Best practices for pitching to investors

If you are an entrepreneur, one of the most difficult and nerve-wracking parts of the job will be pitching to investors. An impressive pitch starts with a carefully designed business plan in which it’s up to you to prove the business’ worthiness in the eyes of potential funders. The pitch could be the one thing that makes your business take off or that throws it into an eternal void—so craft one that makes people turn their heads and listen. Follow our guide of tried-and-true do’s and don’ts for exceptional pitches, culled from experienced entrepreneurs and venture capitalists.

Consider these tips to make a pitch successful:

1. Make a presentation:

First, carefully invest some time and put together your pitch deck. The objective is to form a presentation that is easily understood and gets investors excited about your business. Make a short presentation that takes no more than 10 minutes as well as a longer, more detailed version. Retain only those elements that are highly relevant to your business and leave out anything of less interest from an investors’ perspective.

2. Practice:

Well before presenting to investors, practice your business pitch a couple of times to avoid any fumbles and to prepare yourself to speak quickly about each aspect of your business. Practice explaining different elements of your business quickly and simplifying your message as much as possible to make investors understand your proposition in a short time.

3. Sketch out issues along with a narrative:

Start your pitch with a compelling story that addresses the issue or problem your business can solve to connect with your audience. In the event that you have tried, tested or surveyed your idea, present the data. And do some research about the venture capitalists and investors to whom you’re presenting to understand what they care about.

4. Present your solution:

Showcase what is exclusive about your product or service and how it will resolve the problem your business has targeted. Keep it short, crisp and simple. Avoid buzzwords and jargon if your investors are unfamiliar with your industry.

5. Claim your target market:

Identify the potential target audience rather than saying the audience is “everyone in the world,” even if it is true in your mind. Help investors picture your potential customer base by showing you have carefully considered your target audience.

6. Outline your business or revenue model:

Investors and venture capitalists want to know about your business or revenue model to assure them of your capability to pay back the funds. The single-most important question for your pitch recipients is how the business will make money. Be very specific about your products or services and pricing, and stress the prospective future of your business by showing why market demand will be high.

7. Mention your successes to build credibility:

Make an impression on investors by illustrating what your business or team has accomplished so far, such as initial traction, contracts, sales, product launches, key hires and milestone achievements. Also, speak about your business plan as if it were a road map of steps ahead, and reiterate specifically how their investment would strengthen performance.

8. Explain your marketing and sales strategy:

This is one of the most important parts of the pitch deck. Explain your customer acquisition strategies, measures and costs. Explain how you will reach customers and which channels you’ll advertise on. If you have already done market research and know your customer, show investors what your business will look like when operational.

9. Name your competitors:

The finest way to communicate your business plan’s worth over that of competitors is to show your business’s advantages and features that beat the rest. Put your efforts into conveying how your solution differs, clearly demonstrating the key factors your business offers that competitors lack.

10. Be upfront about funding needs:

It may sound uncomfortably direct, but you must speak clearly about how much money your business needs, how much money has already been invested, who has invested and divulge any ownership percentages. Tell investors why you need the money to advance to the next level, what it will be used for and projected revenue.

And equally important, here’s what NOT to do when pitching:

1. Don’t provide an unsolicited business plan or executive summary:

While some investors are open about their process to cold outreach, the majoritydo not read unsolicited emails. They get plenty such emails and don’t have the time to filter through to find your diamond in the rough. However, they do pay attention to referrals from someone in their network. Ask advisers with whom you work or have connections to find out if they have any investor referrals and can propose a direct introduction.

2. Don’t show up without researching the investor:

Make sure you are connecting with the right investors, meaning those who have interest in your business field. Investors’ interests may range from biotech to mobile apps, from the internet to digital media. Some have mandates about the stage or location of a company in which they will invest. Do some homework before the pitch to ensure your company is aligned with the investors’ criteria. Displaying knowledge of an investor’s background and companies in which they have invested makes the conversation easier.

3. Don’t “initial pitch” to your ideal investor:

Practice makes perfect, and this applies here too. Every time you present your pitch, valuable feedback will allow you to further refine your pitch deck and presentations. Kick-start with friendly investors first, which will help you position your pitch well with time. Also, be ready to provide crisp answers to queries, and practice to make your responses succinct.

4. Don’t ask for a signed NDA before sharing information:

Most investors have a policy of not signing nondisclosure agreements. In the event you have something highly confidential in your pitch deck, take it out and do not share it. By asking to sign an NDA, you cancel out all chances of getting an investment and you must assume that it will be shared more broadly as soon as you send a pitch deck.

5. Don’t send a wordy email introduction:

In case you think this is not important, think again. Formulate a short, thoughtful and crisp four- or five-sentence email introduction that summarizes the company and prompts someone to open the pitch deck. Don’t pack the email body with technical information, instead convey why this is an incredible investment opportunity.

6. Don’t load your pitch deck with more than 15-20 slides:

Use your time wisely! The pitch needs to be clear and easily understandable within a particular time frame, as the maximum you will have an hour to make your pitch. Overloading your deck with too many slides reduces the audience’s interest. If an investor seems interested, you can always provide more detailed information later. If the deck will be viewed on a mobile device or tablet, try to keep the file size to a minimum so it can run without lagging and hanging.

7. Don’t omit details about current customers or traction:

One of the most important elements of the pitch is providing data on early traction or customers. Showcase your achievements or success so far, and do not underestimate the importance of this information. Tell investors about your pilot versions or proofs of concept, as this can have a great signaling impact. Also, be sure not to overlook to convey any prior buzz or media attention your business has received, particularly from well-known websites or media houses.

8. Don’t forget to demonstrate how your business can prosper amid current and future conditions: Most investors and venture capitalists are looking for businesses that will grow and become even more meaningful, particularly given COVID-19’s economic and political upheaval. So be sure to address this issue upfront. Also, tell investors about the actual addressable market and what percent of the market you plan to acquire over time.

9. Don’t show unrealistic projections and valuations:

If you inaccurately display the company’s projected revenue as reaching $5 million in revenue within five years, it is apt to backfire and lead to no investment interest. Investors seek to invest in a company that can be nurtured to become an exciting, prosperous one. Stay away from any statement in your projections that will be hard to defend.

10. Don’t pitch without a demo:

A demo is more powerful than a thousand words. Display a prototype or operational demo of your product, service, app or website, to give investors a better understanding of what your business is trying to accomplish. Ensure it works fine and does not have any bugs or lag time, and aim to impress with its look and feel.

After every pitch, check your ego and refine your message:

It does not matter whether you get another meeting, funding or a rejection. Always look for areas to improve. Ask for feedback, and apply it the next time you pitch to investors. If the investor is unwilling to provide any, don’t push. It could tarnish your image and hurt how your company is perceived.