Pitching your business to an venture capital (VC) investor can be intimidating. You’re competing against a crowd of smart creators with outstanding ideas. And the pressure to win a VC makes it easy to fumble your pitch.
Also start-ups with superb growth potential typically make basic mistakes, such as being unfamiliar with their finances or not finding out about investors before the pitch.
Investors say “no” more than they will ever say “yes.” So be prepared, do your research and learn to build trust. You may hear a lot of “no” before someone finally picks up your business.
Here are seven ideas help pitch your business to a VC investor.
1. Have the right type of business
VC investors are looking for a particular type of business: one with insane potential for growth and scaling. If that’s not you, you may need to reconsider your business model or financing strategy.
A lot of investors will not work with you, not because your idea is bad or your business isn’t valuable, it is potentially because your business will take a long time with slow, steady growth instead of that fast return that VCs are looking for.
Anticipated growth rates vary by industry, but it’s not unusual for VC investors in some areas to target 10% month-to-month sales growth. Are you 10 times better than the competition?
2. Locate the right investors
It is essential to look into the right investors for your business and customize your pitch to them. Different VC investors focus on different industries, deal sizes and start-up stages.
Past the specificities of your business, finding personal connections, such as a common friend/colleague, can provide you a side over the competition. You also need to discover investors you can click with on an individual level.
You can learn about prospective financiers and the VC community by networking with other founders and participating in start-up events. Don’t hesitate on increasing your search outside of your state or even country.
3. Concentrate on the market
One of the most constant VC pitching no-no’s is to greatly concentrate on all the terrific features of a product, while playing down why it will benefit customers. The advantages tell an investor exactly how huge your market could be– the most important point to a investor.
Begin the pitch with a brief explanation of the product, then swiftly segue right into what it provides for consumers, just how much money it saves them and the pain points it fixes.
4. Know your numbers
Your job is to persuade an investor that your business is poised for spectacular growth, and with that, you need to have the numbers to back that up. Remarkably, several founders do not have that information at all. Solid numbers are vital to your pitch.
You need to be familiar with your financial projections and statements for the next three, six and twelve months. Projections must strike an equilibrium in between being possible and show your high-growth potential.
5. Be straightforward concerning the strengths and weaknesses of your team
Investors will want to know a great deal about your team: not just resumes but what each person will do to add to development. Be honest regarding any kind of skill gaps and exactly how you’ll resolve those.
6. Discover good advisors
It’s vital to work with legal and accounting professionals who understand startups in your sector and can give you guidance at an early stage. Engage these advisors prior to looking for investors. They can open doors to VCs and encourage you on complicated topics like valuation and structuring contracts.
7. Pick up from “no”.
Do not get discouraged by an investor’s “no.” Their comments can be very valuable for future pitches or reviewing your company. They might also be willing to introduce you to customers or other investors.
You might not be a great fit for the investor, or they may have currently bought something that is in direct competition to you. Get curious and humble, ask them why so you can gain valuable advice. Investors have strong networks so recognize this when you are pitching, if they do not want to get involved with your business, they may know someone who will.