So you have a million-dollar idea. Naturally, you’re thrilled and ready to make your bold, big-time vision a reality — that much you’re clear on. What’s less clear is how, exactly, you’re going to get the funding you need to set your plans in motion.
New businesses generally can’t kickstart and sustain the momentum they need to thrive solely through elbow grease and power of will — they usually need some serious cash to get things going. So when you’re looking to push a bold new idea, business plan, or strategy that needs capital to move forward, you need to have some idea of how to secure it.
That’s why any aspiring entrepreneur has to understand how to pitch to investors. Here, we’ll go over some tips, tricks, and tactics that will help you pitch your ideas and business plans confidently and effectively. Let’s take a look!
How to Pitch an Idea to Investors
When you have that light bulb moment, it can be tempting to reach out with a couple of halfway fleshed-out ideas and a dream, but investors are too savvy and practical to bite on that.
They need to know they’ll receive a promising return on their investment — and ideas and dreams aren’t all that compelling when it comes to demonstrating that potential.
That’s why you need to consider these steps before you start pitching.
1. Tailor an Elevator Pitch
Seasoned comedians generally have something known as a “tight 10” rehearsed and ready — it’s a solid, reliable, short set of jokes they can count on to make people laugh. And while there might not be a ton of overlap between business and comedy, new business owners can still take a cue from that strategy.
New and aspiring entrepreneurs should have an intriguing, informative elevator pitch on hand — a 30-or-so second description of the nature of your business, offering, and value proposition, designed to help you earn a second conversation with a potential investor or network connection.
2. Narrow Down Your Target Audience
Preparation is half the battle when it comes to pitching — your efforts can only do so much for you if they’re not tailored to suit the investors on the other end of the table. That’s why you need to thoroughly research who you’re going to be talking to.
Take a close look at the other types of businesses they invest in and the degree to which they tend to be involved in those companies’ operations. Get a feel for how new they are to investing. And see if you can learn more about their individual personalities.
This step will be much easier with some firms than others. Many investors will have a lot of public information available, but several tend to keep their efforts and preferences closer to the chest. Still, you can’t skimp here — do everything you can to approach your meeting as well-prepared and thoughtfully as possible.
3. Market Research
One of the best ways to prepare an effective pitch is to have your market research done and organized. Being able to demonstrate an ability to compile, analyze, and draw meaningful conclusions from market data shows investors that you’re dedicated, incisive, and trustworthy.
It can make your idea seem sounder. If you can show that market trends are conducive to your offering’s success, you’ll make your pitch significantly more interesting than it would be if it was based on conjecture.
4. Create a Business Plan and Model
If you want investors to take you seriously, you can’t just walk in with an idea and nothing else. Even the most exciting concept means nothing without concrete plans behind it.
At the end of the day, investors are investing to make money — you need to demonstrate that you have the framework and courses of action in place to deliver on that.
You also need to give them an outline of the return they can expect to see on their investments. A sound business plan isn’t impressive if you can’t show accurate, attainable, intriguing results that will stem from it.
5. Prepare a Demo
Whether you’re looking to fund a physical product or digital services, prepare a demo and be sure to work out all the technical issues before appearing in front of investors.
Make sure the product model works as intended and any electronics or batteries are operating and fully charged. For digital products or services, make sure everything is in working order even minutes up to the pitch.
How to Pitch a Business Plan to Investors
Pitching an idea to investors goes hand-in-hand with pitching a business plan to investors, so always come prepared with a business plan when you want to pitch your idea.
1. Make it thorough and thoughtful.
The business plan will include the nuts and bolts of the business — that means providing a picture of what you are selling, the need your offering will fulfill, your target audience, plans for marketing and operations, budget, expected revenue, and any other market research data you collect. You want to be detailed and transparent when presenting your business plan, so investors know you have done the research and are trustworthy.
2. Show the data.
Explain current data and how it applies to your business plan, and be as open as possible. Share how many customers you currently have and how many new ones are coming to you each month or quarter. Discuss exactly how the business plan will generate revenue and how much revenue you expect to see, going forward.
3. Put a pitch deck together.
Once you’ve collected the data, it’s time to organize it in a clear, easy-to-follow pitch deck. Learning how to write a pitch deck is simpler than you might think. After compiling all the data for your business plan, break it down into different segments of the pitch deck, which can be presented easily in a slideshow.
You’ll start by explaining who you are, introducing any team members, and explaining the problem you want to solve with your business. Like an elevator pitch, you’ll share why your business is different from your competitors.
Explain the product or service, and include a pause to implement your product or service demo. Share your target audience, expected revenue model, and your budget. Conclude the pitch deck with contact information, so investors can reconnect later if they are interested.
Prepare to Get Funded
Having a brilliant idea is just the start of making your dream business a reality. Even before your company starts, you have to conduct research and make comprehensive plans if you want to attract investors.
The more research you prepare, the more confident and transparent you can be in your pitch — showing investors you are dedicated to knowing your business inside and out and helping them boost their ROI.