Times have changed, and many things aren't what they used to be, but one thing remains. If you are an entrepreneur or a startup founder, you need to raise money. So, you need to pitch to investors at one point or another.
13% of startups fail because they didn't manage to raise enough money, according to Fast Company. So, this is a critical step, but, at the same time, pitching to investors can be a daunting task. That's where Slidebean comes in. We've created plenty of sources to help you pitch to investors. This article covers all you need to know about how to pitch to investors.
Pitching to investors can be a daunting task for entrepreneurs, especially when you're trying to secure funding for your startup. But with the right approach, you can make a compelling case for your business and increase your chances of getting the funding you need. In this article, we'll take a look at some tips and best practices for pitching to investors.
First, it's important to understand that investors are not just looking for a good idea; they're also looking for a team that can execute on that idea. Before you even start crafting your pitch, it's essential that you have a solid business plan in place, including a clear understanding of your target market and revenue streams.
Preparation is key when it comes to pitching investors. Here are a few steps you can take to ensure that you are well-prepared:
The main difference between pitching to venture capitalists (VCs) and angel investors is the stage of development of the company, the amount of funding they provide and the level of involvement they expect from the company.
VCs are professional investors who manage funds on behalf of limited partners, typically institutionals and high net worth individuals. They look for high-growth startups that have the potential to become large, successful companies, they typically invest in later-stage companies that have already achieved some level of traction and are looking for a significant amount of funding, often in the millions of dollars, to scale their business and they take a more active role in the company, often sitting on the board of directors.
Angel investors, on the other hand, are typically high net worth individuals who invest their own money in early-stage companies. They tend to invest smaller amounts of money, often in the tens of thousands or hundreds of thousands of dollars, and take a more passive role in the company, but they can provide valuable mentorship, guidance and industry contacts.
When approaching to VCs, it's important to show that the company has scalability, growth potential and a solid team, and a clear plan for how the funding will be used to achieve significant growth.
When approaching angel investors, it's important to convey the potential for success of the company, how the funding will be used to achieve key milestones, the team's expertise and the size of the market opportunity. Also, it's important to be open to mentorship and guidance.
Both angel and VC investors want to see a good return on their investment, but they may have slightly different expectations and criteria, so it's important to tailor the pitch accordingly to the specific audience.
When it comes to creating your pitch, it's important to remember that investors are busy people, and they want to see the key points of your pitch in as concise a manner as possible. Keep your pitch deck to a maximum of 10 slides, and make sure each slide contains a single key message that you want to convey. Use clear and simple language and avoid using jargon that the audience may not understand.
One of the most important aspects of your pitch is the problem that your product or service solves. Investors want to know that you have identified a real problem and that your solution addresses it in a unique and effective way. You should also be able to demonstrate that there is a large market opportunity for your product or service, and that you have a clear strategy for capturing a significant share of that market.
The next step is to present your solution. Explain how your product or service works, what makes it unique and how it addresses the problem you've identified. This is also a good time to talk about your competitive advantage and how you plan to defend your market position.
Next, you should present evidence of your success to date. This could include revenue, user numbers, partnerships, or any other relevant metrics that demonstrate that your business is on the right track. If you don't have much in the way of traction yet, you can use projections and milestones to show investors what you're aiming to achieve in the future.
You should also be able to explain how your business will make money. This is where your business model comes into play. You need to demonstrate that you have a viable revenue stream and that you understand how you will generate profits.
It's also important to introduce the members of your team and highlight their relevant experience. Investors want to see that you have the skills and expertise to execute on your business plan.
Finally, you should include financial projections in your pitch deck. Investors want to see that you have a realistic understanding of the financials of your business, and that you have a clear plan for achieving growth and profitability.
In conclusion, it's important to remember that investors are looking for a good idea, a solid business plan, a great team, a clear market opportunity, and a viable revenue stream. By following these tips and best practices, you'll be well on your way to creating a compelling pitch that investors can't resist.
Keep in mind that is really important to practice your pitch, try to anticipate and prepare for questions, be honest and transparent. Remember to convey passion and enthusiasm for your business. Lastly, don't forget to finish with a call to action, let the investors know what you are looking for and what you expect from them.
