Raising startup capital is one of the most challenging aspects of starting a business. You mostly have little to no cash to run the startup, your family and friends may offer little to no financial support, banks would be highly skeptical about funding your new venture, and investors may not trust you well-enough to put in their hard earned money. These challenges go on to build the first frustrating stages of an entrepreneurs journey and leaves many business ideas lying under the covers, never to get a chance to breathe in the real world.
But while raising startup capital can be difficult, strategically positioning your business idea or already existent venture in the right way can get more investors to pay extra attention to your business, and so, increase your chances of getting funded. If you’re meeting up with a series of investors and want to make the most of your business pitch, here are 8 valuable steps to pitch your business idea to prospective investors:
Step 1: Research And Prepare Yourself (Not Just Your Idea):
Before approaching any investor, the first thing to do is to research all your prospects. Doing this will help you know what type of businesses they prefer to invest in, what they do during their leisure, what personality type they belong to, and a general overview of how they live their lives.
With this information, you can then repackage yourself, your idea, and your approach when you do meet-up with them. By mirroring their personalities, telling them how their achievements have helped you build your vision to solve a problem with your venture, and showing them you’re just a younger and passionate version of themselves, they’ll feel more inclined to listen to your business pitch.
Step 2: Begin Your Pitch With A Good Story:
Everyone loves a great story. It connects with our inner beings and draws us closer to the source, especially when this story is passionately told and carries a great opportunity at the end. At the beginning of your business pitch, tell the investor a great story; largely one that depicts an initial disappointment that then led you to discover that many more people constantly face the same problem as you did, and would dearly jump at the solution you’re providing, because it solves it for them.
By first telling a story, you’ll build a close connection with the prospective investor and increase your chances of getting them to take a close interest in your business idea.
Step 3: Explain What Your Product Is:
Now is the time to sell them your idea. You should tell them exactly what your product is and how it works. It should be explicit, straight to the point, and must show how it solves the problem it’s meant for, faster and better than any other competition out there.
Step 4: Explain Who Your Target Audience Are:
As earlier stated in your story, now re-emphasise your target audience, talk about the potential size of your market, where they are, and what they like to do online or offline. You should mention their genders, the potential number per gender, which of the sects have the highest chances of using your products or services, which would tend to use it least, their potential occupation, and a whole lot more.
The goal here is to show your prospective investors an almost accurate and exciting number of customers you have discovered based on your own research.
Step 5: Explain How You Intend To acquire Those Customers:
After highlighting the potential size of your market with explicit data points tied to a well covered market research, you now need to show your investors exactly how you’re either acquiring or intend to acquire these customers.
You need to put in your best at this point and must be very convincing in your assertions. You have to show him or them you’ve got it all figured out and are either already or are about to take the crucial steps that will help you get the minimum critical mass of customers your business needs to succeed.
Step 6: Explain How You Intend To Generate Revenues:
Acquiring customers comes with generating revenues and also building up business expenses in the process. You need to show your investors how you’ll generate front-end revenues from these customers you’ll acquire and how you intend to profit from them over and over again, long after they’ve made their first purchase.
Investors prefer businesses where the long-term value of a customer can result into multiple and constant revenue regeneration. The goal here is to show how you’ll acquire a whole lot of customers for a low cost, and then profit from them over and over again at an even higher price.
When your revenue model is well explained and sounds really exciting, you’re almost close to securing startup funding for your business.
Step 7: Talk About Your Progress So Far:
After covering every previous step, you should go on to talk about your business progress rate so far, if any. If you’ve already started building your business, the better off your pitch will be. If you haven’t, you may need to put in more work into your business pitch.
At this stage, you should have gotten the potential investor interested in what you do, even if they don’t intend to invest. If you have a running business covering everything already, do well to highlight it and the entire progress made so far. This goes on to show that you’re a go-getter and someone who would be swift to react to new market trends in your industry.
Step 8: Explain Your Exit Strategy:
Lastly, explain your long-term vision for the business and talk about how you intend to ensure every investor reaps profitably from the venture. You should mention whether you intend to either get more investors on the long-run, sell the company, or even release an Initial Public Offering (IPO). Investors want to know how valuable their investments will be if they choose to make a commitment and if you’re the best business bet for them to go with.
By now, if you’ve already played your cards right, one or two investors may be interested in knowing even more about what you do, and how you take it from here will ultimately determine if your business will get funded or not.
To Sum It Up
Raising sufficient startup funding for a business is never easy and is probably going to be one of the hardest things you’ll ever set out to do as an entrepreneur. But ensuring you have a great product, have ran a pilot test for your business, have gained a little traction, and have fully understood exactly how to pitch right to investors, will help you more easily land an investment for your business.
What are your thoughts on this article about how to pitch your business ideas to investors? Let me know by leaving a comment below.