Developing a funding pitch is pretty high-stakes. What are the key factors to consider when writing your pitch?
Several small business experts weighed in to give us some insight.
We’ll be discussing this topic, and other about creating a profitable business, in our fireside chat via Google Hangout on February 10. Don’t forget to RSVP!
Most outside investors require four basic components for a business to be deemed worth investing in. The components are: team, market, product, and traction. If your company lacks any one of those four components, the opportunity to invest in you will not be as attractive to investors.
Danielle Tate, Founder and CEO at Blueblird
The first is to determine if the money is really needed (most often it's not). Inviting investors into the company means a loss of control and perhaps more rigid bureaucracy which can substantially sabotage a growing business by curtailing its ability to be nimble. If funding is truly needed, then its necessary to be prepared to answer investor's questions, such as how much funding is needed, how will it be used, as well as when and how will it be paid back. Many times, entrepreneurs fail to ask for enough funding to survive long enough to reach a tipping point. Proof of concept must also be demonstrated very clearly in order to show investors that the idea has been validated and there is momentum.
Daryl Gibson, Founder at Innovative X
Who will you be pitching to? Create a presentation that is customized for your audience.
Make sure you have the facts and stats to back up your requests. If you are asking for a specific investment have the financial projections to substantiate your claims. Keep in mind that generally people who have money to lend will be extremely savvy when it comes to projections, operating expenses, and anticipated revenue. Make sure you've done your homework.
Be honest about your shortcomings. Don't try to 'put lipstick on a pig'. In other words if some part of your plan isn't perfect, don't try to pretend that it is. Be honest, be authentic, and be humble. If you've got a great idea and most of your plan looks do-able, don't worry if its perfect. Be yourself and don't be afraid of not having all the answers or needing some support or guidance. This kind of attitude can be an asset.
Be willing to put some skin in the game. Investors like to see that you are invested in the success of your business. If you want to show them your commitment than show them that you are putting your own time, money, energy, love, and hard work into making your business a success. If you are putting everything you've got on the line to win investors will sometimes be more likely to invest in you because they can see that you are also committed.
Know what you are available for and what you are looking for. This is pretty key. They say 'If you don't know where you are going, how will you know when you get there?' With this in mind you need to be clear about how much money you are looking for and what you are willing to part with to get that investment.
We've all seen Shark Tank. Be prepared to defend your requests. Stay true to what you need. Fight for the money, and know how much control (stock, ownership, management, etc.) that you are willing to give in exchange for investor financing.
Jennifer Martin, Founder at Zest Business Consulting
What are key factors to consider when developing a funding pitch? Investors are in the business of making money – period. Every slide, every point, every detail should address that core focus of your audience. They will ask hundreds of questions, just assume that the root question behind every inquiry is “how is this going to make us money”. Be solid in your ability to address that and have the details at the ready to make a strong case for profit.