Ready To Pitch Investors?

For many Entrepreneurs, it’s inevitable, that day when you stand before someone that could very much change your life in an instant. Pitching investors could be rough, torrid but could also be very fulfilling. In my case, I am certainly keeping an eye out potential investors since I am gradually closing in on the “closed beta” launch of my startup. In my case, I will need a good number of servers, need to bring in two or three people to join the team and as such will be seeking Angel Investment. I will be inviting beta testers in December and in January, making it public. The goal is to have as many brands, individuals etc… connecting with fans/customers via video with real time features. This will obviously require manpower and Investor funds.

Over the past 3 weeks, I have been preparing myself for the inevitable, and thought I should share what I have decided to be the key elements to preparing an Investor pitch. It will be my second time pitching investors and so I sort of have an idea of the kind of questions to look out for, the way they want to be approached and what they want the pitch to contain.

First let’s understand two things, these days you could either get an investor to give you money in exchange for Equity (a percent of you dear company) or convertible debt (borrow money to be paid back -most times with interest- and can be converted into equity under the right terms). It’s up to you as an Entrepreneur to determine which route is best for you. Personally I wouldn’t take $1million in convertible debt, that’s way too much debt on you in only your first few months of being live. I have decided that for my startup, I will be giving away some equity in exchange for the funding I will be getting.

I paid close attention to TechCrunch 5o some weeks back and saw a lot of Entrepreneurs talk about their startups. They were pretty much mass pitching, to not only the investors in the room, but investors following on TV, twitter, livestreams and so forth, so it was essential to be on their game. I particularly liked RedBeacon’s pitch and if you are looking to pitch an investor someday, you should watch events like these. You learn the key elements of a pitch, what should be in and what shouldn’t be. Here are a few ideas for you. Before going in to pitch an investor,

1.) Make sure you can explain you startup’s service in a sentence or two. Ofcourse there’s more to your startup than you can convey in 2 sentences but believe it or not, you need a punchline or should I say punch-sentence, that concisely describes you. It’s attractive to investors, and even to other Entrepreneurs.

2.) Make sure you are pitching the right person. Take for example, say I am an investor and I am all about tech, web 2.0 and real time data stuff. Say my last 4 investments have been in Twitter, Gaucho, Loopt, MeetUp. Won’t it be ridiculous of you to come up to me with a pitch about a new bio company you are looking to build? I think it just makes you the Entrepreneur look lazy, ill prepared and lacking focus…all traits of people Investors never want to do business with. So study the Investor, find out what they like to invest in, does your company fit well in his/her portfolio?

3.) Make sure you have a demo handy. It’s not enough to walk up to an Investor with just a biz plan and executive summary. Take a leaf out of Aaron Patzer’s book, carry you written pitch handy as well as your laptop to do a demo for every Investor you run into. Investors are easier to convince when you show them images and how things work than just a theory.

4.) Go prepared! There are those few questions that EVERY investor asks. Before you go in, make sure you’ve come up with a good answer for each. You don’t want to be stumbling on words or staring at the ceiling when they ask you a question, it shows lack of confidence and poor preparation. Maybe you need to watch sharktank a bit more to understand the workings of Investors if you are new to it, but they always want to know about the founders, the team behind the company, how do you intend to market the product? who is your competition? how will you keep your competition beneath you? how will you be making money? etc etc…

Finally, remember that investors are in business to make money too, so they will only invest in what they believe will benefit them. Does your company have a strategy that lets you and your financial backer make some profit in the end? This tremendously improves your chances, especially if you are already making money with that strategy. I will keep you up to date as things move along at Videfy. In the meantime I want to give special mention the the Gen Y startup of the week: CauseShare, a social fundraising platform built by Michael Kiser and Dave Adams. Thumbs up guys! keep it up.

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Tagged as: Angel investor, business, Convertible bond, gen y, Meetup, Money, start-up, TechCrunch