Here is a guest post I did for serial entrepreneur and my good friend Jeet Banerjee’s Blog. To view the original post on his blog you can check it out here.
You can say I have a little experience about pitching investors, as I raised a seed round of funding for my first start-up right out of college. I have pitched to a number of different types of investors and groups ranging from local small time angel investors all the way to successful venture capital investors.
I learned many lessons along the way, including things I did right when raising funding successfully from Angel Investors, and things I did wrong when failing to raise money from Venture Capital Investors. Regardless of the type of investors you are pitching too, or whether you are asking for a hundred dollars or a million dollars, there are some fundamental lessons of pitching that are pretty much universal for any scenario.
I would like to share with 5 tips for pitching to investors.
Paint a picture
The best way to start a pitch is to begin with the problem your product solves. If done correctly, this is a great way to get the investors interested even before you start speaking about your product, especially if they can relate to the problem.
When speaking about the problem, it’s best to give a real world example or scenario that the investors can relate too. Paint a picture and tell a story about how a customer is experiencing a certain pain, and then go on to illustrate how your product alleviates this pain. You will have on average about 10 minutes to keep your investor’s attention during your presentation, so it’s very important that you start with a very compelling customer pain that captures their attention.
Within the first 30 seconds of your pitch most investors can get a good read of how confident you are in your pitch, your company, and yourself. Investors like investing into confident people.
Confidence is usually a good indicator of competency and investors want to know the company they are about to invest their money in is ran by competent people. Displaying your confidence during your pitch also shows you have a great understanding of your business and market.
This lets the investor know not only is your concept great, but that you are the right person to execute it successfully. One of the easiest ways to develop this confidence while presenting is to learn your business inside and out, not necessarily just your presentation.
Brag when necessary
No one likes a bragger, but when you are the CEO of your company, sometimes a little bragging can become necessary. What I mean by bragging is, if you and your team do something exceptionally well, highlight this and bring it to the attention of your investors.
If you got a team full of bad asses that have 10 years of related experience, brag about it. If some of your users say that your app is the most used app in their phone, brag about it. It’s always better to say too many good things you’re doing than not enough. I learned this lesson first hand from talking to an investor who was judging a startup pitch competition I partook in (I didn’t win).
We talked casually after the competition and I told telling him about how strong our advisory board was and other things which I failed to mention in my presentation. He let me know I should have bragged about those things during my presentation as it could have strengthened my chances to win.
Know your technology
This tip is more applicable to the non-technical co-founders our there since it’s usually our jobs to deliver these types of presentations. You may not need to know how to write code, but you should definitely learn your product’s stack and technical aspects.
Become your product’s product manager. The more sophisticated the investor, the most sophisticated their questions. So although they may ask you a business question such as your cost per acquisition, they also make ask what modules you are using and why you choose those specific ones.
This is also applicable if you are giving a demo of your product during your presentation. Your product may still be rough and in its early stages, but if you know everything about your product, you should be able to know how to deliver a demo that highlights your product’s strengths and smooth out its rough areas.
The most important advice I can give is that numbers talk, and if you’re lucky enough to be generating revenue, money talks. Investors love metrics. When I am talking about metrics, I am talking about email signups, visitors, active users, growth rates, customers, revenue, numbers of followers on twitter, etc.
The more metrics you can provide the better. Even if you only have 100 users but the majority of them use your app every day, this metric shows that people find real value in your application. Regardless if you’re product isn’t developed and you have no users, you should already began marketing your product and have an email list of individuals who will sign up once you launch.
It’s not uncommon for startups to get a couple of hundred to a thousand email signups even before their prototype is finished. When you have metrics and growth rates to reference, it’s much easier creating accurate growth and financial projections for your presentation.