You've devised a wonderful business idea and must get funded to bring it to life. Even if your project is freaking awesome and trendsetting, your marketing is rock solid, and you have a stellar team, getting funded can be quite challenging. It's still challenging even if you're already on the market getting nice profit and intend to use the funding for scaling.
Around half of the new businesses fail within five years, so as you can imagine, convincing investors that your business will be part of the other half is not a walk in the park. Paradoxically enough, one of the main reasons businesses fail is the lack of funding. Hence, part of the job goes down to ensuring that the other aspects are lean and optimal so you can justify your need for funding. The other part of the job involves effectively presenting your reasons for funding. A killer pitch can make all the difference in determining success or failure. That's what we'll focus on here in this article.
What is a Business Pitch?
It's no secret that no business can survive without enough funding, right? Often, bringing your business idea to life or scaling your business requires getting financial help from investors. A business pitch is a formal presentation where a business owner meets with investors to discuss a business idea involving an investment opportunity for them. The pitch illustrates how the funds will help materialize the business idea and the benefits investors will get from it. That said, let's dive into some great tips you should consider for creating a business pitch for funding.
1. Brand Storytelling
Who doesn't love an inspiring story? Crafting a great story that tells investors where your business comes from and where it is going is an excellent way to engage with them. An inspiring story is also perfect for showing your passion for your business idea. Stories can also help you highlight how your business relates to your beliefs and values. This way, it'll be much easier to evoke emotion to build a connection with potential investors. That's crucial since emotions trigger big decisions, which include investing in your business.
"Leaders are storytellers. All great organizations are born from a compelling story. This central organizing Thought helps people understand what they stand for and why. " — James Kerr.
2. Value Proposition
In case you haven't done this already, it's key that you define a rock-solid value proposition to pitch your business idea for getting external funding. Your value proposition will help you explain how your product stands out from the competition. There will always be competitors, even if you have a trendsetting project under your sleeve. Competitors help you validate your business idea. Yet, you need a killer value proposition to let investors know they're making the right choice with your business. It's worth noting that investors will likely ask you about your competitors, and saying you have none or don't know them is a huge red flag.
3. Investment Opportunity
Speaking about the value your product or service can deliver to users is important. However, clarifying the investment opportunity behind your pitch for funding is even more important. Whether you need external sources of funding to start your business or you want to scale your company to drive more growth potential, you must make that clear. Spending too much time discussing the product's features and functionalities is a classic error.
Here, it's fundamental to talk about your business successes, which normally involve sales or contracts, and provide financial projections. Be specific about them, including hard numbers, percentages, and spreadsheets. Make sure you briefly detail your business and product strategy. If you own a Software Development agency, you may want to talk briefly about Product Development management.
4. Business Model
Your business model is a structured framework that details how your business operates and gets profit. It involves multiple factors that investors want to hear from you. That includes your target market, operational costs, business profits, and value proposition. Simply put, your business model is your plan for making your business successful and profitable. That's even more important for startups that have just launched their Minimum Viable Product (MVP) since they represent a higher risk for investors. That explains why the questions they normally ask revolve around the business model.
5. Tough Questions
Sometimes, things don't go according to plan. American investor Bill Gross quoted boxer Mike Tyson in a TED presentation saying, "Everybody has a plan until they get punched in the face." Apart from your business model, investors may want to ask questions about the market opportunity, the management staff, intellectual property, and competitors.
Another key factor that may raise quite a few questions is your company valuation. You must be ready to explain why the figure you give is realistic. On the other hand, if they point out whatever issues you haven't managed to solve, you must be honest about it. We all know how important honesty is for creating successful business relationships. Even Alex Kenjeev, president of O'Leary Ventures, acknowledges the power of being honest about your weaknesses. Some tough questions may also involve your business KPIs. For software development agencies, investors may ask questions about how Product Management guarantees top performance and quality.
6. Team Management
American investor Bill Gross has also discussed the importance of the business team for driving economic growth. Having a unique idea and a solid plan with backups isn't enough. You need a stellar team of professionals that bring it to life. Show how they approach their work to surpass their competitors. For example, in a sales pitch, we would highlight that our team of rockstar developers and designers uses a UX-driven approach with cutting-edge tools to deliver world-class solutions that users love. As mentioned, it's also key to note the talent and capabilities of the managers.
7. Pitch Practicing
This may sound like a no-brainer, but we can't overstate the importance of practicing your pitch. Ensuring your pitch's time and coherence are neat and smooth will pay off. Extensive practice will boost your confidence, ensuring you don't miss a thing. Also, remember that pauses will help you sound more natural and professional. It will also help you craft a top-notch pitch deck to deliver the message more effectively. Plus, consider giving investors a copy of your pitch so they can carefully analyze all of the facts.
Final Thoughts
Like it or not, funding is essential to building a successful business from startup companies to big companies and future businesses. The good news is that making a great business idea pitch isn't a piece of cake, and it's not rocket science, either. It primarily requires you to put yourself in the investors' shoes and concisely present your reasons for business funding and investment opportunities. Even experts mention that so long as you're getting enough traction, the core aspects of your solid business plans are solid, and your company's validation is realistic, getting funds is relatively easy.
