan. Investors want to learn about your idea not just from the overall narrative but from the financials as well.

7) Research, research, research

DO NOT  present figures, whether expected revenue projections and/or costs,  that aren’t supported by credible research information. No investor in their right mind will even think about putting their money in without understanding the figures and to do this they will do their homework on the data you present.

Uncorroborated information will not only lose you a chance at getting the money but also damage your credibility.  And nothing is harder to regain than lost credibility. Let all your estimates be backed up by realistic and detailed research that you can readily make available to the investors for due diligence to be done.

8) Have a written business plan

Go prepared with a well researched and packaged business plan summary that you can hand out to the investors for further reading. To someone interested in your idea, nothing says you’re more prepared than a detailed summary. This will help you pass on the details that you couldn’t have gone into in the initial presentation.

9) Have an exit plan

Depending on they type of investor you’re pitching to, have a realistic plan on how the investor will make money. If it’s a VC or an angel investor looking to come in, invest and then leave after a few years, how will they profit? Will it be by a buy out, going public or even a licensing deal?

No matter how good your idea is no investor will want to consider taking the risk if they can’t clearly see how they will recoup their cash. An entrepreneur is always thinking of creating a long-term business. The investor is always thinking of how they will make money out of the deal in a short to medium time frame. This is the trick to luring the investor; let them see what’s in it for them.

10) Be ready to listen

Many entrepreneurs fail to close with investors due to this crucial issue. Having pitched to many investors before and having faced the same types of questions, one can at times lose their patience during the Q&A session of the pitch. Yet to an investor this is one of the clearest indicators of how disciplined a potential investment is.

An investor who has so far been won over might change their mind if they perceive that you’re not the type that’s open to constructive criticism or transparency. Learn to be patient & courteous in answering the questions directed your way.

 

I hope that these pointers will be of help to you when seeking to win that investor over, whether it’s in big business or of it’s just you seeking to get funding from your family.

 

Victor Muthoka

Lover of God, children & arts, Apple fanboy, Amazon kindle die hard, closet geek, tech enthusiast, entrepreneur, tree hugger and a voracious reader

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