How to pitch to Investors

I’ve received a ton of pitches and investment opportunities since I became an active Business An-gel. A lot of them have been really good but unfortunately many have had a lot of shortcomings. Here is my advice on how to pitch to investors.

magnus_pitching

Be serious about your pitch

I’ve experienced too many overly self confident “If-I-build-it-they-will-come” entrepreneurs with ar-rogant attitudes. For some reason it is often young entrepreneurs. Remember that you are in a situation with your hat in your hand, asking a stranger for money to back your idea. It might be that you believe that you have the world’s greatest product but the investor is probably not sharing that mindset.

Keep it simple

Keep your slides and pitch to an absolute minimum. Don’t overcomplicate things and put too much text in. If you can’t explain your business idea in a few sentences so an investor understands it, maybe you should consider that your customers might not either.

Have an executive summary

So even though you try to keep things as simple as possible, many investors get bombarded with pitches. Often a pitch is only skimmed. My advice is to do an executive one-page summary which catches the investor’s eye and intrigues them to read on.

What makes it unique?

So, let’s say you want to start a webshop, a restaurant or are seeking funding for a movie. That’s great. But how does it differentiate itself from the millions of competitors in the market? I’m not saying you have to reinvent the wheel, it could also be that your go-to market strategy is unique and not the product. If your product is truly unique, you are faced with another problem: will the customer be able to understand the concept and see the value of the proposition in it?

Think risk vs. reward

Of course I can’t speak for all, but the majority of investors I know will look at a pitch and think: “What is the risk of me losing my money investing in this and what is the chance of me getting it back with a return?” When you do your pitch, appeal to this way of thinking and present your case so it addresses this concern. Use facts, math, market tests etc. – never use the “Trust me!” approach.

People over ideas

Professional investors realise that it’s not about the product, it’s about the people. Even a crappy product can become ultra successful with the right team behind it. An investor will buy into the people as much as the product. So why should an investor buy into you and your team?

Monetisation and liquidity

Cash is king. Not only should you have a clear plan for how you will put the money you are trying to raise to good use, but equally important, have a specific plan for how the company is going to make money and when. Too many good companies have lost their lives because of lack of liquidity, so make sure you have a plan for this and present it in your pitch. Investors want to see fiscal responsibility.

Marketing

What is a customer worth and how do you intend to get these customers? And don’t just say “From Facebook” or something intangible like that. Think of channels and methods like “We are going to do this type of marketing where we pay XX amount of money for customers. By our calculations this will be made back over YY days, so an ROI on a customer will be ZZ days,” or “Tests show that we can pay upwards of X USD per click when we do online marketing, so therefore we are going to buy clicks from these and these sources that can deliver volume.” If there is something an investor likes to see, it’s a machine where you put money in one place and see more coming out at the end.

Investors love roadmaps

A roadmap shows that you have foresight and have thought ahead. It also shows that you have a clear vision of where the company is going. There are different roadmaps: product-development roadmaps, fiscal roadmaps etc., but they can also be combined in one with the most important objectives (I personally prefer that).

What do you need and what can you offer?

Whether you are seeking cash, brains or connections from your investor – or perhaps all three things – make sure you communicate clearly what you are on the lookout for, and of course what you are willing to offer in return. Be ready to argue for your valuation because that’s one of the first things an investor will question you about!

Search and steal from other pitches

Artists get their inspiration from others – same goes for entrepreneurs. Each company is different but you can get a lot of inspiration by spending a very little amount of time going through other people’s pitches. It’s just a search away.

Show you are committed

If you have any hopes of an investor putting money into your idea, you need to show that you are committed. That might be living with no or minimum wage, relocating, taking on debt or something else. The point is you need to show you are committed to the cause. If you don’t want to take any risks, neither will the investor.

Looking for an investor? 

If you got an interesting case please feel free to submit your case to me. I yearly do 4-6 equity investment as well as offer loans for startups (danish only).

More advice

Finally: If you want more of this topic, I can recommend my eBook: “500 questions to ask before starting, selling or investing in a Business”. You can read more about it on this website or get it here:

 

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