In a previous post, I explored how to decode venture capital lingo. Now I'm going to take you through some basic steps to prepare to make a pitch to investors. These same tips can also be used to pitch ideas to clients, business partners, and potential customers.
1. Deliver Something Tangible
You have a great concept, but the investor can't understand what you are saying. Or maybe it's how you are saying it. A potential investor wants to be able to visualize your product or service, so be prepared to display a presentation, pass an item around the room or show a poster board, video presentation or scale-model of your prototype.
2. Time it Perfectly
Prepare for a 30-minute timeslot that includes your presentation and questions. If the investors are engaged, you can go into more detail, but keep the initial pitch brief. Think of the investors and all the pitches they've sat through, and how boring it is to listen to someone go on and on.
Timing it perfectly also refers to pitching the idea at the right time. Either the client has the need for it now, the market is just right, or another condition is just right for the idea to take off. Be sure to include why the timing is right for your idea to succeed.
3. Show them the Money
Remember Jerry Macguire? Answer the money question right away. Explain how you are going to make money with your product or service. Offer up actual numbers or test cases of similar products. Do your own market testing and pilot a piece of your product, so the results are ready to share with the investors.
If you have already learned something from test marketing and made some product changes, explain those too. Investors will want to be assured that the bugs have already been identified and worked out.
4. Know Your Competition
Do your research in advance about the competition. Nothing looks worse than an idea that's already been done. Address what the competition has done, but explain what areas your product excels in. You need enough of a niche for your product or service that an investor could see a new market being successful.
5. Recruit a Rockstar Team
To give the investors confidence, you'll need to show that you are building a team of rockstars. Recruit the best and most brilliant marketing, coding and website development people you can afford. If you haven't filled all of your key positions, be honest and address that in your pitch. Explain the types of personalities you are seeking and demonstrate you have a solid plan. Key team members will either need to have experience in the industry, some experience in launching a venture, or both.
Now that you've got some tips for pitching a business idea to investors, you're ready for prime time. Use these techniques whenever you are trying to convince a client, supplier or business partner about a new idea. No matter how great you think your idea is, be honest about the weaknesses you see and then explain how you're going to address them.