Whether you’re a first-time founder or raising Series B and beyond, you can improve your fundraising strategy with our tried-and-true answers to how to pitch to investors. The goal of this guide is to help founders craft a story—their startup story—that gets a term sheet offer. The art of pitching to investors is a fundamental skill that any startup founder should master.
Many first-time founders only learn how to build fundraising decks and deliver pitches when they begin raising money. The secret to conveying a strong company narrative to venture capitalists and angel investors is to prepare your pitch deck before reaching out to them.
Additionally, it will help you define your fundraising plan. This chapter will assist you in condensing your message and demonstrating how to create a pitch for your fundraising stage, whether it is Series C or pre-seed.
Tips For Pitching To Investors
1. Know Your Purpose
Let’s examine why investment funding would be a wise next move for your company before getting into the finer points of how to pitch to investors. Why are you seeking investment from angel or venture capitalists, and why at this time?
You probably want your company to develop quickly. Whether it’s for client acquisition or product development, entrepreneurs often want access to finance to expand their teams. However, remember that venture capital is just one source of funding. For instance, businesses may raise money via institutional finance, loans, crowdsourcing, and bootstrapping.
To support the amount you’re seeking from investors, you must have a clear product roadmap and go-to-market plan before you begin creating your presentations. Additionally, you must demonstrate how investment will drive expansion and, eventually, corporate value.
2. Recognize The Fundraising Environment
Investors are being more picky about their investment portfolios as a result of the economic slump. These challenging circumstances will also create robust companies with solid business concepts, effective operations, and excellent scenario preparation. Startups may continue to get financing in the next few years by honing a business presentation that emphasizes the discipline that investors are seeking now.
Apart from the financials, investors are also setting up new funds to focus on certain groups, such as LGBTQ, Black, and female entrepreneurs. Voices from venture capital companies looking to diversify their portfolios and entrepreneurs from underrepresented groups are included in this handbook.
Startups are free to pick which investors to seek for investment, and they should. Your firm will be well-positioned for success even after you complete your round if you concentrate on those that are pertinent to your operations and in line with your goal.
3. Define What Are You Selling
One of the tips to approach investors is that these answers to these two crucial questions should take center stage in your product overview:
- Which unmet market demand is satisfied by your product?
- How does your product meet the needs of the market while standing out from the competition?
The first slide of many effective pitch decks highlights the unmet market need that the firm is trying to fill, and the second slide gives a summary of the company’s answer. Additional slides may be utilized to describe the product’s intellectual property and other entry obstacles, as well as how it differs from rival alternatives.
Although your firm does not need to have developed a cure for COVID-19 to get funding, you must be able to concisely and clearly explain why your proposed product would be purchased by consumers. You may want to reconsider your strategy if you’re having trouble coming up with a straightforward table that illustrates your competitive advantages.
4. Offer Evidence And Accurate Business Data
Once your presentation has a strong narrative idea, it’s important to back it up with facts. Your co-founders or the larger leadership team will need to provide feedback at this point. In particular, it may include getting your CFO’s revenue data (both current and forecast), your CMO’s go-to-market plan, and your CTO’s or CPO’s opinions on your product roadmap and strategy.
Make sure you have proof for every facet of your company, from product distinction to financials. Give a specific example of how your product differs from that of your rivals. Provide pertinent user behavior data and describe how your product development and vision are influenced by it. If you’re on schedule to meet your MRR or ARR milestones, provide your revenue indicators.
Even if investors anticipate optimistic business & financial forecasts, make sure your data stays grounded so you can support your predictions. Build ChartMogul or Google Analytics connectors straight into your primary slide presentation if you’re currently using a go-to-market (GTM) plan so you can use the most recent data, which outlines the process of how to pitch to investors, and you may learn more about data integrations.
5. Quantify The Market
Three important market-related questions must be included in your presentation deck:
- How large is the market that can be addressed?
- What is the market penetration strategy of your business?
- What is the company’s level of market traction, if any?
“Addressable” is the crucial term in the first query. Exaggerating the size of the addressable market is a typical error made by entrepreneurs. When it becomes evident that the actual addressable market for your product is far lower than the overall market size you have indicated, it is extremely simple to lose confidence.
What if the creator of a new brewery in your area made a presentation to you and said that there were hundreds of millions of potential clients in the market? The tens of thousands of beer drinkers within a 25-mile radius of the brewery are likely a more accurate assessment of the addressable market than the hundreds of millions of beer consumers globally.