Check our startup pitch deck template
If you're reaching out to investors to ask for capital, the first thing you need is a pitch deck. It's a series of slides that tell investors and VCs about your company. It might seem basic, but this piece of information will help you reach out to more people than you can imagine.
A pitch deck needs to have essential information to be effective. Startups come in all shapes and sizes, so investors need to understand what your venture is all about. To do this, you need to send the correct information.
Your pitch deck needs a company overview and a mission statement. Then, you want to focus on the problem you are trying to solve and your solution. Unfortunately, many founders overlook these details when creating their pitch deck. Another valuable piece of information you need is the Market Opportunity. Investors want to see that you understand that your idea can stand out from a competitive crowd.
Pay particular attention to the product or service that you aim to provide. This stage also involves the customers, technology, and competition around it. There's not a better moment than this one for investors to get to know it. In fact, think of it as the only moment, as you might not have a chance to redo the pitch.
One of the most important aspects of a pitch deck is the financials. You must explain your company's traction and the business model and marketing plan. We'll cover this information in more detail later in this article. For the moment, keep in mind that you need to present your startup's financial model as straightforward as possible.
All these components are vital for the final step: the ask. How much money are you asking for and why? If you still have the investors' attention, you must win them over at this point. It's likely that they already know whether they will invest in your company and that you're worth it. So, it's only a matter of how much you ask of them for how much of your company.
This information might feel overwhelming. So, it always helps to have the best guidance possible. Slidebean helps founders pitch to investors. It's the core of what we do and, in the process, we've learned a lot about what works and what doesn't. If you need help building your pitch deck, please contact us.
Having the pitch deck is one thing. Another is pitching your business idea to investors with success. In the following section, we'll cover some of the critical aspects of this process that you need to know.
An excellent pitch deck is vital for your startup. However, you might not always have the opportunity to pull out your computer and show it to potential investors. What if you run into one on the elevator? You must also pitch your idea to investors in a one-on-one conversation. So, how do you successfully do that? Here are the essentials.
You need to have an elevator pitch. This isn't only for those situations in which you actually run into an elevator. Having a 30-second speech that encompasses your entire company means that you understand it. This pitch needs to have everything someone would need to know about your startup, even if they've never heard of it before.
It's tradition to hear that an elevator pitch should be about 30 seconds, and that's a good reference. However, keep it short and straightforward. Explain what problem you're solving, why you stand out, and why you're better than the competition. Now, it's not only about running into a potential investor and pitching to them in an elevator. You also need to know which investor is the best for success.
Research investors, as they are your target audience. Many excellent sources can provide you with their specialty areas and preferences. We have an investor finder that does that, and it's something that you should have. After all, knowing who to pitch to will increase your chances of success.
Having said that about pitching to investors in an elevator, the same goes for a pitch deck in a controlled environment. If you're participating in a pitch camp or if investors give you some of their time, the same applies.
Be sure to use straightforward language in a time-constrained environment, such as an elevator or meeting. There's no need to complicate the interaction with complex words. Sure, you need to impress the investors, but elaborate language won't do the trick. Instead, use a language that conveys the essence of your startup. After all, the pitch has to reflect you and your company.
This point leads us to an aspect that we at Slidebean have seen some founders struggle with. Don't explain what the idea is. Instead, tell investors the story behind it. After all, a lot of the success behind a pitch comes from engaging with people. Investors want to know how the idea came to be. So don't be afraid to tell the story, and they also want to know who you are, so don't be afraid to include that.
Covering all these aspects is essential. Once you've mastered them, pitching will become easier. If you are in a one-on-one presentation, congrats! This is an excellent opportunity for you and your startup, which leads us to the next section. What do investors look for in a pitch?
We've covered many aspects of how to pitch to investors. So, it's also essential to view this topic from investors' perspectives. After all, they are the ones that will hand out the money. So, here are some aspects that investors look for in a pitch that some founders might not be familiar with.
Have you researched the investors as individuals? That's one of the most common things that founders overlook. Yet, from their personality to their expertise in investing, it's precious to research them. Listen to interviews they've done and read articles that mention them. You will find crucial information that can tell you what that particular investor is looking for. After all, these are people with their specific likes and dislikes.
