Written By April Ly
The fundraising process for new business owners can be a daunting one. Investors may seem like foreboding sharks (hello, Shark Tank) who want nothing more than to take a nasty bite out of your lackluster pitch and give you a hard no before kicking you to the curb.
But pitching to potential investors doesn’t have to be scary. In fact, you should welcome the opportunity because it is just that – an opportunity!
Keep reading to find out Hatch Duo’s top 12 tips for pitching investors.
Prepare Your Pitch
Prepare your pitch around what your investors actually care about. Be sure you are discussing the avenues for revenue, how you’ll manage costs to save and be efficient. Explain what makes your brand the best and be passionate about what it is you are selling.
Don’t Only Target One Investor
Investing in a business is easier now than ever before, so a lot of people can, and more importantly, are investing – which means more potential funding for you! With this, you should be tailoring your pitch as such.
If you know you are going to be pitching to an industry expert, speak like one. If your investor is less-versed in whatever it is you are working with, don’t bombard them with jargon they won’t understand.
Choose and Target the Right Potential Investors
What does your investor-targeting strategy look like? If you don’t have one, now is the time to start!
Don’t waste your time by pitching potential investors who aren’t high-profile candidates for your business. Instead, follow Westwicke’s amazing four strategies to target the right investors:
- Understand investor style and metrics
- Analyze investor ownership
- Diversify your conferences
- Host investors
Read the entire article here.
If you are struggling to even find potential investors to pursue, Huffington Post has put together a list of the best places to find them. Check out these 10 places to help you find and structure your investor-targeting strategy:
- Through top-tier business schools
- Through your industry friends
- Angel investor networks
- Find the right entrepreneurial community
- Be market-ready
- Do your research and compile a list
- Accelerator programs
Know When To Pitch
When is it a good time to invest? You should be asking yourself this question before expecting investors to do this exact thing. Timing is everything!
If you have stock market enthusiasm, your investor might be too. If you are second-guessing the market, then don’t expect someone to put money into a business when the market is making them uneasy.
Big investors aren’t going to flex their muscles and show off at any given time. Instead, investment money is put out into the market strategically, and to get your hands on it, you need to know when it’s prime time.
A general rule of thumb is to keep up with the market – if you wouldn’t put money into the market, then it’s likely an investor won’t either.
Some would also argue that opportunity is amidst trouble, so trust your gut and pitch when you think you and your business are ready!
Know your Balance Sheet like the Back of Your Hand
You need to be able to answer the following questions in-depth and with confidence!
- What projects do you have on-going, and are they successful? How?
- What is your target ROI, and have you been hitting that target?
- What is your net operating income? (e.g., are you financially stable)
- What assets/debt do you have?
Create A Timeline
You can’t see into the future, but that doesn’t mean you shouldn’t have a good idea of what an investor’s money can do for your business. Let your investor know when they’ll start seeing cash flow and be prepared to back up your estimated date of return on investment (ROI).
Your potential investor knows you can’t see into the future – this isn’t an episode of That’s So Raven. In other words, don’t try to act like you know exactly what the outcome of your business will be. Instead, be honest and give the most plausible scenario in terms of the future. Your potential investor will appreciate your honesty and the fact that you’re not overselling or being overzealous about something.
Ambition Is Key
If you aren’t confident about your pitch, neither will a potential investor. Be sure to make it very clear how your plan will achieve certain business goals that you have set, make or save money, and show statistics that will confirm this claim. Project return on investment (ROI) so that investors have no questions as to whether or not they will be successful in this investment. Instead, the question is how successful they will be!
Be An Expert In Your Industry
One of the most famous and viewed Ted Talks of all time was given by Simon Sinek, titled, “How great leaders inspire action.” In the talk, Sinek said the following:
“People don’t buy what you do; they buy why you do it. The goal is not to do business with everybody who needs what you have. The goal is to do business with people who believe what you believe.”
That being said, potential investors need to believe what it is you’re pitching, and that is certainly impossible to do if you aren’t an expert in your industry.
If you need some inspiration to help work on your pitch to receive funding, be sure to watch the entire Ted Talk below!
Who Is Your Competition?
Being an expert in your industry and knowing your competition goes hand-in-hand. You can’t claim to be an expert without knowing the ins and outs of who you are going up against. Investors will want to know what your particular business has that others do not. In order to alleviate any concerns, you should be able to identify and answer the following questions about your competition:
- What makes them successful?
- What have their losses been?
- What’s their reputation?
- How does their business differ from yours?
- Who are your allies?
- What marketing tactics do they have? More importantly, how will yours be better?
- What similar companies are delivering solid earnings?
Those are just a few questions to get you started. As the saying goes – keep your friends close but your enemies closer! Your enemies are your investors’ enemies. In addition to answering all of the questions about the competition, you need to be able to prove how your business will be better in every aspect.
Get Other Investor Insight
Dubbed as the world’s best investor, Warren Buffet may not pick up your phone call to share tips and tricks with you about winning over investors. With that being said, it’s crucial to the future of your business to speak with experts amongst the investor community before moving forward with your strategy.
We are all fully aware of the economic devastation brought on by COVID-19 in Q1, and sadly, Q2 is not likely to be any better; if not, significantly worse. Economic output is falling, and investors aren’t expected to make any big moves given the current economic climate. But, there is a silver lining – a rebound is on the horizon, but exactly when we will bounce back remains unknown.
The news isn’t all grim, however. Companies like Spotify and Netflix have managed to avoid falling into the consumer black hole since lock-down began. As the situation continues to evolve, it’s certainly interesting to see which businesses are thriving and which ones have had to throw in the towel (RIP Gap).
Be sure to keep an eye on the businesses that continue to thrive despite things like recession and try to mimic these same structures into your business proposal. As expert Warren Buffet has said:
“It’s only when the tide goes out that you learn who’s been swimming naked.”
Businesses have the perfect opportunity to see which ones have overextended themselves during the good times and have not yet prepared for the bad – and hopefully, you’re sitting on the right side of the fence for this one before your amazing pitch!
For Further Information…
We hope that this article has your creative and confident self ready to go fund your business today! In case you need any additional inspiration to pitch potential investors, be sure to check out these articles we’ve rounded up – you’ll have your business funded in no time!
- 10 Ways to Find Investors For Your Startup via Forbes
- The Fundraising Wisdom That Helped Our Founders Raise $18B in Follow-On Capital via First Round
- 10 Funding Options To Raise Startup Capital For Your Business via Finextra
- 10 Ways to Find Investors for Your Startup via Huffington Post
- 5 Ways of Funding a Business: How to Get Your Piece of the Pie via Forbes