Cracking Your First Investor Pitch: How to Talk to Investors

When it comes to finding an investor to back your startup, the first impression you make in the first meeting could be your last chance to make any impression at all. Angel investors and venture capitalists are inundated with presentations and pitches from hundreds of startups like you – but only a handful succeed in winning investors’ blessing.

That’s why you and your first pitch must stand out and make the investors take notice. But this is easier said than done. Making a compelling case for yourself in 3-15 minutes with a pitch that is succinct yet all-encompassing, informative yet interesting, and ambitious yet achievable needs skill.

But don’t worry, we’ve got your back with some useful tips to help your first meeting transition into more meetings and ultimately funding.

Elements of A Successful Pitch

Before we get into how to communicate your ideas to the investor effectively, let’s do a quick revision of the elements to be included in your pitch.

• The Product and its Need: Define what your product or service is and what problem in the market it is trying to solve.
• Market Opportunity: Explain why now is the opportune moment to address this problem. Cover important points such as market size, scope, industry-specific metrics, current trends, and other market-related information.
• Competition Vs. You: Showcase your unique value proposition and highlight how it stands out from existing competitors in the market using a pitch deck.
• Revenue Model: Explain how you plan to generate revenue using pricing strategy and sales forecast (and how you arrived at it).
• Team Power: Highlight your team’s strengths and skill sets, and how they add value to the business. If you have notable advisors on board in specific areas of expertise, disclose them as well.
• Achievements: Give honest information about any major achievements and milestones the company has made so far. Show the growth trajectory and share future growth plans. Also, emphasize customer retention and satisfaction numbers to highlight demand for your product or service.
• The Ask: Most importantly, be clear about how much funding you want from the investor and the investment terms. Share details about other investors already on board or previous funding rounds.

Remember, you might not always have a projector at hand to show your presentation. If you manage to get an informal dinner meeting or even a shared Uber ride with a potential investor, you’ll need to have all relevant information ready. So, your pitch, its numbers, and other information must always be on the tip of your tongue.

Now that your pitch is ready, here’s what you can do to increase your chances of converting it into an investment.

1. Find Potential Investors Through Your Network

Now is the time to leverage your professional network to reach out to a potential investor. Approaching an investor through a mutual contact helps get you a meeting faster and is likely to make a better impression. The mutual connection can vouch for you and your commitment to the business.

2. Know Your Potential Investor

Research every investor you approach. Know their background, past investments, and industries they are particularly interested in, not just to impress them, but to ensure the investor’s interests align with your business. After all, if all goes well, you’ll be working closely with them. They will be a part of your failures and successes. So, make sure you approach people you are genuinely inclined to work with and can trust.

3. Know the Exit Strategy

Even before they invest, investors will ask about your exit strategy to understand how they can get their money back, preferably with a profit. Are you aiming for a public offering, or would you rather be acquired by a larger company? Whatever your goal, communicating it to investors at the pitching stage matters.

How to Talk to Investors

While your product strength and business numbers are obviously important, presenting them in a way that piques investors’ interest and keeps them hooked to the rest of your pitch is a different skill in itself. What can you do to make the most pitch-perfect pitch?

• Keep it Simple and Effective: A short presentation, without much decoration, with only the information needed to highlight your product, its market size and scope, and growth prospects, is enough. Crowding slides with too many numbers or visuals can be confusing. Remember, the presentation is only an accessory to your pitch, not the star.
• Modify Pitch as Per the Setting: Each investor is different, and the time you get with each will also differ. So, keep pitches of varying lengths ready. For instance, you should be able to cover key points in a 3-minute pitch but also have enough material on hand if you have caught investors’ attention. Moreover, be aware of the setting – pitching in an investor’s office has a different mood and tone than pitching at a dinner meeting. Learn to gauge the investor’s mood and interest as you speak, and train yourself to adjust your pitch accordingly.
• Tell a Compelling Story: Just like any good book needs a catchy first line to grab your interest, a good story can quickly capture investors’ interest. The story could be about how you came up with the idea of this business or how a customer’s need inspired your product innovation. A touch of emotion can work wonders at holding investor attention.
• Purpose of Funding: Be upfront, transparent, and detailed about how much funding you are looking for, for what purpose, and exactly how it will be used to fulfil that purpose. Whether you want funds to hire industry veterans, buy machinery for large-scale manufacturing, or test products before launch, specifying the reason is vital to show investors the impact their investment will have on your business.
• Practice Your Pitch: Rehearsing your pitch in front of family, friends, co-founders, or teammates helps you feel more confident. You can also better understand key points to make the pitch more appealing, and how to modulate your voice and speed to stay within the time limit. Encourage your audience to ask questions and keep refining your pitch to answer anticipated investor questions.

If your pitch doesn’t work, reach out to the investor and ask for feedback. Most investors appreciate these requests and offer valuable insights on how to improve. Use their guidance to your advantage. Sometimes investors remember this passion and eagerness to learn, keeping the window open for future collaboration.

• Keep Updating Your Pitch: As your company progresses, update your pitch deck to reflect the growth in numbers and milestones. If you ever approach the same investor at a later stage, show them how you’ve grown as a business since your last meeting – it might just be what was needed to seal the deal.
• Avoid Extravagant Claims: Be careful not to make extravagant claims about your business without sufficient data to back them up. Avoid claiming to be “the 1^st ever in the world” to solve a particular problem or innovate a particular product, because, although you don’t know it, chances are the investor has sat through 10 more pitches about the same thing.

Contact Edelkoort Smethurst CPAs LLP in Burlington to Help You Find the Right Investor

Nobody knows your business better than you do, but pitching it to a potential investor takes a knack that business advisors have. From preparing a pitch that highlights your company’s strengths and offers a realistic view of areas that need improvement or support to connecting you with angel investors and venture capitalists, a business advisor can guide you through this important phase of your business journey.

At Edelkoort Smethurst CPAs LLP, our accountants and business consultants can provide services such as preparing financial statements and forecasts for investors and designing an exit strategy. To learn more about how Edelkoort Smethurst CPAs LLP can provide you with the best accounting and business advisory services, contact us online or by telephone at 905-517-2297.