Crafting an effective pitch is about much more than a fancy presentation – it’s about showcasing your business in a language investors understand.
It’s also about highlighting why you will be successful in your business, not just because you are passionate (although it does help) but because you understand the critical success factors driving your business and have taken steps to address them, reducing the risk of failure along the way. That, my friend, is the beating heart of what investors are looking for.
Businesses which peak the interest of risk capital investors must have the bandwidth for fast, significant growth in order to drive the kind of three-to-five year returns that the investor will need to earn to compensate for the risk being taken.
For this reason, risk capital investors are looking for some very specific information in investment pitches, and – given that they may see upwards of 100 business plans per month – they want this information to be delivered as briefly and painlessly as possible.
Here are 10 questions to peak the interest of investors:
1. Who are you and what is your business?
Provide a short one-liner about your business so listeners will have a frame of reference for both yourself and your concept.
2. What is the market opportunity?
Is there a problem in the marketplace where potential customers are crying out for a solution? Do customers want your product, or do they need it?
3. What is the size of the opportunity?
Are you solving a problem for hundreds, thousands, or millions of potential customers?
4. What is your solution?
Go into a little more detail about how your solution will solve the market pain. Why is your solution unique? Do you have some validation that the market will accept it?
5. Who are your competitors?
There are always competitors and a current solution to displace – who are they and what is their solution? Why is your solution different, or better, than what’s already out there?
6. Who, specifically, is your customer and how do you find them repeatedly?
Market access typically is the biggest challenge facing startups – who is your target market, and how are you going to access this market? Is your sales strategy efficient and scalable?
7. What is your business model?
How are you going to make money, and how much are you going to make? What is the dynamic between the size of the market, market share and profit margins? Is your business model scalable? That is, do the marginal costs shrink as volumes increase?
8. What are the timelines and capital requirements?
How much money do you require to get to first revenues, positive cash flow, and profitability?
9. Who is the management team?
Is there deep domain expertise on the team? Does the team have the capacity to execute the commercialization plan? Are there gaps in the team? Can the gaps be backfilled? Is the founder the key shareholder? Is the founder or management team coachable?
10. Is there a potential exit opportunity?
Is this a business that will be of interest to a strategic partner? If so, what attributes are the strategics looking for and can the business satisfy them?
The True Nature of your Business Opportunity
Many different types of businesses and business models can be successful, even though they may not all meet the profile of a high growth potential business suitable for risk capital investment.
However, these questions will help you (and hopefully potential investors) in understanding the true nature of your business opportunity. At worst, it’ll be a handy tool in assessing whether the business is worth your effort to begin with, which could save you a lot of time, money and heartache.
Either way, you’re welcome.
Do you have a question about angel investing? Get in touch with Valhalla Private Capital via our contact page.