We share our experience which we here at Exagent Group gathered over the years. Article by Orsolya Jakots, Brand Manager.
As a start-up, it can be challenging to thoroughly introduce your business to investors. In some cases, there are only 10 minutes to show your company’s worth and convince investors. It is essential to build up your pitch effectively to achieve secure funding from potential investors. To assure you have a rock-solid pitch you might need some elements like visual communication tools, or a pitch deck.
The objective is to put your main idea in the centre and arrange related subtopics around that core idea. Therefore, you can help your investor to more accurately understand your goal.
Based on our taste and experience we created a step-by-step guide in order to give a helping hand to young, investment seeking start-up companies. Here are some tips on how to shape your pitch to make it more successful.
The objective here is to have an apparent and appealing presentation put together that makes investors excited about your business. There are many tools that can help your team to prepare a pitch deck such as Powerpoint as a starter where you can find over 50 different industry pitch decks or even Canva for the sake of change of scenery and create something innovative.
The aim is to create a professional-looking presentation, you can also insert your company logo or add your brand’s colour scheme to the design.
It is beneficial to begin your presentation with a compelling story. You should align your story with the problem that you want to solve in the marketplace. It is even better if your story is relevant for your investor. In order to get to know your audience, you can do research previously in your investor’s history. As an example, what industries they support to invest in, which startups they have already invested in? With this research, you can have a sense of what they care about and tailor your pitch deck story to them.
What is the problem that your future clients are facing and how can you solve them? There are so many products and services thrown on the market, you need to stand out with your solution and explain how you can fill in those gaps that your clients are “suffering from”.
It is essential you keep this part short and clear, you would not want to confuse your investors with useless information. If your investors are not familiar with your industry’s buzzwords, try to avoid them in your presentation. Keep it as simple as possible.
It would be foolish to assume that everyone is your target market. It may be some day, but let’s stay realistic in the first place. You must complete a thorough research and understand the market where your product or service can be satisfying and booming. If you fail to find that specific gap in the market that you are fabricating your company’s products for, that can lead to a misalignment on those audiences’ needs. In worse cases it can waste time and resources or alienate an audience.
Therefore, it is suggested to have a breakdown of your company’s TAM (Total Available Market), SAM (Servicable Available Market) and SOM (Share Of Market). Using these datas and formulas can help to determine actual numbers of your market analysis and understand your target market better.
It is one of the most essential slides that investors give attention to. How will you make money? What is your revenue model? Is it Advertising, Freemium, Licensing, Markup, Production or perhaps Subscription Model? Try to scout between the options and determine which revenue model could be more fitting to your business.
You might want to build some credibility and showcase some of your references or tractions you have made. This is the part where you impress your investors with some of your early milestones such as contracts, key hires or product launches.
On the contrary, do not get over your head, try to establish a future vision section where you concentrate on the “where the company is heading” part. Show them a roadmap of the following steps and additional milestones, even mention how funding would help to achieve them.
In this section, you show your investors what your business would look like in action. How will you reach customers? How much would that cost? What is your sales cycle strategy? Entrepreneurs tend to give less credits for this part, however it is also an important detail that interests investors. You should calculate your customer acquisition costs (CAC) to determine how much money your company spends to get new customers. It is good to mention communication channel options, advertising platforms that you use to reach potential customers.
Investors are interested to know if you have the right team to implement your business plan into action properly. It is advised to show your team’s experience and qualification to ensure they are the right people to be part of the company.
Demonstrate the projections in revenue over the next three to five years. It is vital to back up all your information with not only assumptions but facts and numbers as well. Give clear and relevant information to your investors, and try not to over explain your numbers and calculations. If investors would like to hear and know more, be well prepared and add extra information slides at the end of your pitch deck.
First and most importantly, who are your competitors? Secondly, why are you so different from those competitors? One of the great options to showcase it, is a Competitive Matrix Format. List your competitors down on the left side of the figure and add features and benefits on the top. Then place check marks on each lane under each category where it is applicable - do they have that feature/extra? In order to show your competitive advantage it is a good point if your company has all the checkmarks and is better in most features than your competitors.
State how much money has already been invested in your business. Who invested in it? What are the ownership percentages? State clearly as well how much more money you will need to step up your game and define transparently what that would be. Communicate what investment you seek, what your expectations would be and remind everyone at this point of the presentation that your management team is fully capable of handling the capital responsibly for innovation and growth.
Adding a Vision slide can really add value to your pitch and bring an even greater first impression to the investors. What is your company’s long-term vision and plan? What would you like to construct and build up on the long run? By clarifying these perspectives in front of your investors, your conversion of receiving a successful investment might be better and make a deeper impression in your audience.
Julia Sohajda, co-founder of Vespucci Partners Venture Capital Fund, who has just been selected by Forbes for the 30u30 list, confirmed to our question that outlining the vision will allow the investor to see the great opportunities and potential of the business. The investors can really “fall in love” with this approach.
Most investors would like to know your exit strategy. Make sure you have done some due diligence and show why it would still be profitable in 3, 5 or even 10 years. There are many exit strategies you can choose from, take for instance M&A deals, MBO, Liquidation or IPO. Is there a possibility that an individual will buy your company’s share? Will another company’s management team purchase your assets and operations?
An exit strategy is a vital of importance to have. In case the business is not successful, an exit strategy enables the entrepreneur to limit losses. Investors would normally want to know your strategy on this topic as well.
There is always a possibility to improve. Listen to the feedback you receive, whether it is positive or negative and refine your pitch deck or business model. There is a chance you will schedule a next meeting or receive funding or even be rejected. Any of these outcomes give you a new perspective and an opportunity to improve.
It is even greater if one of the team members can make notes during the pitch so you can evaluate your presentation afterwards. What were the parts that lead to negative impressions? Which parts of your presentations were appreciated? It can be reflective to hold a session with your team afterwards. It is a great learning experience that you can implement to your professional life in the future.