In the second blog of this two-part series, UCL EDUCATE’S Business Lead, Koby Yogaretnam, gives a few pointers on how to make your business funding pitch stand out and be more successful.
In the first part of this blog, we looked at some of the practicalities of preparing and submitting a successful funding pitch. Here, we examine in more detail some of the points you need to include.
What challenge is your business seeking to solve?
An investor will certainly ask you why you’re developing your particular product or service, so make sure you have considered carefully how to respond. An investor will need to know your business solves a problem, and the solution matters.
Highlight the market opportunity
Nearly all investors are looking for businesses that can scale, so make sure you highlight why your business can grow and become big. Discuss the actual addressable market and what the percentage of the market you plan to capture – but be realistic and not over-ambitious.
Acknowledge the competition
It’s important to include an analysis of your competitors, to show that you understand the market. Saying that you don’t have competition is unrealistic and naive. Of course, you have competition, whether direct, indirect, or from someone providing an alternative solution.
Don’t ask an investor to sign a non-disclosure agreement before you share information
Many investors have a policy not to sign NDAs. It’s in your best interest to protect your idea but, if you have something highly confidential, don’t share it.
Be realistic about the value of your company
It can be tempting to over-estimate the worth and value of your company. Unless you are realistic and honest, such conversations can end very quickly, especially when an investor starts to pick at numbers. My advice is not to bring up valuation in a first meeting, but if it does get discussed, be reasonable.
Don’t over-hype your product or service
“Google will want to buy us” – don’t come across as arrogant and over-confident. Avoid making statements you can’t back up.
Highlight your team’s experience and credentials
This is very important and needs to be covered early on. Investors consider the team building a start-up more important than the idea or the product.
Understand the potential risks to the business
Inevitably, there are risks in any business plan and an investor will want to test what you see the risks are to the business. Cover the mitigating precautions you might take – this will add value to the investor trusting your thought process.
Mention any early ‘buzz’ or press attention you have received
Share in the pitch any early attention your business has received, especially from well-known sites and publications. Feature their headlines and quotes.
Share the traction or customers you have already gotten
Do you have any brand name customers? How many downloads/users you have to date? Share this with your investor and cover how the early traction can be further accelerated.
Be ready to explain how you will invest investment capital and how long it will last
Be prepared to explain to an investor how you plan to use their capital and your proposed burn rate. It is important to understand when you may need a further round of funding.
Practice, practice, practice
Practice your pitch to different people (friends, advisers, mentors) several times. Too often entrepreneurs struggle to get their words out and aren’t sure what the next slide is in their presentation. This makes you look unprepared and could create a bad impression.
FINALLY, always include a clear call to action
Be clear in your pitch, what it is you are asking from your investor. This could be anything, ranging from ‘We are looking for an investment of £250k’ to ‘shall we have lunch next week?’
As you practice and deliver more pitches to different audiences, you will learn what works, what potential investors are interested in and what you need to know more about. Make sure you adapt your slide deck, executive summary, and presentation to reflect what you’ve learned.
Investment pitches can be hard to master, but with some thought and flexibility – and practice – you will learn to get it just right.