For entrepreneurs who want to start a business but lack the funds, solidifying capital is essential. Today’s post, written by Todd Smith, provides useful tips on how to dazzle potential investors during your pitch deck.
Aside from a lack of knowledge and experience, the largest problem most startups and small businesses face is a lack of capital. And many people who want to raise money, commit major mistakes if/when they finally get in front of investors. The investor presentation, or “pitch deck” is the key to opening the door with investors, creating interest, and ultimately, to raising money.
One common misconception is that investors are actually going to write a check on the spot, after witnessing your presentation. This never happens. Think of your presentation like a first date–-the very earliest stages of getting to know the investor, building a relationship, and hopefully, getting a second date in the form of a private meeting.
So when you go to raise money via an investor presentation, here are the five things on which you need to focus:
1. Sell Yourself
Investors will often state that the people and the numbers are what will drive them to make an investing decision. They have to believe in you and your ability to execute on your business model. Even the best idea in the world is worthless without a person or a team that is capable of making it happen. So focus on your track record, your past successes, your education, and your industry experience, but be careful not to brag. Have some humility as well. Most of all, show some passion and excitement about your business. Passionate entrepreneurs are fundable entrepreneurs.
2. Tell Your Story
No one enjoys having a stream of facts and figures thrown in their face. People love a story, so give them one! If you want to raise money, you must first build interest, and a good story can go a long way towards doing just that. How did you get the idea? Why is there a need for your product or service? Who can benefit? How? If your own story isn’t that earth shattering, create a hypothetical story. It must speak to your humanity and resonate with investors.
3. Be a Person (Not a Robot)
Investors are going to be watching and studying you during your presentation. Smiling and showing excitement and enthusiasm, perhaps even cracking a joke, puts people at ease and gives you a better chance of building that rapport. The focus should be on you and not on your pitch deck, or worse yet, on the investor’s cell phone or watch.
4. Prepare a Pitch Deck
There is an annoying misconception out there that business plans are no longer needed so long as you have a good pitch deck. While it’s true that investors may no longer want to pore through hundreds of business plans (mostly because the majority are poorly written), you still absolutely have to do your homework in terms on knowing the market, your competitors, your customers, and having a marketing, financial, management and operational plan. That said, do not rewrite your business plan onto your slide deck. Guy Kawasaki’s 10-20-30 rule is a good one. No more than 10 slides, no longer than 20 minutes, and no font smaller than 30-point. Essentially, the aim is to be succinct. Remember, you’re just trying to get that second date, not get married on the spot.
5. Field Questions
Leave a lot of time for questions and answers. This is your first step towards opening a dialogue. As investors listen to your pitch, most of them are formulating questions in their heads about your business model from their own perspective. They are all about risk, and are trying to assess how risky you and your business idea will be if they put up the capital. Often, it can help to do your pitch in front of multiple groups. This will help you better anticipate questions, and respond quickly and confidently. How you think on your feet is important!
Clearly how you pitch is just as important, if not more so, than what you pitch. If you want to raise money, you must build relationships. Your investor presentation is your chance to make a good first impression. If you lack experience or presentation skills, hiring a good coach or consultant can dramatically improve your odds. They’ve been down that road many times before they understand how investors think, and they know what to present, who to present it to, and how to present it. This is your dream, so don’t leave anything to chance!
In additional to being an investor, and serial entrepreneur, Todd is one of the top business plan consultants in the country. He has consulted with Growth Ventures ranging from high growth start-ups, “closely-held” middle market corporations to new business within Fortune 500 companies for nearly twenty years. Todd is a business plan expert with a specialty in helping high growth start-ups and business units develop investment grade strategic business plans. He is passionate about working with entrepreneurs to develop business plans that obtain investment capital.