In a world that fosters innovation and technology, new business ideas are gaining more attention from investors than ever before.
Angel investors and venture capitalists invest in new businesses every day, even though they know nothing is a sure bet. 75% of venture-backed startups fail. But this doesn’t stop them from investing in people and projects they believe in.
When a new business idea succeeds, it really succeeds. And investors are in the risk game. They know business. They know the statistics won’t always be in their favor, but they’re willing to gamble on a good pitch.
And that’s what separates the winners from the losers: the pitch. Keep reading for pro tips on how to be successful when pitching a business idea.
1. Confidence, Courage & Charisma
While innovation, sales figures, and a solid business model will close the deal, the thing that will capture the initial interest of a panel of investors is the entrepreneur themselves.
The hook is the most important part. Studies have shown that most investors know within the first 30 seconds if they are interested in a business pitch. How can someone convey a whole business idea in 30 seconds?
The answer is, they can’t. But what they can convey is confidence, courage, and charisma. And these characteristics go a long way when it comes to catching and keeping the attention of elusive angel investors and venture capitalists.
Of course, you can’t just ride on your confidence the whole way through the pitch. The business concept and sales projections will have to be sound for them to actually pull the trigger on funding.
But if you don’t convince them right out of the gate that you yourself are worth their money, the pitch will fall flat. The general rule of thumb is that people invest in people first, and ideas second.
2. Do Your Research
This seems obvious, but it’s surprising how many people don’t know anything about the people they’re pitching to. Would you go to a job interview without doing research into the company? No. At least, you shouldn’t.
If you show up without doing your due diligence, it will show. The more you know about your audience, the easier it will be to tailor your pitch to pique their interest.
Look into people and projects they have invested in in the past. And then, take it a step further and look into what those people and projects did right, or wrong.Must Know: Killing A Million Birds with One Stone: Why Your Business Needs to Blog
If you know an investor invested in a project that failed – look into why it failed and how you can prevent it from happening with you.
What industries do they specialize in? How much time will they have to work alongside you to develop your idea? Are they a money man, or will they have an interest in hands-on development of your product?
Many entrepreneurs want more than an investor’s money. They want their industry knowledge and their experience too. The more you can appeal to their personal interests, the better of a position you’ll be in.
3. Pitching a Business Idea Means Telling a Story
As much as people invest in people, they invest in stories. A presentation with an interesting and compelling narrative is hard to forget. People love stories, and investors are no exception.
A pitch with a full story arc that takes the listener from the problem through to the solution is a pitch that will succeed.
If you can capture their personal interests and tug on their heartstrings, they are much more likely to take your pitch to the next step. It’s not much different than advertising.
The best campaigns are the ones that tell a compelling story. Gone are the days when investors want to see spreadsheets.
They want to see the numbers. But they want them presented in an exciting and interesting way. Outline the problem. Offer a solution. It’s as simple as that.
Keep it Simple, Stupid. This old-school acronym still holds up. Most business experts agree that if you can’t convey the essentials of your pitch in five minutes – it’s too convoluted.
While your pitch might take longer than five minutes due to demonstrations or answering investors’ questions, the main idea shouldn’t take longer than five minutes to explain.
From start to finish, your pitch should outline the project, the sales figures, the potential for return on investment, and future projections.
Confidence and a good story are what it takes to capture their attention. Sales figures and future projections are what will turn the light green.
This goes back to doing your research and being prepared for any questions they might ask you. Keeping it simple does not mean being vague.
The more concise and specific you are with your numbers, the less likely it is that you’ll be caught off guard by unexpected questions.
Is public speaking not your strong suit? There’s no harm in hiring a professional speaker to get your ideas across. Find a speaker here!
5. Know Your Competition
Even if your project innovates an entirely new idea, it’s important to know who your competition is – whether direct or indirect. Every company has competition.Must Know: How to Plan, Fund, and Allocate Your Business Marketing Budget
One thing investors hate hearing is that an entrepreneur has no competition. While this might seem like a strength, it comes off as being ill-informed and naive. It all comes back to taking the time to do your research.
If there really is no direct competition to your idea, great – but you’d better be able to back up that claim with real industry research.
6. Set Timelines
Most investors aren’t going to fund a project forever. They will want to hear solid timelines, projection, and a solid exit strategy.
What does success look like for you? Selling your company shares? Becoming an industry leader? Innovating new technology? An investor will want to know what success looks like beyond the dollar signs.
Ideally, an investor will be there to help you get started and will leave happy having made their money back, and then some. Will you be able to survive on your own once your investor moves on to other projects?
7. What Not To Do
In many cases, knowing what not to do is just as important. First of all, no one really cares about social media interactions. Likes and comments do not pay the bills.
Secondly, don’t leave it to the investor to sift through your business plan for answers. A good business plan is usually around 50 pages, and no investor is going to read a full business plan before agreeing to green light a pitch.
They will ask questions about anything that’s unclear, and you’d better have answers. Re-directing them to your supporting documents is only going to waste their time and yours.
The Bottom Line
When pitching a business idea, understand that you are the product. Investors are interested in the people behind the idea.
If you can convince an investor that you and your team are essential to the success of a project they want to fund, you’ve already won.