How to Pitch an Idea to Investors
Understanding how to get your business from idea to implementation.
Guest post by: Giovanna Minenna
Do you have an idea that is on the verge of greatness, but need money to get it going? Do you have a business that is already running, but needs capital to grow? Do you need a strategic partner along with growth capital?
Proper access to growth and operating capital is essential to the success of a business. If you want to develop your idea into a successful project, it’s important to understand how to get your business from idea to implementation, or from small to scale with the right investment.
The ability to get funding relies greatly on your pitch. A pitch can either get your business off the ground or sink it.
There are a lot of factors that go into pitching to an investor, so I am going to break them down for you and give you first-hand experience from the pitching that my husband and I have done!
My husband, Scott Russell and I aired on CBC’s Dragons Den this year, captured the attention of the Dragons and ended up getting a deal offer from Arlene Dickenson. My husband has also started his own energy technology company and a major factor of his future success will depend on being able to raise capital for his business.
Giovanna and her husband on CBC's Dragons Den
Source: The Valley Leader
So here are some essentials when thinking about pitching an idea or an existing business to investors:
1. Tell a story
It’s not enough to just have a good idea or strong business. First and foremost, investors are investing in you, not just your idea or business. They want to know that you’re level-headed, passionate, realistic, and driven. They want to connect with your story on a human level.
Practical advice: If you want to capture your listeners attention, and get them interested in what you are talking about, storytelling is very effective. The idea is to make your pitch unforgettable and give them all the information they need to know. Look at platforms like TED for ideas on how to craft your story.
2. Solve a problem
Too often entrepreneurs giving a pitch don’t make clear the problem that they are solving right away. The two most important things you need to identify for an investor are what it is you’re doing/selling, and what problem it solves for your customers.
Practical advice: Have a slide called “The Problem” and one called “The Solution” right after it. Make it infinitely clear what problem you are solving.
3. Know your customers and competition
This one should be a no-brainer. Regardless of whether you pitching or not, you need to have an intimate knowledge of who your customers are or are expected to be, and who your competition is. What we’ve done in the past with multiple businesses is build a customer avatar. What is the ideal age, income, interests, gender, location, etc for your customer? You would be surprised how different the ideas of different people in your business may be about who the ideal customer is. This is great data to have on hand for a pitch.
Giovanna's brow studio, Brows by G
For your competition, build a simple excel spreadsheet with your main competitors, what they offer, and what they charge. This isn’t something you necessarily need to have in your pitch deck, but will be essential for a discussion with an investor about how you are different and can better solve your customers problem.
Build a customer avatar and see how that matches up with your current customers (if already in business).
Build a competition matrix of competitors and prices.
4. Know your business and vision
Again, something that is pretty obvious, but sometimes overlooked. Really define what your vision is for the business in 1,3, and 5 years and have that information ready to discuss during the pitch. Know your sales, margins, profitability, and other key financial metrics like cost of goods sold. If you’re not a financially inclined person, all of these concepts are explained in simple terms online.
5. Practice with people
Finally, the most important thing you can do is practice your pitch in front of real people. Try to find people who are business minded and those who aren’t. They will ask different questions and give ideas and feedback that you would never otherwise expect. Do this over and over until you can answer any question thrown at you.
Things to think about when preparing the actual content
of your pitch:
Have you clearly defined the problem and your solution?
Do you have a brief background on you and why you’re best equipped to solve the problem?
Do you have validation/data on why customers will buy your product service, or if you’re already in business, on your performance and growth projections?
Have you clearly identified what investment dollars would be used for?
Have you included information on your strategy and vision?
All of this needs to be prepared with the following questions in mind about your audience:
Do you understand who you are pitching to? Can you get some background information on them (LinkedIn, websites etc.)
Do they know your industry?
Do they have any other investments in your industry?
What’s their personality like? Quiet and careful, or loud and volatile?
Are they a new or seasoned investor?
Are they investing their own money or money from a fund?
What companies did they start or come from before becoming an investor?
Be sure make your pitch unique to each investor, but these are the basics that’ll get you started and in the door for that meeting. So, if you have a great idea and want to see it flourish get out there and start pitching!