After you’ve drawn up your business idea and crafted your business plan as a business owner, you need funding to turn your entrepreneurial dream into a reality. It’s often said that after the ideation stage of a business, the next step is to source for finance.
For this reason, it’s important to note that all business owners need to be able to pitch their business ideas, whether to potential customers or to investors and banks in order to raise money for their business start-up. However, in a bid to successfully attract the favor of their investors, the pitching must appear to be brilliant and innovative in nature.
The truth is that business investors are looking for realistic business plans and ideas when it comes to funding new businesses. But the question is where can you find them as an entrepreneur?
How To Find Investors for Your Business
- Through Your Industry Friends: if you know of other founders of companies similar to you in your industry who have found investors, ask them for their recommendations. As many investors specialize in specific markets, like biotech, retail, travel, or mobile app development, they tend to find companies through networks. So secure yourself within those networks, do your research on angel investors who work in your field, and try to get an introduction.
- Through Your Mentors: if you don’t have industry mentors, you should consider connecting with a few before you start shopping around for investors. Your mentors see you through significant parts of your journey; they get to know your company, and you as a founder, and also have the experience to offer their guidance to help you navigate the industry. With their help, you can be recommended as well endorsed.
- Online: online is one of the major channels and platforms to find investors. So, linkedIn and even Quora can be effective sources to find investors. With online resources, be sure that you can establish some sort of credibility. The easiest way is by looking specifically for investors in your own market and with LinkedIn and Quora, you’re one step closer to your investor.
- Industry Conferences and Summits: if you don’t have the network you want – or need – then grow it. You see, the key is to build and nurture these investor relationships. Find out what type of companies they invest in, what stage, how much revenue they want to see, how long they take to do due diligence, and any other factors that make them get excited over a potential deal. As you’re building a relationship, ensure you’re slow and steady. Never assume that you will be invested in right away.
Now that you’re aware of where to find your angel investor, let’s take a look at how to successfully pitch your business ideas to investors.
How to Successfully Pitch Your Business Ideas to Investors.
Prepare Your Pitch Deck:
Once you’ve found the right investor, it’s time to start preparing. The best way to do this is by creating a 15 to 20 slide pitch deck, detailing: The problem you want to solve, your proposed solution, the ins and outs of your product, your target audience, your business strategy, your financials, and your exit plan. Creating a phenomenal pitch deck takes more than just putting this information on a PowerPoint with few colorful graphics, financial charts and bullet points. Hence, the need for strategic planning, thoughtful word choice, and purposeful design.
The point of a pitch is to inspire and excite, not put your investors to sleep. To avoid this, you need to share what problems inspired you to create your business in the first place? What successes have you had since then? What setbacks have defined or changed your company? Most importantly: where are you headed now? Framing your business idea as a story also helps you explain your passion for your business. It gives your investors a reason to be excited about working with you so they will buy into your business plan with certainty.
Define the problem
Your prototypes for the product are all top notch and you’re thrilled about your business plan. But if your product doesn’t solve a problem or fill a need for customers, investors aren’t going to share your excitement. Rather, start off with the problem. And to do that, you need to understand the need that’s in the market today and as well have the facts to back that up.
While pitching your idea, you should be realistic on how to solve people’s problems and meet their needs. In other words, don’t pitch your business idea as a get-rich-quick scheme. Instead, demonstrate realistic revenue growth and include three possible outcomes – worse case, medium or expected case, and best case in terms of revenue. Ensure you provide evidence for your forecasts, such as market data and competitor analysis, and explain clearly the assumptions you’ve made in arriving at your revenue forecasts.
Keep Start Up Costs Low
Don’t get carried away with unrealistic costs when trying to raise funds for a business idea. Wise investors are looking for a new business that has a tight rein on costs and an overall focus on cost control. Avoid rewarding yourself a large salary. Don’t be tempted.
Be Specific with Your Investment Needs
One mistake entrepreneurs often make is being vague when it’s time to talk money. Without question, it can be intimidating to ask for a specific amount of money, because there’s always a chance that the investment could come up short. But it’s important to be confident and specific with your request. Not only do investors want to know exactly what their investment will look like, but they also want to see that you’ve thought through your financial needs. At the same time, it’s important to show them where you anticipate to be after spending their money – as this builds trust.
Prepare for a Q&A
Last but not least, prepare for a Q&A from your investors because they will have questions no matter how flawless your pitch is. Anticipating those questions and having clear answers will not only increase your credibility but will also give you a chance to address concerns before you leave the boardroom.
In conclusion, pitching to an investor is an important step in the lifecycle of any startup company. But knowing how to do it right is what sets successful entrepreneurs and companies apart. The key is to choose your investors wisely, and then prepare and pitch accordingly.