Entrepreneurs are always having full of great ideas, but when it comes to fundraising, it has never been easy.
Whether you’re starting a business from scratch or seeking funds to push your start-up or small and mid-sized company forward, raising funds can be a frustrating challenge for you.
Investors won’t be sold on a good idea alone. They are investing just as much into your concept as they are in your ability to deliver it.
According to a study by CB Insights, one of the main reasons most start-ups fail is because they’ve run out of cash.
In this study, 101 start-up founders were asked to identify the major causes of failure. The results showed that 29% of them cited a lack of sufficient capital was the main reason for their failure, making it the second most popular reason behind the no market need.
Although start-up funding has increased significantly over the years, only a small percentage of start-ups have been able to secure the funding they needed.
Investors have specific demands from start-ups, such as a strong management team and a sustainable competitive advantage, which is expected to be met in order to provide them with the funding they need.
If you’ve developed an idea that you believe is worth investing in, and you feel confident enough to present it to a group of potential investors, then you better prepare before you pitch your idea to any investors, whether they are angel investors or VC funds.
Here are the fundamental ways you can be prepared to pitch your idea to investors and get funded.
Understand Your Potential Investor
If you want to know how to give a successful business pitch, you should do some research on who you’ll be presenting before you walk into the room and pitch your idea.
You should find out as much as you can about your investor. How well do they know your industry? What kind of projects or companies they’ve previously invested in? What interests them, and what doesn’t?
For example, if there is an aspect of your product or idea that aligns with the investor’s value, you should highlight it and turn it into one of the focal points of your presentation.
Narrate A Story
What’s the best way to grab the interest and attention of your audience? Most probably is tell them a story.
With a good and compelling story, you can make your pitch unforgettable. Tell the story of your idea, including how it came to be, where you want it to go, how you think it will change the world.
Get your audience emotionally invested in your story. Emotions play a huge part in decision-making, so try to appeal to the investors’ emotions to make them more likely to say yes to your pitch. Then, funding will follow.
Give A Powerful Elevator Speech
You need an elevator speech. An elevator pitch is basically a 30-second soundbite that explains everything the investors need to know.
However, it’s the hardest part about creating a compelling pitch deck – keeping it short and sweet. The idea is that you can deliver your pitch to someone and grab their attention when they first meet you in a short period of time.
Not only that, the objectives of your elevator speech are to be able to concisely describe your idea or product to the potential investor and get the person interested enough to ask you questions.
Your elevator speech needs to cover a few main things, such as:
What do you do?
What problem do you solve for your target customer?
Why you’re different?
Why should your target customer use your product or service over your competition?
After your speech, make sure to connect with the person who is listening. Ask them questions, respond to their follow up questions, but most important is stay in touch.
Growing your professional network should always be your goal as a founder. You never know who will provide your next funding source or opportunity.
Be Passionate and Confident
Being confident is vital for delivering a great presentation, and it comes from practising your pitch at least 20 times. Repetition is the key to managing your nerves and practice makes perfect.
Other than presentation, you should be able to answer any question from investors with confidence. More importantly, it shows you know exactly what you’re pitching, you understand the business, the market, the metrics.
If you show these attitudes when you’re pitching your idea to potential investors, they are more likely to consider your presentation.
Take Jack Ma as an example.
He was able to pitch his business idea – Alibaba.com to Masayoshi Son, SoftBank’s founder and CEO, a Japanese business magnate and investor.
At the Bloomberg Global Business Forum in 2017, Son said that he was drawn to Alibaba not because of the business model or technology, but because of the charisma and leadership of Jack Ma.
Son invested $20 million in Alibaba.com in 2000. He decided to invest only five minutes into his first meeting with Jack Ma.
Confidence and passion also show that the founder is going to be able to inspire and hire the right team.
At the end of the day, a founder is the critical key factor in a successful pitch to potential investors. They represent the face of the company and its success or its failures. The founder is the company, and the company is the founder. There is no difference between these two.
What makes a successful founder? What qualities inherent in a founder will impress investor like Masayoshi Son?