Getting clients is one of the most difficult tasks for most organizations. Therefore, any astute potential investor would want to know how you intend to do that as well as the expenses you have allocated to reach the desired level of market penetration.
6. Using A Source Deck, Create Pitches For Every Situation
Fundraising is a full-time job. It’s vital to be prepared and have the correct documents in hand as you travel from meeting to meeting. Start by producing a single, polished source deck that can be adjusted to persuade any prospective investor.
Ideally, the source deck acts as a presenting tool and operates as a stand-alone file that communicates your business narrative when shared. If you don’t have an in-house designer on the team, you may get started with one of Pitch’s free, professionally created templates.
Companies with in-house designers may construct a slide template that guarantees everyone utilizing the deck remains on-brand. Having a template and primary source deck makes it simple to build consistent copies of your pitch deck.
However, founders are no longer confined to providing static PDF presentations. With Pitch, you may provide a pre-recorded version of your pitch utilizing video recordings and share a specific URL with each investor.
With a collaborative presentation platform like Pitch, you can construct a bespoke deck for each investor you pitch to and keep all your pitch decks in a separate folder. After your presentation, you may also share that exact deck with a link to enable an investor to study the slides and give feedback. This will also help you to keep track of how an investor is engaging with your deck.
7. Tighten Your Narrative
Every presentation starts and finishes with a compelling narrative. It’s time to stand back after you’ve assembled your slides and included your team details, growth plan, and important facts. As you complete your deck, make sure your narrative is engaging and simple to follow.
You may also share your deck with friends and family to get their perspective. The narrative ends by revealing which clients and financiers have already signed up for the pitch trip. Consider how you might make your tale simpler as you finish your pitch deck.
Place your supporting slides in the appendix section for reference, such as those that go into great detail about your revenue model or marketing approach. Reduce your content and your slides to a concise elevator pitch that anybody can understand.
8. Follow KISS Theory (Keep It Simple & Short)
It’s time to make your pitch after your slides are ready. Practice, and more practice, is the secret to success. Do your script as much attention as you do your slides. Before you make your first call to an investor, rehearse in front of your family, friends, and team.
Use the KISS approach to keep things simple so you can concentrate on your company concept. When describing your product, choose terms that are simple to pronounce. Additionally, to maintain a clear presentation flow and steer clear of technological difficulties, utilize either static slides or directly embed videos.
Nowadays, a lot of investors want entrepreneurs to perform their first presentation via video conference. To ensure a seamless viewing experience for your audience, get acquainted with video call shortcuts.
Keep in mind that you don’t have to respond to all of the questions at the first meeting. The goal of your first pitch to investors is to inspire trust in your team and your company’s future. Due diligence will be done by prudent investors. After your first presentation, concentrate on selling your company concept to investors so they will want to talk further.
When Making A Pitch To Investors, What Are Some Typical Errors Made?
While there are certain things to avoid, we also want to provide you with a list of constructive things to do to make your pitch outstanding. Steer clear of these typical fundraising pitch pitfalls if you want to know how to pitch to investors:
- Failing to comprehend your client or audience.
- Failing to do market research.
- Not being open about your sources or the facts you have.
- Not giving the meeting adequate time for questions.
- Not getting in touch with the pitch participants after the meeting.
- Failing to improve your deck after a failed pitch or paying attention to investor input.
Pitching might be a quick “no” or a lot of build-up followed by a flurry of action. Get ready for every step as if it were the last one—entering the room and giving birth.
FAQ
Q: How do I go about asking an investor for money?
A: A well-written elevator pitch outlining your background and expertise should be included in your email. A copy of your executive summary that includes information on the team, market, and technology should be included in the email. Investors desire a chance to go at some preliminary data about a business.
Q: What is a fundraising pitch?
A: A presentation that gives a succinct but thorough rundown of your company is called a pitch deck. It should include the core ideas of your company strategy as well as your goods and services. It should also outline your suggested financing requirements and emphasize high-level financial estimates.
Q: How can you make a contribution pitch?
A: Talk about more than simply your company or yourself. Describe the impact that volunteers and donations have! Donor-centric language should be used, and the listener should be included in the discussion. If people believe they will make a difference, they will be more inclined to take action!
