The biggest hurdle in the race to obtain funding for your start-up is the first meeting with potential investors. Successful entrepreneurs agree that receiving the initial capital from an investment firm, angel investor or venture capitalist, gives your business broader appeal to other investors. Preparing for this first meeting requires more than just creating a great pitch deck. You need to find the right investors for your company, master the material in your pitch, make sure you’re getting your message across and then practice the pitch in front of audiences.
Steps to Preparing Your Pitch
1) Gain exposure to place yourself in the entrepreneur/investor ecosystem.
One of women’s unique strengths is their ability to network and weave relationships together. Use this ability to get your name and your credentials out into the entrepreneurial world. “I very purposefully set out to build my network. I literally decided one day that I was going to attend a hundred events. I was going to start leaving a comment every day on one of the top venture capital blogs, and twenty-six hundred comments later, and a whole lot of events later, pretty much everyone knew who I was. It was all about giving. It was never about taking,” Tereza Nemessanyi, CEO and Co-Founder, Honestly Now.
2) Create the Perfect Pitch
- Be conservative about your earnings potential. Create a very clear business plan with a very clear value proposition, so that the people on the other side of the table will understand what you’re trying to accomplish and when. Then try to be fiscally conservative. Often investors will look at your projected earnings and cut them in half. Even if you have the market data and a limited market share capture, investors might discount these numbers because they don’t understand them. Be prepared to back up and explain any projections with real numbers.
- On the flip side, don’t be too conservative when selling your vision. People often get so fixated on demonstrating conservative plan and on not overselling their vision that they pitch something too small. To balance being conservative and still exciting, pitch your idea by describing what you absolutely know how to do and then add other things that could potentially be done to make your vision really big.
- Understand how to pitch the big vision. Be able to piece out what you don’t think you know and where you think the real risk in the business is. Then discuss how you are going to address your limitations and tackle eliminating or at least reducing the risk.
3) Practice Your Pitch.
Find an expert investor that is not interested in investing in your company but willing to work with you on your pitch. Approach him or her without the aim of receiving money, only the goal of getting advice. If you take money off the table, the investor may be more willing to mentor and work with you. This type of relationship is invaluable in aiding you in crafting your pitch. You may develop what you think is a perfect pitch. Then after test driving it, you could discover that you have failed to get your message across. Your vision and business plan may be solid, but you’re not stating your case in an understandable format. By working with someone with a firm grasp of the investment world, you get immediate feedback about their interpretation of your words. Then they can help you craft your pitch so that other investors will get exactly what you are trying to say.
4) Keep going back.
Think of ‘no’ as ‘not right now.’ Persistence is the hallmark of an entrepreneur. Sometimes the person whom you speak with today may say no now but then will invest in you three years from now. The investment community is a network of people. Make sure you build a relationship with them. Help them get to know your reputation and your track record. Keep up with the relationships regardless of their current interest in investing with you.
After pitching your vision to an investor, don’t be discouraged if the investor declines to offer funding. Both entrepreneurs and investors describe the process of finding and offering funding much like dating. Not only does the prospect have to provide a strong case for success, but the individuals need to click. Regardless of your preparation, your business plan and your pitch, there will be some investors who just don’t like your idea and don’t want to work with you. But, there will also be those who do “fall in love” with you and your venture. Those are the ones who will invest in your business and turn into valuable assets for your company and your future.