This is the main stumbling block that many entrepreneurs face when aiming to get their dream to make the leap from concept to reality.
1. Understand your audience
Do your research before approaching any venture capitalist. Understand where their focus aligns with your company and development plans and ensure that your pitch hinges on this connection and interest.
2. Use your pitch to tell your story
For the first contact, many investors will be looking for an initial elevator pitch. This should be a short, sharp, two-page or 30-second pitch on your company. This is your opportunity to grab their attention with key facts and a summary of the investment. Keep it short and sweet — show precisely who are you, what the product is, and how big the opportunity is.
If you’re successful in moving to the next stage, this is where your killer 15-20-page pitch will come into play.
3. Sell yourself
You might have the best idea in the world, but if you can’t sell yourself to investors, you’re going to struggle to secure the funding to get off the ground. Investors need to feel confident that the leadership team is trustworthy and knowledgeable.
Remember that venture capitalists will be inundated with opportunities and pitches. Where possible, try to secure a warm introduction via a shared connection or trusted colleague.
4. Know your numbers
As we’ve all seen countless times on Dragon’s Den — whilst cringing behind our hands — even the greatest delivered presentations fall flat if you’re unable to confidently demonstrate an undeniable grasp of the market numbers and business projections.
Know your market inside out — what are the opportunities for growth and how are you going to get there? Illustrate where the investment will be used and, most importantly, how it will make them money.
Be realistic with market values, and the level of investment that you are asking for. If you only started your company two weeks ago and you’re pitching a £2 million valuation, or you don’t have any grip on the market yet, then it will lead to a very short conversation.
Likewise, valuing a technology or SaaS company during the early stages can be particularly tricky. It is has become more common in recent times for investors to ask for convertible promissory notes, SAFE agreements, or convertible preferred stock investments in these instances – details of which can be found on A Guide to Venture Capital Financings for Startups .
5. Validate the big return on investment
Venture capitalists will typically be looking to grow their assets to at least three times the investment value — while looking for the holy grail of ten times.
Think about how you present your company not only in its current form but also showing the potential for upscaling that will ultimately deliver the maximum ROI. Think big and be able to back that up with market knowledge.
6. Be clear, concise, and passionate
This is your time to show your passion, knowledge and experience that will drive the business to deliver an outstanding return on investment. Be clear on your objectives and ensure that your pitch answers the who, what, and why questions for your audience.
7. Timing is everything
If you’ve been asked to pitch a ten-minute, or five-slide presentation — stick to it. Ideally, aim to finish a minute or so earlier to allow for questions. Better to make a big impact and leave them wanting more than to run over and turn them off!
8. What makes your product stand out from the crowd?
Be sure to clearly articulate what your company’s product or service brings to the table and what makes it unique in the marketplace or sector. Think ahead of what key questions investors will be likely to ask and make sure you cover them off in the pitch.
- What makes your product or service unique?
- Why do users care about your offering?
- Who are the main competitors in your sector?
- What plans do you have for future proposition developments?
9. Show any potential risks
Any investment brings a level of risk with it. Be honest, professional, and upfront on these.
Convince investors that you have a clear understanding of what the associated risks are and that you have a plan of how to mitigate against these.
Be confident in explaining the processes that are in place to reduce risks and be prepared to take questions and to be challenged on these. The lower the risk, the more attractive the opportunity — and ultimately the better chance you have of securing funds.
10. Include an exit plan
Arguably now comes the hardest part — showing your investor their exit strategy. It’s a key component of the plan that many start-ups fail to address. All focus tends to be on the ‘hook’ and securing the necessary funds, however, venture capitalists will be centered on projects that offer the greatest turn of profit in the shortest space of time.
Give due attention to the short and medium-term goals of your company as part of your pitch, and what that means to your investor. How quickly can they expect to hit their goal? Three-to-five years is generally considered a good time frame. Be sure to include that big pay-off number in your conclusion.
If you’re a SaaS entrepreneur or an existing business with a ground-breaking new idea, the IDS technology accelerator programme can help you.
From assisting with securing seed or pre-seed funding, and attracting initial clients, through to creating a future development roadmap, making fresh industry contacts, and preparing for early series A investment, we can support you with a comprehensive, six-month strategy, with a track record in helping technology start-ups thrive.
This is the key to what makes IDS different. We are there to offer expertise beyond the initial phase, and to support the onward success of your product. We’re consultant-first solutions architects, with a real passion to deliver the immediate and long-term growth potential of your technology, either as your ongoing technical partner or simply as the steppingstone on your journey.