If you had to pitch your product or service to a potential investor how would you go about it?
I was recently asked to coach a bunch of start-ups in the art of pitching to potential venture capitalists.
Having been involved over the years in raising capital and having to spruik to potential investors, here is the structure I’d recommend you follow.
First start with the context which provides an overall frame of what this is about.
“I am solving X problem for Y people using this solution to give them Z outcome.”
Then answer these questions, in this order.
- Why is this problem something that needs to be solved? What’s important about it?
- What proof do you have this is a problem? What have you seen, heard or experienced? Is this just you experiencing the problem or have you done significant external research?
- How big is your market and where is it? And please don’t say everyone in China or some such!
I want to know if you have a local market first where you can prove your solution and actually make sales.
- Tell me how have you have quantified your market potential.
- What market surveys have you conducted? And realise that surveys by themselves don’t mean much. People may say they think your product or service is a great idea, but the only real arbiter is whether they actually take out their wallets and pay for it.
- Have you made actual sales as proof people will buy? How many? Are these just early adopters who’ll try anything? How will this broaden to a larger market?
- What is your solution comprise of? What makes it unique? Can you protect your IP?
- Who is the competition? And yes there will always be competition. If yours is an addon product, could manufacturers include their own version down the track making yours superfluous?
- What are the revenue and profit figures you’re projecting? How realistic are these? You’d be amazed at some of the pie in the sky figures I see being bandied around with absolutely no basis in reality.
- As an investor I want to know what you’ve already invested. In terms of time, money and effort.
I want to know you’ve put your own money on the line, because if you’re not willing to back yourself financially, why the heck should I back you?
- Tell me who’s on your team.How their specific expertise and experience benefits the venture. Had a good example of what not to do the other day. The pitcher was spruiking a fintech which would require a banking licence down the track. He said the MD had been in charge of a gold mine in Peru. Suffice to say, he got slammed by the VC judges who queried how that experience would benefit the organisation here when they really needed people with senior banking experience on the team.
- Tell me what you want from me. How much money or other help and what you’re willing to give in return such as equity.
- And finally, don’t drown me in power point slides. Be concise and you’ll go a long way.