Out of more than 500,000 companies started in the U.S. annually, less than 1,000 qualify for venture capitalist funding. The majority fail to attract investors for various reasons, including when and how they approach a venture capitalist. Even the most brilliant business idea may fail to get investor funding if there’s no convincing pitch.
The pitching process can be overwhelming for first-time entrepreneurs who lack industry connections. But by using these five investor-pitching tips, you can increase your chances of attracting investors who will put their money into your business.
Create and Rehearse Your Pitch
Go through your pitch before presenting it to potential investors. It should be short and to the point. Create two versions of the pitch—one that you can present in at least ten minutes and a detailed version containing all the nitty-gritty.
Rehearse the pitch and master all the important elements. Demonstrate to the investor that you know every detail of your business and can talk about it without reading from a document.
Tell a Story
Start your pitch with an exciting story that captures people’s attention. Keep it brief and do not try to act like a comedian. The story should trigger the investor’s emotions, allowing them to see and feel like you did when you were creating your solution.
It could be a personal story or a story about how your product or service solved a client’s problem. Research the investor’s interests and projects they’ve previously funded and tailor your story to match the things they care about.
Invest Your Money First
Use your own money to make the first baby steps. Investors will be willing to entrust you with their money if you can demonstrate responsibility with your own money.
Bootstrap the business in its initial stages before approaching investors. Depending on your startup idea, you may need personal savings or title loans online only to get your business rolling. A title loan is more affordable than a bank loan and easier to pay off.
Build Traction and Showcase Milestones
A great business idea will not win over investors if you can’t demonstrate its viability. Good business traction will convince potential investors of your growth potential and guarantee ROI. Conduct market research, create a revenue model, and launch a marketing campaign for your products.
Showcase your accomplishments such as key hires, secured contracts, and product launches if any. Demonstrate what you intend to accomplish in the future. Show as much evidence as possible that you have a viable and scalable business idea worth investing in.
Have a Convincing Financial Forecast
Know your funding needs and clearly outline how you plan to spend the money. Prepare to answer questions such as:
- Have you received funding before?
- How much was it?
- Can you show how you used the money to get the business to its current status?
Have a breakdown of how much money you need to take the business to the next level. This is a crucial stage that may require you to back up your numbers with realistic facts and tangible evidence.