Tips for Pitching Venture Capital Investors
There is basically one purpose when you make a presentation to a VC and that is to get them intrigued about your business. In fact such a presentation is like one that is done in a corporate setting but the VCs have to focus on the essential facts pertaining to your business. You need to be able to answer their questions and back up your answers with facts and figures.
Just as with everyone VCs are subject to time restrictions and therefore it is advisable that you keep your presentation clear and to the point. Look at it from the investor’s point of view. Consider listening to a number of presentations each week and ask yourself what would make one stand out from all the others.
The following facts are crucial and must be included in order to grab their attention and assist their memory:
A description of your business model and its function.
A description of how revenue is generated and what your costs are.
An explanation as to why your business is going to be a success.
An explanation of how far along are you in your business plan.
A description of your target market including size, growth, demographics, and change over time.
A description of how your products and services meet a currently unfulfilled need among consumers.
An outline of your competitors which happens to be the one point that is so often neglected in presentations.
A break-down of the amount of investment that you require in order to succeed.
An indication of the expected time it will take for your plan to work.
An indication of your management teams abilities and history of success.
Bear in mind what the whole point of the presentation is: To solicit excitement in the investor. This is still the beginning stage and therefore not the right time to discuss things such as terms and details. The VC will not hesitate to contact you if interested. It is important to not go overboard or push your business too much. You need to be enthusiastic and optimistic but be realistic nonetheless. Remember that all VCs hear about strong management teams and successful business models, or that this is a first-mover advantage opportunity. Guy Kawaski who is a very successful and well-known VC has been quoted as saying: “…it gives me a migraine just thinking about those things”.
Again, try to think from the venture capitalist’s perspective. What is their goal? Make money. You need to make the case that your business will grow, increase significantly in value, and reach a liquidity event for a significant return on investment.
After every presentation is a question-and-answer session. This is your last opportunity to show the investors not only that your business is an ideal candidate for equity funding, but that you are a credible manager. Know every aspect of your finances and projections, inside and out. Know exactly where your business is going and when it will be profitable. Include detailed plans for your capital expenditures and uses-of-funds. Remember, this is your chance! Put your business on display and demonstrate how capable and enthusiastic you are about building it.