You’ve worked on your funding strategy, prepared your materials and analysed the funding landscape to find relevant investors. Now comes the final stage: facing investors and pitching your business idea.
The pitch is your opportunity to bring across your personality as a Founder and demonstrate your passion for the product you want to bring to market. You must make it easy for investors to understand why they should back your idea, so you need to know your numbers, show confidence and instil trust.
For many Founders, this is a nerve-wracking moment, and understandably so. They must be able to talk fearlessly about their vision and back it up with objective figures - but that’s not as easy as it sounds.
We asked two experienced investors what they consider more important during a pitch and their tips for Founders who are preparing to raise for the first time.
Peter Goodman is an investor, Board Member to F+L and Co-Founder of several businesses. Here's what he says:
"Having the right materials ready is important, and these come in three layers: the first is a teaser of your business idea which is important to catch the imagination quickly - it’s what’s going to get you through the door. The second is general an overlook on everything: the background of the team, the addressable market, what the opportunity is and what’s going to take you to get there, what the distribution will be like, headlines one the financials, etc. Then the third layer is basically to dive deeper into details of each of these parts.
Each investor has their own approach and will want to see different details - some are focused on the money, others will scrutinise more the product, others are distribution-driven. Understanding who you’re meeting and what’s important for them is essential, so you have clarity on those areas.
I personally focus on distribution - sometimes Founders think that they just need to build a product and customers will come. But they need to raise money to get their product out there, otherwise, no one will know about it. So I always want to know what the distribution strategy will be like: what’s the ICP, who are your buyer personas, what are competitors doing and how you’ll do better.
It’s common for early-stage companies to obsess about building the best product; when, ideally, you need a good blend of product and distribution. And Founders often forget about their own networks for that: look beyond friends & family and reach out to business people who operate in the same sphere. Someone who can help with distribution - sharing valuable contacts, providing external support and becoming advocates - can become an unexpected investor.
Raising seed investment is always a bit more difficult because the pitch isn’t as clear - investors know that early-stage start-up numbers are mostly made-up, based on predictions, but you still need to justify them. A lot of investors aren’t experts in your industry, so you can’t be too simplistic or they will say no because they don’t understand it. Investors don’t want to have to learn everything about your industry, but you need to be able to paint a proper picture of your product and your strategy. It has to be believable.
On later rounds, expect to see your finances and business proposition to be scrutinised in detail - but then you’ll already have a lot of information on your customers and more metrics to show, so it’s usually easier to explain.
One thing investors really like to hear is when a Founder says “the reason I want you to invest is not only because your money can help me get there, but because your knowledge, experience and network can bring so much value”. It shows you want to build a relationship with them and get them involved.
Finally, keep the same level of enthusiasm throughout. It’s easy to see when a Founder is getting tired of hearing no and losing motivation, and that influences how investors perceive your business. So keep the enthusiasm and the energy high - it will happen at some point!"
Mark Fishleigh is an investor, Director and Advisor to F+L and a number of other start-up and scale-up businesses. Here are his top tips for Founders during the pitch:
• Keep it short and simple. Investors see a lot of pitches - they won’t remember all the detail. Hit them with the key messages in no more than 5-10 minutes then let them delve into more detail where they want to. Your business is complex, they all are. But, from the outside, it needs to appear simple and needs to be understandable by someone who isn’t an expert in your sector.
One analogy I heard recently was aircraft carriers. They’re unbelievably sophisticated, complex systems, but their purpose is simple - they allow countries to project power around the world. To appreciate this you don’t need to understand the inner workings, just the end result.
• Keep it relevant to the investor. There’s a lot of advice on the internet about what to include in a pitch, and it’s mostly very similar and pretty obvious. What’s less obvious is how to cover those points in a way that demonstrates how and why your business will put your investor’s money to good use. Really work on this. You need to speak the investor’s language rather than expecting them to learn yours. Try it out with some friendly investors/advisors if you can. Also, do your research on each investor you meet in advance, and tailor the pitch to them.
• Keep it real. I see a lot of pitches promising world domination, often from businesses that are pre-revenue. It’s great to have that bold vision, but you also need a really clear and pragmatic view of the next few steps that you are going to take. What specifically are you going to do with the funds from this round of investment, and where will the business then be as a result? This applies to the financials too, as an investment decision is ultimately a financial one even if the investor has a strong affinity with your business. Paint the potential, but don’t over-promise what can be achieved with the funding you are asking for.
• Keep it specific. Make every statement count and avoid fluff, truisms and cliches. For example, pretty much every business claims to have a world-class team. So what? What are the specific skills and experiences that you have assembled and how do they increase the likelihood of success?
• Keep it human. Investors sometimes back good teams with average ideas, but they rarely back good ideas with average teams. The deck is just a backdrop to your conversation with the investor. Rehearse so much that it becomes natural - there is space for your personality to come through and you’re able to really engage with the investor without losing your way. If you have a team, bring the right people to the pitch with you to show your collective strength (that means that everyone has to have an active role in the pitch).
• Keep it yours. Above all, this is your pitch, so take advice on board, but make it work for you. Take a look at the straplines on each of the slides of your pitch deck, which should all hang together as a narrative. If an investor were to just read those, would they understand the essence of the investment opportunity as you would explain it?