Get Your Message Across: Breaking Down What Makes For A Good Pitch For Funds From Investors
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I founded Agga Consulting with the goal to enable startups, SMEs, and aspiring entrepreneurs to have access to high-quality strategy and management advisory in an affordable manner in terms of pricing, but also in terms of mode of collaboration. As part of this philosophy, Agga Consulting collaborators have been running numerous workshops mainly in the UAE and Greece with the goal to give practical solutions to some of the most common questions in the minds of entrepreneurs.
During many of these workshops, a common question was frequently brought up by our participants, which was how can they effectively pitch for funds from investors. Investors are not only venture capital firms. They may come from many different sources, such as your clients, FFFs (i.e. friends, fools, and family), banks, grants, angel investors, etc. Although the language, format used, and even time spent on transmitting this pitch may vary according to who is your audience, we believe that all potential investors are looking for the same re-assuring messages. What differs is the level of detail of information to be actually disclosed in that communication to give a reassurance to potential investors that these messages are backed up.
Thus, we felt that it would be interesting for us to further explore this field, and provide entrepreneurs a practical approach to pitch for funds from investors, that actually works in a “#SimpleAs123” manner. To get this as right as possible, we mobilized our network of collaborators that are based across Europe, such as Periklis Tsoulos, CFA who is based in Amsterdam to research it, and we also reached out to entrepreneurs, such as the Dubai-based Mirhan Mandour, founder and CEO of Digiteam, and one of the leaders of the female chapter of the MENA Fintech Association.
Our exercise was fruitful, and that led us to identify the following 10 core elements that should be present in any successful pitch:
Probably the most important element of your pitch. Ideas can be expressed in terms of the issue they are trying to resolve, the solution they are actually providing, and the benefits expected from utilizing this solution, or the risks from not utilizing this. As for how you represent it, mobilize your creative talent to work in this part; for instance, through the use of short videos, simulations, or augmented reality.
Investors want to put their money into a market that is growing, not saturated, and looks healthy overall. Therefore, it is important that you transmit this reassurance by backing it up with research, market projections, or evidence of other successful ventures in that market.
The first person that needs to believe in your idea is you. You need to demonstrate that you are investing time and money in this, so that others can follow.
4. Skills and experience
It is important to demonstrate that the right skillset is present in your organization to make the idea happen. Here is where your team needs to be introduced, highlighting the relevant skills and experience they hold to make you realize your idea.
Investors not only want to invest in a promising market, but also in companies that they know how to evolve. Showcase your ambition, how you are planning to evolve the company at later stages. If you find it hard, here is a trick. Think about evolution in terms of new products/ser- vices, in terms of growth in new markets, in terms of new partnerships, etc.
6. Business operation and planning skills
Ideas don’t bring money, business does. Thus, it is important to demonstrate that you understand what is the complexity behind making your idea a reality (i.e. activities that need to be performed, resources that need to be onboarded, etc.), but also that you know how to make that happen in a reasonable, but not very lengthy, timeframe.
If you have done your exercise extensively, by now, you should have a good idea of the total investment you will need to make your idea reality. Although you may be planning to finance partially from your own funds (which is actually also what we recommend), potential investors would like to also see this information in order to understand better whether your feet are on the ground. If you have a finance or accounting person in your team, this is where they should shine.
Although it is reasonable to state that profits are rarely evidenced from day one of operations, investors expect you to be very specific by when you are foreseeing this to happen. Projected income statements, cash flows and balance sheets, or even metrics calculations such as net pre-sent value, break-even, etc. may be useful here in order to demonstrate to potential investors that profits will be made, and relatively soon. Again, this is an exercise to be driven by your finance or accounting expert.
Once all of the aforementioned elements have been addressed, it is the time to ask the core question to your investor, which is the funding you are actually looking from them.
Last, although it may not apply in any situation, it is worth trying to understand before your meeting with a potential investor if there are any elements that provide you a common ground. This could be, operating in a market in which the investor has demonstrated a particular interest in, similar background, etc. The identification of such elements will make the investor see you from a different angle, and thus could give you an extra bonus over other entrepreneurs looking to get access to the funds of that investor.
To further support our clients and stay in line with what we preach as Agga Consulting, which is that we are the affordable business advisory that provides “#SimpleAs123” methodologies to some of the most common questions in the minds of entrepreneurs, we have created a generic storyline that can be used across businesses, across pitches and encompasses the identified 10 core elements. So, the next time you try to pitch your idea to a potential investor you can tell him/ her that:
1. It is a great idea...
2. ... with enormous potential...
3. ... with evidence that we are implementing it in the right way...
4. ... and with the right people onboard
5. We have a clear vision of how this could evolve to...
6. ... and we have clarity on the actions required to get there reasonably fast...
7. It will cost us X dollars...
8. ... but we expect to generate profits very soon
9. We are looking for X dollars of external funding...
10. ... and a partner that can be a catalyst to this journey.
Good luck with your pitches!