HOW TO PITCH YOUR BUSINESS TO VENTURE CAPITAL INVESTORS?

Although raising capital is very important, startup founders are often lacking knowledge on how to pitch potential investors. Preparation is the key to success.

To receive an opportunity for a capital raising, you must go through the application process. During this process, it is best to have a reputable referral to establish credibility with the potential investor. The most successful pitching catches the investors attention. Ask yourself: How can I create a pitch that catches the attention of potential investors? How can I make sure they are listening?

Suppose you have an impressive profile and have the opportunity to meet and pitch to an investor. You have 2-5 minutes to present, what will you say?

Here are some tips to help pitch your business to a VC investor.

1. Use common words, be straightforward, and be as simple as possible

Founders often like to use complicated terms to create a professional persona. However, this makes communication difficult. Introduce your startup in a single sentence that is simple and easy to understand. For example, “Hi, we are AirBnB, and we help you rent the vacant rooms in your home.” Very simple. Don’t say, “We are AirBnB, and we are a trading platform for your space.”

Be simple and straightforward. The ultimate goal is to help investors understand your goals immediately. This is not a poetic competition, so avoid difficult words and keep it short.

The ultimate goal is to help investors understand your goals immediately

2. Have the right type of business

VC investors are looking for a specific type of business: one with meteoric potential for growth and scaling. If that’s not you, you may need to rethink your business model or financing strategy.

Expected growth rates vary by industry, but it’s not unusual for VC investors in some fields to target 10% monthly sales growth. “A typical metric is, ‘Are you 10 times better than the competition?’” Scarborough says.

3. Focus on the market

One of the most frequent VC pitching no-no’s is to heavily focus on all the great features of a product, while underplaying why it will benefit customers. The benefits tell an investor how big your market could be—the main thing an investor cares about.

Start the pitch with a brief explanation of the product, then quickly segue into what it does for customers, how much money it saves them and the pain points it solves.

The benefits tell an investor how big your market could be—the main thing an investor cares about

4. Be Specific about your growth momentum

A good example of specific growth momentum in a pitch is the following example, “This is a graph that shows our number of paid users in the last 6 months and a prediction of the next 3 months. Attached is the corresponding revenue chart. The momentum grows approximately 30% per month.” Investors need to know where your company is now and how long it will take to reach your future goals.

If you haven’t launched the product yet, talk about your timeline and show that your company is developing very fast. Explain that your company won’t stop whether it is funded or not. For example: “We started in June, in two weeks we finished MVP, in July there was a beta, we had xx users to try, and next week we came out v1 officially.”

5. Be honest about the strengths and weaknesses of your team

A good example of specific growth momentum in a pitch is the following example, “This is a graph that shows our number of paid users in the last 6 months and a prediction of the next 3 months. Attached is the corresponding revenue chart. The momentum grows approximately 30% per month.” Investors need to know where your company is now and how long it will take to reach your future goals.

If you haven’t launched the product yet, talk about your timeline and show that your company is developing very fast. Explain that your company won’t stop whether it is funded or not. For example: “We started in June, in two weeks we finished MVP, in July there was a beta, we had xx users to try, and next week we came out v1 officially.”

6. Find good advisors

It’s vital to work with legal and accounting professionals who understand start-ups in your sector and can give you appropriate advice early on. Engage these advisors before looking for investors. They can open doors to VCs and advise you on tricky questions like valuation and structuring agreements.

It’s important to research the right investors for your business

7. How much money do you need?

The close of your pitch should communicate how much money you need and it’s use. Do not use a vague number. Show that you know what you need money for and why. You must have a plan to launch and grow without asking for a large sum of money to begin.

8. Learn from “no”

Don’t get put off by an investor’s “no.” Their feedback can be very helpful for future pitches or reviewing your business. They may also be willing to introduce you to customers or other investors.