What Makes a Great Investor Pitch

What makes a great investor pitch?

A great business pitch is among the first of many outcomes an entrepreneur must deliver to get their company off the ground…

While it’s not necessarily an indicator of future success, it’s a critical moment for any business… a great pitch can bring valuable partnerships to the table – partnerships that come with more than just money… these come with connections, experience, knowledge and skills

Typically when you pitch you will have a limited amount of time. At HBA you have 10 minutes to tell your stories and 5 minutes to answer questions and overall make an impact and sell your proposition and win an expression of interest to talk about investment.

These are eight tips for a great investor pitch…

Preparation

This should not be a surprise for as the cliché sounds ‘preparation is everything’

Selling your idea is as much how well you present it as it is the idea itself… and how well you present is all about preparation.

I’ve seen hundreds of pitches… among the best was a pitch delivered by Dr Anne Brunveils, CEO & Founder of Px Healthcare, a life sciences company that has developed the only validated, personalised medical support platform for cancer patients, called OWise, which has been demonstrated to improve the patient – physician relationship and is designed to improve users quality of life and even survival. When I saw this presentation I was very impressed. She was clear, full of energy and answered every question with great confidence ‘authentic, solid, and precise in answering answers’. It was clear she had prepared.

Before you make your pitch, you’d better do your homework. Know your business (including financials) intimately, know your investor. Study their bios, social media accounts, and investment backgrounds of every single investor who will be in the room (find them on LinkedIn) and anticipate and have answers to the questions the investor will ask.

Know the key points of your presentation cold and nail the 10 minutes of your presentation where it’s just you doing the talking.

Practice your pitch (in front of real people)

We’re all heard of ‘practice makes perfect’. Of course it is true, but I want to reiterate how well and often you practice your investor pitch can make a potentially life-changing impact on you and your business.

Let’s take the case of Michael Dubin Co-founder and CEO of Dollar Shave Club, a Venice, California-based company that delivers razors and other personal grooming products on a monthly basis to customers by mail.

In addition to having a simple product, Michael’s differentiator was practicing his pitch in front of other people before presenting to investors from whom he raised over $100m and making his video Dollar Shave Club which we’ve all seen.

The more familiar and comfortable you are with your pitch, the more effective your presentation will be.

There are no shortcuts here you have to practice (a lot) to reach the level of familiarity and comfort that’ll result in a flawless presentation and that flawless presentation could make you a lot of money.

At the end of every practice pitch, ask yourself what you would change about it. In fact, in certain settings, you might ask the people you pitched to what they would change about it use it as a learning exercise by reflecting on what went well and what you can do (better and) differently next time.

Tell a compelling story

A pitch needs to tell a story and be much more compelling than a list of facts. Remember facts tell but stories sell.

One of the best showcases of how a compelling story can win over investors (and can even, in some cases, make up for lack of business acumen) comes from Pobble’s co-founder Henry Smith. Henry‘s pitch began with the story of how he developed a way to teach primary school kids to write by posting their work on an on line platform (a little like Pinterest) and attracting a global audience which motivated the kids.

Telling a story is making an emotional connection with the investors and connecting with them on a human level can make a big difference to the outcome of your pitch.

Show yourself as being business savvy

Successful entrepreneurs who’ve given the best pitches not only tell a compelling story, but also promote themselves as smart, savvy businesspeople. After all, an investment results in a business partnership – and investors want to work with smart people who know what they’re doing and can make them money.

Investors know that the better the entrepreneur’s business savviness the more likely they are to succeed and that means knowing your business and how to make sales. Remember sales answers all questions. Grow your sales and deliver on your business plan sales projections is what makes the entrepreneur business savvy.

Make your presentation visual and interactive

A successful investment pitch is much more than presenting PowerPoint slides.

A common thread for successful investment pitches are that these entrepreneurs make their presentations heavily visual and interactive such as showing a short video, demoing products that investors can actually touch, hold in their hands, and experience for themselves and share customer experiences.

Visual presentations and physical interaction have positive psychological impacts on an audience.

Research shows the more we touch or the longer we hold something, the more we feel ownership over it – and the more we want it… and the more we feel we already own something, the higher value we place on it… and ultimately buy it

In general, the vast majority (if not all) of the best pitches are highly visual and involve interactive elements like Erbology, MACACHA and Prof Scrubbington’s whose founders brought samples and shared customer stories during their 10 minute pitch.

Talk about sales and demonstrate customer traction

Among the most common questions investors ask of entrepreneurs at the pitch event are about sales – What is your sales run rate? What do you think you’ll do this calendar year? What are your projections for the next 3 years? The investor is seeking validation of your products.

For investors, early sales success is one of the most promising signs of the product’s validation. Sales shows that customers are already valuing the product.

A pitch I heard that impressed me was that of Home Touch which recently closed a fund raising. Dr Jamie Wilson, who founded the company, talked exhaustively about sales numbers and projections to prove the value of his online domiciliary care services.

Along with a compelling story and presentation, talking confidently about your sales numbers and projections is very persuasive… without numbers to back them up, whether a person likes a product or not is fairly anecdotal… investors like to see ideas that are backed by real sales numbers.

If the entrepreneur hasn’t made sales yet, then have an idea of demand from campaigns and customer trials using crowdfunding sites like Kickstarter, Indiegogo and even Instagram, an increasingly used sales channel.

Remember to be realistic with your sales predictions… If they’re not believable, then you won’t be, either.

Be clear what investment you want and at what valuation

Know what you are raising and what equity share you will trade. Importantly, be ready to negotiate. A common reason why entrepreneurs fail to land an investment is because they don’t negotiate well, either they haven’t done their homework on the numbers, or they become anxious and indecisive, or both.

Before you confront your investors, have a plan for negotiating. This is the part of your pitch where the stakes are very high. You’ll need to do a lot of preparation ahead of time.

Be prepared for not getting what you want or even no deal. This is where you have a clear alternative strategy. This is your ‘Best Alternative to a Negotiated Agreement (BATNA)’. This could to engage the angel investor in an advisory capacity.

Keep calm and manage your nerves

Pitching is nerve-wracking enough and when you’re pitching your passion and belief to people who are primed to be both sceptical and critical, it can really feel like you’re stepping into the hot seat and being interrogated when the questions start pouring it not unlike Dragon’s Den, the message is keep calm.

Keeping your cool and clam can pay off big time… Arthur Kay, Henry Smith, Michael Dubin and Jamie Wilson are very cool under pressure… deals are won because the entrepreneur who is pitching kept a cool head during a barrage of questions and expressions of doubt.

While the entrepreneur may feel nervous, it’s important to keep a cool head during the pitch. If you’re visibly uncomfortable, you’re only going to make the investors uncomfortable – and they might see that as a lack of confidence.

The entrepreneur can and should when faced with difficult questions is to deal with these in an open and honest way. If you don’t know the answer offer to revert back with an answer but never guess. If an investor points out a deficiency in your business plan, you might talk about how the investor’s guidance and capital can help turn those weaknesses around. If things go poorly, don’t dwell on it learn from the experience, make identifying what you’ll do differently next time into an exercise.

That’s all it takes to deliver a great investor pitch!