As the competition for investment capital continues to grow, and your search for funding intensifies, you are faced with the need to put together a strong and compelling pitch that will convince investors to fund your start-up.
To improve your chance of winning investors for your start-up, here are 10 questions, each tailored to your idea that your pitch must answer:
- What Is Your Vision Of The Business? Tell your target investors why you are passionate about the business you plan to start. Tell them why the business matters, and why they should be part of it.
Help your investors to envision the outcome you wish to create. Give them a sense of what the business will be when it succeeds. The alignment of your investors with your vision will greatly influence the decision to dream your dream with you.
- What Problem Is Your Start-Up Planning To Solve? Identify the problem that your start-up will address. The presence of a pain point, among a known audience, is needed to create a customer base, and sustain your business.
Validate the existence of this pain and this audience. Explain how this pain has been addressed in the past. If it is currently being addressed, point to existing solutions or a demand that is not being met, and sign-post how you plan to compete in this market.
- What Is Your Unique Solution? Having demonstrated the existence of a problem and a gap in the market, present a solution that your potential customers will adjudge to be compelling and worthy of their consideration against other options.
The presentation of your solution should show how it will resolve the concerns of potential customers. It should also point out how your solution will be an improvement on current solutions, and thereby create a unique offering that is not available in today’s market.
- Do You See A Market Opportunity? Present a clear description of your target customer. Show that there are others like him/her who form a sizeable market that will be willing and able to buy your product or service. Estimate the total market size, and the share of the under-served market that you aspire to serve.
Indicate how ripe and accessible the market is for your product or service by addressing the channels you will use to reach your customers.
- Who Are Your Competitors, And How Will You Outmanoeuvre Them? Explain how the target market has evolved over the years. Recap the stories of players who have entered and exited the market. Explain why they failed.
Outline why you think the time is right for your start-up to enter the market, and why you think it will beat the competition. Share your knowledge of your potential competitors, their strengths, and weaknesses. Say how you will battle entrenched competition or outpace other start-ups.
Tell how your unique solution will offer benefit(s) that the competition is not providing and, by so doing, differentiate your start-up in the marketplace.
- What Will Your Product Or Service Add To The Market, And How Will It Grow?
Articulate the value and features of your product or service, including how you plan to grow the start-up.
Layout your plan to create opportunities for growth, by following up your initial offer with similar or different products or services, with a view to creating new revenue streams and extending your brand.
- What Is Your Business Model? Illustrate the economics of the business. Will the start-up you are pitching be a thriving and profitable business?
Show how the start-up will achieve an operating profit. Share your assumptions on costs and prices as they are projected to impact your economic value chain.
These are projections at this point. Fluency of the numbers and their sensitivity to key assumptions are critical to inspiring confidence in your pitch.
Every investor wants to know how much spend will be required in order to expect to make how much money!
- Who Is On The Team, And Who Is Leading The Charge? List and introduce the founders and senior managers. Include board members and advisers, if applicable.
Investors want to know if the start-up has, or can assemble, a team to make the enterprise a success. They also want to know the corporate governance structure of the company, and who will head the team.
- What Is The Financial Plan? Projected Profit and Loss Statement, Balance Sheet, and Cash Flow Analysis.
Provide historical and forward-looking projections, complete with sources and uses of capital, future capital requirements, and future financing plans.
Forecast for at least three years.
The financial plan is the foundation of your pitch. It tells how you think about your start-up, and signals whether investors should have confidence in you and your business.
- Is This An Investment Opportunity? Outline the funding history of the start-up: Investors, amounts invested, percentage ownership, present valuations, current capitalisation and proposed structure of the deal.
The bottom line of your pitch is to convince your potential investor that the business is likely to succeed, and he or she is going to make money. Get your potential investor to pull out his or her cheque book, and buy into your dream.
Are you preparing to pitch for your start-up? Do you need help to prepare for it? Let’s work with you. Visit the SME Clinic at https://smefinance.org/sme-clinic/