First-Time Founders: How to Successfully Pitch Your Business Idea
Reading Time: 5 minutes Entering the world of business as a first-time entrepreneur is a great challenge. It takes determination and desire to leave the comfort of a steady job and a decent salary in order to sail into the unknown and start your own business.
But it takes more than determination to actually succeed in this endeavor. You may have a great idea and a team full of experts, but it still may not do the trick. Running out of cash is the second most common reason why startups fail, so proper funding is absolutely crucial in the initial stages.
Very often, you’ll go to venture capital companies or angel investors to ask for seed money. But there are so many startups doing the same that you won’t get much time with the investors, and you’ll have to impress them immediately. For this, you’ll need a good pitch.
Here are a few tips on how to properly pitch your business idea to potential investors.
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Start Strongly
Your time to present your business idea will be very limited, so you don’t want to beat around the bush. Start with a concrete, specific explanation of what your product does.
Don’t play any cheap tricks at the beginning, because they’ve seen them all. Cut to the chase immediately and be as transparent as possible.
It’s not a thriller movie – it’s a business pitch, so don’t leave them in the dark, and don’t intentionally leave out the basic info so that they can get shocked afterward. Make sure your ideas are absolutely clear from the very beginning and that your audience can follow your train of thought every step of the way.
Present a Problem
Next up, ensure that they understand the problem you’re trying to solve. Emphasize why it’s important and why people would spend money to get rid of it.
Again, try being crystal clear and have in mind that some of the people listening to your pitch don’t have the same background as you do. Obviously, you shouldn’t overexplain anything, but sometimes even that is better than leaving your audience utterly perplexed.
Present a Solution
After that, present how your product works and how it resolves the issue in question. More importantly, try pointing out why you’re different and why your solution is unique or better than all the others.
That being said, don’t hesitate to talk about your competition. A lot of competition means there’s a sizable market, and that’s definitely a plus.
By demonstrating why your product is better than the rivals’, you’ll be able to convince the investors that there’s room for improvement in the market – an improvement that your product can bring.
Show Concrete Proof
Your word or merely common sense is not enough proof that the product will work or that consumers will need it. A strong pitch should include concrete evidence that will back your claims.
This means you’ll need to conduct thorough market research and present some credible data about early customer feedback and traction. Financially supporting a young startup is always a risk for investors, but showing them that you already have good momentum can be a huge factor.
Provide a Solid Financial Plan
Let’s suppose you’ve built a compelling story around your product and the investors genuinely like it.
Now, have in mind that they don’t really spend money on stuff they simply find interesting, but rather on stuff that will bring them profit. So they’ll surely want to know the financial details right away.
You’ll have to be very specific about things like:
- how much money you need from them
- what are the other sources of funding
- how much time the startup will need to become profitable
- exactly how profitable your startup can potentially be
- how you’ll handle growth in this context
- how the financial specifics will change once the firm starts to develop
It’s vital to be realistic and open here. Don’t promise them you can make them a fortune in a year, because they know you can’t do it and you’ll simply lose all credibility. Go with an honest, viable long-term proposal, and this might earn you an honest, viable, long-term commitment with the investor.
Introduce Your Team
Coming up with a great business idea is one thing, but executing it is something completely different. So, you’ll need to convince the investors your team can carry out everything you’ve promised.
Talk about the experience and skills of the key members of your team. Point out how exactly their competence ensures the success of the project.
Don’t avoid highlighting the humane side of your team, but don’t overemphasize it. You can tell a story or two that will illustrate your team’s enthusiasm, creativity, and uniqueness. But don’t try too hard to make your team seem cool because it can look like you’re doing that to compensate for the lack of actual expertise they can offer.
Learn about the Investors
Doing proper research on the company and particular people you’re pitching to is hugely important for several reasons.
Firstly, you don’t know their background. Once you get familiar with the competencies of these people, it will be easier to determine which parts of your pitch need additional explaining and which ones you can just run through.
Secondly, a list of businesses they’ve invested in can also be of help. You can check which branches they tend to invest in and which brands have managed to get funding from them. The latter can tell you a lot about what sort of brand image attracts them. You can use this knowledge to readjust your overall approach as well as the tone and the language you’ll use in the pitch.
Also, if you feel you have something in common with a company they’ve already partnered with, try putting a bit more focus on that very characteristic of your brand or your product.
Rehearse
At last, once you have the pitch fully planned out, make sure you memorize it and rehearse it until you’re confident enough about presenting it in front of an audience. You don’t want to waste the little time you have and test the investors’ patience while trying to remember stuff.
Rehearsals will also help you figure out whether the pitch really fits the time frame you’ll be given. This is critical, as the first draft basically always turns out to be too long. Measure time when you rehearse, check the clock at the end and keep trimming and making little modifications to your presentation until it’s just right.
Finally, present it to others. It would be great if you could do it in front of your colleagues who understand the subject matter and in front of a layperson as well. This way, you’ll know if it’s too technical or too basic for some of them. You’ll need to try to find a balance between the two. Be open to feedback and use it so you can get the most out of your pitch and secure that much-needed funding.
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