Pitching

“If you can’t explain it simply, you don’t understand it well enough.”
                                                                                                                        Albert Einstein

10 Slides: What to pitch to Investors

1. The problem: All products or services either are solving a burning need or taking away a pain. What is the burning need or pain that your business is addressing? What problem are you solving for your customers?

2. The solution: How are you solving this problem or addressing this burning need/pain? What is your value proposition which will make your customer’s life better?  Where does your product or solution sit in the value chain and what trends or technology have made your product or solution now possible?

3. The business model: How are you going to create, deliver and capture value in your business? What are you buying for x and selling for y? Have you tested the assumptions of your business model? Are you customers/the market willing to pay you for your product/service and will this cover the costs associated?

4. The “secret sauce”: What is the underlying magic/technology/intellectual property of your business which allows you to provide your solution to your customer? Is this protectable and will it ensure that you can maintain a sustainable competitive advantage?

5. The market: What is your target market, how big is this initial market and profile your typical customer. What are other potential markets and who large are they? How long does it take to acquire customers and what does this cost? What is the life time value of your customers? Do you have any key customers already?

6. The competitors: List your competitors, both locally and internationally, comparing and contrasting your solution to theirs. What is your sustainable competitive advantage and are you/remain differentiated? It is important that you consider your product/service from a customers perspective i.e. features and benefits rather than just on the underlying technology.

7. The team: Who are the key members of the executive team, their roles and what is their relevant domain/sector experience? Are there any other advisers, board members or shareholders who are involved in the business?

8. Financials and projections: Has your business generated any revenue to date? How much has already been invested in the business (hard costs)? What are the future revenue streams and how much revenue will each generate? Be very careful about making broad, untested assumptions as any business can be a billion dollar company with a few basic Excel skills.

9. Status of the business and development plan: What stage of development is your business at? How much more R&D is needed on your product/service? What is the development plan for the business and what are the key objectives for the next phase of growth? This development plan should also relate to the fund raising plan which is detailed below.

10: Funds required: How much funding does the business need to raise, how long will this last for and what will be achieved with this investment? This should relate to the development plan above.

10 Tips: How to pitch to Investors

Unless you’re very lucky, you only get one opportunity to pitch your business concept to an angel or venture capital investor. So you’d better make it good. This article focuses on how to pitch to investors, rather than the content of an investment pitch, which is a separate topic.

1. Perfect your micro-pitch. Every entrepreneur should have a one sentence pitch that conveys the value proposition of the business simply and succinctly. This micro-pitch should focus on who you are, what problem you are solving with your solution and how you are going to make money. You never know when you may meet a potential investor and a good micro-pitch is key to securing a longer meeting or pitching session.

2. Know your audience. It is important to know whom you are pitching to, how your business meets their investment mandate, what previous investments they have made and what they may be looking for. This is especially important in South Africa as there are limited funding options and opportunities to pitch

3. Edit the slide deck. There is nothing worse for investors than sitting through a pitch that begins with the entrepreneur reading word for word from slide 1 of 50. You need to grab attention from the first minute. Only include essential information in your slide deck and if possible keep it to 10 slides. You need to be able to get through your slides, as well as answer questions, in under 30 minutes. If you cannot do this, you are not yet ready to meet with an investor. A great guide is Guy Kawasaki’s 10-20-30 rule for PowerPoint: 10 slides, no more than 20 minutes, using size 30 font.

4. Use graphics, charts and diagrams. Images and graphics are an excellent way of conveying a large amount of data or a concept, clearly and powerfully. They liven up a slide deck and allow you to tell the story or explain the model rather than repeat the information on a slide.

5. Do your homework and be credible. Be careful of quoting statistics, making sweeping statements and ignoring your competitors. While your investor may not be an industry expert, don’t assume that they are ignorant of the market. They will expect you to have a deep understanding of the space your business is entering and to be aware of other players in the market. Never embellish your own background or the business’s successes. Investors can easily verify these facts and will lose interest if they feel that you are not being entirely truthful.

6. Keep it simple. Try to avoid using jargon, buzzwords and technical terms that may alienate or overwhelm investors, especially if they are unfamiliar with the technology you are employing.

7. Practice, practice, practice. Pitching is an art and should be a combination of story-telling, a conversation and a sales pitch. Getting the balance right takes time; you should take every opportunity to practice your pitch and get feedback, before meeting with investors. It is also important that you pitch to someone outside your industry to gauge whether a non-industry expert will understand your pitch.

8. Hope that you are interrupted and anticipate questions. Be prepared to be interrupted: If your audience asks questions, it shows that they are engaged and interested in your pitch. Prepare back-up slides on every aspect of your business that can help to answer questions an investor may have. For example, in your pitch deck you will have a slide providing a company overview; include back-up slides on each of the founders, your advisors or previous investors.

9. Stick to time. Ensure that you practice your pitch beforehand and that you leave time for questions or a discussion at the end. For example, if you have a half-hour meeting with an investor, prepare a 15-20 minute pitch, leaving 10 minutes for questions. Investors often run pitching sessions back to back, so if you don’t complete your pitch in the allocated time, you might be cut short. If an investor is interested they will spend longer with you or may arrange a follow up session to learn more about your business.

10. Have a realistic development plan. It is important that you are able to explain why you are raising funding, what the development plan is for the business and roughly how much funding you will need to implement this plan. The plan must include development milestones for each stage of the business, which are actionable and realistic. Remember that early stage funding is often milestone based, and will be released once you meet the objectives of each stage of the development or growth plan.

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