Raising money for your venture is probably one of most stressful and demanding tasks an entrepreneurs face.
I regularly attend investor presentations through my work looking after private clients and as an advocate for entrepreneurship. Last week I was supporting Venturefest, which is a national network to encourage local innovation and build a community for innovators, entrepreneurs and investors. So what can we learn from the hundreds of presentations I have seen over the years?
A thorough knowledge of your business and it's financials is absolutely vital. The number of times I have seen entrepreneurs fail to answer basic questions about their company finances really is not going to impress a potential investor - if you cannot give them confidence, how can you expect them to invest?
Assuming you do have a good understanding of your business, this means you can start to build a story that will grab an investors' attention. The point of a pitch is not make a sale there and then, it is to get them to buy you as an individual, get the investor asking questions and ultimately to want to meet you again for further due diligence.
Firstly, you should give an overview of who you are and why you are someone they should give their money to. Some of the most impressive pitches were by those who got the investors to like them in the first instance and wanting to hear more. Show your experience in the relevant area, why you believe in the project and why you have passion for your idea.
Sell your idea through stories
Stories create an emotional connection with your audience, whether it is positive or negative. Remember, the most powerful emotions in sales are fear and greed.
A good way to start is to explain the moment or experience that sparked the idea for your business in the first place.
"I keep six honest serving me (they taught me all I knew); their names are What and Why and When and How and Where and Who." - Rudyard Kipling
Explain how it made you feel and this will flow to the audience and perhaps remind them of a similar feeling they have had, or at least have some understanding of your situation. It is also important to pick out a small detail which allows the audience to picture the situation in their minds, adding colour to your story. It is however important that you make this story brief, so do not build in too much detail, as you need to have the audience wanting more. The subject of telling stories is one that demands it's own post.
Explain what problem your business solves and why your business
A good example of this is Just Eat. They created a simple driving belief - that cooking is awful. Their product is effortless and easy, unlike cooking. They then created a simple call to action "Don't cook, Just Eat". A powerful message like this will grab people attention and lead them to seek out more information.
Explain your business model
It is important to succinctly share how your business is positioned relative to your competitors. The reality is that consumers have a choice, so it is important to highlight why they should choose your business. You should explain whether you offer something that is cheaper, faster or better (higher quality). It is often two of those elements that your business should aim to achieve, as there are few cases which meet all all three criteria.
Explain the benefit to the investor
It is important to help the investor understand what the money you are raising will be used for and provide some expectation as to what further capital will be required in future. This should be backed with an exit strategy which will ultimately be how the investor will get a return.
A word on presentations
Most pitches will be in a traditional meeting format, with some sort of presentation using Powerpoint or Keynote. These tools are incredibly powerful and this leads to entrepreneurs creating overly detailed and long presentations, as they get carried away. It is much more powerful to use a small number of slides (less than 10 is ideal), with clear and simple messages, high quality images and keeping words to a minimum.
Remember, the average attention span of an audience is around 18 minutes, so your presentation should aim to keep them engaged, not checking their phones from boredom!
Remember, nobody cares about your business out idea
You might know everything there is to know about your sector, but you have to remember that no one else gives a shit. You certainly won't change that by using jargon or acronyms that nobody understands.
Tell them a story that creates an emotion and that will be the key to getting people to take notice.