Another critical aspect that investors want to know is your plans with that funding if they invest in you and your idea. Again, this sounds logical until you dive deep into it. If you're asking for someone to trust you with their money, you have to be ready to project the future of your startup.
Yes, a financial model might not be perfect in the end. Seasoned investors know this, but showing them how to do so, means that you've done your homework. For this, it's ideal to have a financial model, and we've covered the basics here.
The same goes for traction. If you have some, investors want to know. For them, traction is an excellent indicator of lower risk. It also shows that you're capable of working with a little bit of money, which is essential. However, many founders feel that, because traction isn't significant, they shouldn't present it, and in fact, they should.
We wanted to provide you with first-hand experiences about pitching to investors for this article. So, in the following section, some founders tell us about the challenges of pitching.
Bounce Inc. is a startup that provides luggage storage for travelers and tourists worldwide. While the company started in San Francisco, it now has over 6,000 locations, and it raised $2 million in Seed funding in December 2021. CEO and founder Cody Candee had this to say about the challenges of fundraising.
"The biggest challenge while pitching is gauging the investor's knowledge and interest in what you're talking about so that you can, on the fly, adjust your pitch to the right altitude of conversation: getting into the details vs. keeping it very high level."
We've seen some of the challenges and the vital things you need to have in a pitch deck. So, now, it's essential to look at the common mistakes that founders make when pitching to investors.
Unfortunately, it's not one mistake. There are several, and this article can help you avoid them. The first mistake is critical, and investors will look down on you if you commit it. Whenever you mention data, you have to back it up. There's nothing worse than providing numbers and being unable to explain their origin. So, investors want to hear the reason why you're presenting these numbers.
The second mistake is not getting to the point. Efficiency is crucial, and investors are usually short on time. So, being able to condense the story is vital. Unfortunately, founders often want to explain more than they need to. Other times, they haven't been able to summarize the essence of the idea.
This leads to another mistake that's very common and that we've covered in this article. Be sure to pitch to the right investor, as you could be wasting someone's time. If an investor doesn't work in your sector, the pitch might not work. At the same time, only pitching to your ideal investors is also a mistake. Many of them out there could relate to your area and show interest in investing. That's why finding and researching investors is crucial.
A common mistake that founders make is sending unsolicited information. If an investor is open to cold outreach, then it's okay. But most of them aren't, so your unsolicited email might go unread. That's why it's vital to connect through referrals, and that's where your board of directors comes in.
Be sure to exploit all possible contacts before cold emailing. We'll dive deeper into sending your pitch deck to investors in the following section. Plus, we include other valuable tips to increase your chances of success.
We've covered that contacting investors with unsolicited information can be a mistake. So, how do you send your pitch to investors? We will explain the valuable aspects that you need to consider when sending your pitch.
We're going to contradict ourselves here, and let's say that you're sending a cold email to an investor. Now, why are we highlighting something that we said not to do?
Because chances are that you will send cold emails and, a lot of what you apply to these, you use for other instances. For example, the same rules apply for cold emailing and for investors expecting your email.
If you're cold-emailing, be sure to be concise. There's no need for long paragraphs because investors don't have time to read them. Trust us on this.
There's no need for humor or catchy titles. In fact, anything that sounds gimmicky might end up in the spam folder.
If you want to dive further into contacting investors, we have a great article here. It helps you cover all the details you need to know.
You'll see that many of these rules that we apply with cold emailing are used for reaching investors through social media. The same goes for one-on-one meetings, networking, and other instances. There's no more excellent value than being concise, to the point and explaining why you're contacting them.
Now, all this information might feel overwhelming, and that's okay. After all, creating a pitch deck can sometimes feel challenging. So, that's why, here at Slidebean, we’ve been helping companies to pitch investors and raise more than $100 million in 2021.
As an alternative we've created pitch deck templates that work for every kind of startup. Not only that, but we're also working on THE pitch deck template, so if you need any help with this, let us know.
This is a functional model you can use to create your own formulas and project your potential business growth. Instructions on how to use it are on the front page.