Lessons for Making the Right Investment Pitch

It takes a lot of late nights, pitch revisions, email followups and rejections to finally receive the call from an investor. Even after the call, there will be an intensive questions to answer. How will you acquire your products? Are you the manufacturer? Do you assemble products using components provided by others? Do you purchase products from suppliers or wholesalers? If your business takes off, is a steady supply of products available?

Making the right pitch is the primary essential while making funds.When pitching, the Airbnb team immediately addressed some of the concerns that an investor could have with their business model. The second slide explains why someone would book with Airbnb and not their biggest competitor (the hotel industry) and reveals the gap in the market. The third slide communicates the how behind their product and in simple language highlights the benefits for both parties involved in a transaction.

Here is the template offered by Sequoia Capital:

1.     Problem

2.     Solution

3.     Why now?

4.     Market size

5.     Competition

6.     Product

7.     Business Model

8.     Team

9.     Board Advisors

10.  Financial

11.  Fundraising

User Acquisition Strategy

Understanding how to bring in more customers is a requisite. Founders can bring in a wide range of user acquisition strategy, start a mailing list, leverage social media. After a while, you might need to decide if you want to target lots of cheaply acquired users that you can make a little money from or a smaller amount of users that are going to spend more money. To find this out, you’ll have to do some testing on a specific platform.

Make a Pitch into a Story

Strike a magic fire conversation. Imagine yourself narrating a problem and creating a solution for the same. Your story should lead to your product being the logical conclusion of whatever problem you identify. As long as it’s compelling and concise, you’re set.

Laser-in

Save your more conventional slides for a supplemental deck that you can refer while questions arise organically in your post-pitch conversation. Stories thrive on tension. The worst movie ever made would have the protagonist fall in love during the credits, and we’d have to squirm our way through 90 minutes of bliss.

An exit strategy

If a firm does not want to sell off wholly, then they could recapitalize as an exit strategy rather. This would permit them to pay off to their existing set of investors, thus allowing them to get out from their investment, but would allow the organization to remain under its present ownership and thus carry on to function. The 3 most classic and basic exit strategies are:

1.    Develop the firm to a level that it will be taken over by a larger organization sometime in the future.

2.    Take the firm public with an initial public offering (IPO) of stock.

3.    The managers who wish to stay in the business take over the investors with replacement capital from other sources of investment or from the business’s profits.

Sell A Great Revenue Model

“Before they (investors) can judge whether you’ve built a good x, they have to understand what kind of x you’ve built. They will get very frustrated if instead of telling them what you do, you make them sit through some kind of preamble”, says Paul Graham, founder of YCombinator. Henceforth, clarity for revenue model, and every logistics is crucial for the investors during the time of the pitch. Regardless of the story you’ve decided to tell, it’s almost certainly going to include an explanation of what you actually do.

The Product or the Service

Not every slide can be a work of art. Include a generic temptable slide to add information that can’t be clearly articulated in one image or slide. Keep in mind that highly detailed or technical descriptions are not necessary and definitely not recommended.Depending on the nature of your business, your Products and Services section could be very long or relatively short. If your business is product-focused, you will want to spend more time describing those products.

Team Dynamic

A team of wildly enthusiastic members can definitely spark up the crowd. The team has a balanced skill set that made this a compelling investment to investors. Complementary skillsets between co-founders can bring great benefits to building the startup. Whereby, investors looking out to invest in startups with a great team. It is famously believed that investors invest in the person more than investing in the startup.

Customer Reviews

If the product is prevalent in the market, the founders may also include the reviews of the customers to show the benefits of the services. Great customers reviews are the seedlings of a great product. In every economy, buyers of similar purchase power tend to purchase similar products. Getting great customer reviews lead to getting new users for the product or the service.

Distribution Strategy Around Product

Founders cannot mention that the product is for the entire market. It always begins from the focal point and disperses towards it’s exterior ends of the market. Knowing where is the demographic of the target audience, customer behaviour, market outreach, the distribution of the product is strategised.