Pitching a startup is a very fundamental part of many startups when it comes to raising finance. Although there are many ways of pitching a startup and no “perfect way”, here are some general tips we found to successfully pitch your startup to investors.
1. Know who you are pitching to. Pitching to venture capital funds or business angels are different since they are unique, and value differ factors when investing in a startup. Therefore, in order to maximise your chances of a successful raise, it is important to tailor your conversation to maximise interest. For instance, if you are going to pitch your startup to a VC you are more likely to emphasise on your long-term growth potential. Likewise, emphasising on your current cash inflows are also more crucial to VC firms than angel investors as VC firms normally do not invest in startups that haven’t started making revenue (Investopedia).
2. Keep it simple. When you pitch your startup your objective is to create a clear link with your investors (Forbes, 2018). A good pitch makes it easier to engage with your audience and investors will have an easy time understanding the idea behind your startup and what is making it unique.
3. Let potential investors experience your products. Showing your investor your MVP or a demo is probably one of the best ways for them to get more about your product. You don’t need to explain every single part of your product, rather the most important ones that makes your product unique. If you do not have the possibility to show your prototype videos or photos are also good as they will let investors know that you have a good idea about your product (Forbes, 2017). Feel free to go and check out AGORA Toolkit and sign up to our partners such as Unicorn - Labs and help build your prototype for your startup pitch!
4. Know your numbers, be realistic and be ready to support claims. According to a Harvard Business School Study and a Wall Street Journal around 30 to 40% of VC backed startups completely fail and are forced to default which is mainly due to underestimating expenses or overestimating profitability (Wall Street Journal, 2012). Research from the University of Cologne examined the records of 176 German startups and found that:
Entrepreneurs tend to over-estimate on average their expenses by 211 percent.
Profits are overstated by 136 per cent.
Entrepreneurs think their revenues will be 388 percent higher than they turn out to be.
Investors are no fools, they are aware of the statistics, so make sure to be ready to back up any data (Forbes, 2017).
5. Nail your visuals. Research from the University of Arizona and University of Minnesota suggests that visuals aids when delivering a presentation is essential and it is around 43% more effective at getting people to act than when the presenter used no accompanying visuals.
6. Practice, Practice, Practice. Your success in your professional, financial, and personal life depends to a great extent on your ability to articulate (Pete Geissler, 2015), and being confident is one way of convincing your investors of your knowledgeability. Like most disciplines, confidence comes with practice, but how can you practice your presentation skills? Forbes suggests that you should focus more on the audience and not on yourself, as the crowd’s purpose is to process and absorb the information that you are providing (Forbes, 2011).
Was there anything we missed? Or maybe you’d like to share your own experiences? Feel free to comment on or share this post!
While you are here feel free to check out AGORA Presents for future pitch competitions!