Best Practices for Entrepreneurs Applying for Programs
I can’t tell you the number of times I have sat in an evaluation panel and cringed at the fact that an entrepreneur has a great business, but his proposal is thrown out because of a lack of pitching skills.
Pitching a business idea is one of the most daunting parts of any entrepreneur’s journey. More often than not, it opens an opportunity for an entrepreneur’s vision to turn into reality. Although it is an overwhelming experience, there are several of best practices you as an entrepreneur can take to ensure a greater chance of success.
- Tell a story
Open your pitch with a captivating story that addresses the problem your product or service solves in the marketplace. Your pitch is key to connecting your startup to the audience. Start by getting to the statement of the problem. Show the investor how the problem affects people. Present the story in the present tense with pictorial illustration to sink in the investors’ minds better.
Now that you’ve painted a clear picture of the problem, explain your company’s solution to address the problem. Avoid using jargon when you tell your story, rather, use real customer names and real challenges. Keep the presentation simple and realistic. Be sure to share what inspired you to create the business in the first place. More often than not, what people will remember are the stories you tell, so it’s important to have a few compelling customer stories ready to share.
- Ensure clarity in your presentation
One of the key questions that go through investors’ minds when they listen to you is, “What is your business offering?” I’ve seen many investors tune out of the pitch because the explanation of the business offering is confusing. Offer a clear and concise understanding of what the product or service is, how much the product or service costs, and how you are selling it to the target market. Lastly, be clear to share a compelling value proposition, which will highlight how your product or service is distinctly different from and superior to existing alternatives and meets market needs.
This structure will help pique investors’ interest and keep them engaged during your presentation. It also creates a logical sequence to the pitch, itself. Even if your product or service is particularly technical or detailed, always strive to be exceedingly clear and be willing to simplify the business model.
Keep in mind that investors listen to so many pitches and continuously evaluate numerous enterprises. Any aspect of the presentation that is not clear should be avoided. Make the best use of investors’ limited time by insuring your presentation is direct, clear, and concise.
- Focus on actual progress made and current traction
Regardless of the stage of your enterprise, demonstrate progress. It will be received positively and can help build credibility among investors. The traction that you’d want to share includes sales, traffic, downloads, or any other growth metrics to indicate early adoption and potential to scale.
If your startup runs an app, investors want to know how many sign-ups you have, how many additional ones are you getting per month, what is your conversion rate, how many repeat users you have, and what the churn rate looks like? Further, presenting correct numbers on the cost of customer acquisition, the business’s break-even point, and how much revenue the startup generates will certainly build confidence with the investor that the entrepreneur understands the startup’s revenue model.
As the CEO of the company, you are expected to be the lead salesperson. Therefore, you’ll want to show the investors that you know how to sell them to your own company.
- 4. Answer question directly and succinctly
After you’ve made your pitch to investors, if they have an interest in what you’re doing, they will ask questions. It is very important to answer the questions directly with enthusiasm and zeal. Most investor pitches are timed with a limited amount of time for Q&A. So, the longer you spend answering one question, the fewer questions you’ll have the opportunity to field. You should aim to answer as many questions in as short a time as possible. Anticipate difficult questions. Research more about the industry your startup operates in and all aspects of your business.
Investors may pose complex questions, but don’t make the mistake of avoiding the question altogether or providing an answer to a separate question. When you don’t directly answer an investor’s question you lose out on a perfect opportunity to address a concern, your credibility wanes, and the investor is much less likely to ask for a follow on meeting.
- 5. Close with a clear call to action
The conclusion of your presentation is your best moment to engage the investor with a call to action. Remember that a call for action need not be only money: you could ask for mentorship support, advisory board members to offer strategic thinking, or support in identifying and recruiting amazing team members for your company.
When the call for action is monetary, you should outline proof that what you’re doing has an impact. Make the strategic ask while also stating exactly how you intend to use the funds by sharing a list of activities and how much funds will be allocated to each activity.
Pitching to investors is demanding on your time, and can be intimidating! I hope these five points help you demystify your next investor conversation and increase your chances of generating interest from investors. I wish you the best in your fundraising journey and I’d love to hear from you.
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