Pitching to Smart Investors
Smart investors are professionals like VCs or experienced angel
investors - often part of angel networks. They buy after taking a
rational view of the business prospects and a subjective view of
the commitment/enthusiasm of the people concerned.
The first thing to be aware of is that smart investors know the
odds. So they will be sceptical and challenging. Don't let that put
you off. If you have put time and effort into your pitch you will
be so much clearer and compelling than 90% of the people they see
that you will really stand out.
Here's the golden rule , specifically for investment
pitches, in the first 60 seconds tell them:
- What your business does and why it meets their investment
criteria
- How much money are you looking for
- What size stake are you offering
- How big could this business be in 5 years time (customer,
revenues, profit)
- Why, in a sentence, there is reason to believe you
Then give them enough facts about you, your team and your
business to build sufficient credibility to be heard.
Using the next hour effectively
- Aim to speak/demo for no more than 30 mins to allow sufficient
time for questions and discussion
- Know that smart investors primarily invest in teams of
people - it's the credibility and commitment of the team you put
forward that will be the most important thing. If you don't have a
team you will have to explain the sort of people you will recruit
and how. If you don't have a team always talk in terms of I
will do this etc. If you have a team use I and we to distinguish
what they can rely on you personally for and what the team is
accountable for
- After that it's the product they want to hear most about
-
- How big is the potential market (ie what problems does it solve
and for whom)
- How believable is the solution - can it become and stay a
market leader
So here is how I pitch to smart investors
- Introduction (remember the golden rule)
- People
- Solution/product in detail
-
- How the product works ie how is it is built/sourced/delivered
/maintained
- demo/video/brochures
- how you will beat and continue to beat the competition
- Total Market size for your offering
- Your Target Market and why you are focusing on them (this is
the problem bit of perfect pitch ie what problem are you solving
and for whom, but you need to quantify it here)
- Marketing/Sales approach ie how you will get customers / sell
products and how much each sale will cost
-
- This is an opportunity to talk about the brand you are building
-ie the reputation (what you want to be known for) and the
experience (how you leave people); it's the best opportunity in the
pitch to intoxicate them with your enthusiasm without appearing
deluded.
- Business Model ie how you make money - product pricing and
volumes, product costs, overheads;
- Development Plan - where you are now, key developments and
milestones
- 5 year Financial Projections (product volumes, P and L and cash
flow) with key assumptions
- Funding Needs for next step
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