When trying to attract attention from venture capital firms, entrepreneurs often spend a great deal of time crafting pitches for their ideas. Pitches are the primary means for generating interest in a business idea and explaining to people why they should invest. Through a pitch, entrepreneurs need to be able to convey both their passion and vision, while also demonstrating that they have a sufficient understanding of the current market in order to make their ideas work. Pitches sometimes tend to be formulaic, which will not capture the attention of many investors. Instead, entrepreneurs need to find a way to relate their ideas to an audiences and pull them into the potential of the idea. Following are some important tips to help individuals craft the best possible business pitch.
1. Understand the importance of humility.
When pitching startup ideas, people need to demonstrate their knowledge of relevant industries and technologies. They must also be careful to present themselves to investors in a humble way. Entrepreneurs sometimes pitch their ideas as “the next Google” or claim that their ideas are guaranteed to make investors rich. Such claims demonstrate that the person pitching the idea does not have a real grasp of how venture capital works. Entrepreneurs should sell their ideas not through delusions of grandeur, but with real, solid market research that convinces individuals that people want the product.
Rather than making outlandish claims, humble entrepreneurs capture the attention of investors with colorful, engaging stories about how the gap in the market was identified. People need to focus on demonstrating how much they know rather than telling investors what’s in it for them.
2. Tailor the pitch to the specific group of investors.
All investors have different expectations, backgrounds, and interests. Before pitching their ideas, individuals need to take the time to research the people to whom they are making their presentations. Then they can customize their presentations accordingly by playing up the parts of the idea that align most closely with investors’ goals. Some investors are focused on numbers and will want to see a lot of figures backed by research, whereas other investors want something more interactive from the pitches. By tailoring a pitch to an investor, entrepreneurs can help to build a relationship with that individual, which will help to develop the trust that is required to finalize a deal.
Since most people make a decision in the first 5 of 10 minutes, entrepreneurs need to strive to be as compelling as possible. Entrepreneurs may also want to make a personal connection in the minutes leading up to the start of a pitch, if possible. Some possible ways of doing this could include mentioning a shared alma mater, business contact, or networking group.
3. Think beyond the standard slide deck.
Most pitches today involve entrepreneurs talking while a slide show displays images or figures behind them. While this standard approach can and does work, entrepreneurs can often get a better reaction by making the presentation more creative and potentially even interactive.
Individuals need to take care to avoid making their presentations too gimmicky. However, the right addition to the pitch can really drive a point home. One of the best ways of bringing people into a presentation is by creating a demo or bringing a prototype of a product. Often, it can be difficult for investors to envision an entrepreneur’s exact idea. However, with a prototype or demo, the idea comes to life.
Even with figures, people can use past bar graphs and pie charts to display information in a more meaningful way. Visual representations are very engaging, especially when they make points very clear. Presenters should shy away from complex representations of information during the pitch and focus on brevity and clarity. The complex figures can always come down the road after an investor becomes interested.
4. Answer the key questions that investors will ask.
Investors always want to know the answers to the same basic questions when they are presented with a business idea. Instead of making them ask these questions, entrepreneurs should focus on making the answers obvious during their pitch. This approach shows investors that the entrepreneurs are seasoned and that they have at least done their homework. The two key areas that all pitches must address are market and management, since these are key to success. Great pitches will provide a clear and accurate view of the market, including any position already held and a look at the existing or potential competition. A presentation also needs to emphasize the skills and backgrounds of the management team and make a convincing argument about why they have what it takes to make the idea a success.
Doing a bit of investigation about investors can also help entrepreneurs to predict other questions that they might ask. During a presentation, entrepreneurs need to keep a finger on the pulse of the investors and anticipate questions before they are asked. If audience members seem confused, it could become necessary to ad lib the pitch in order to clarify points. Sometimes investors will simply pass if they feel like they would need to ask too many questions, so it is important to supply as many answers as possible during the pitch.