So you’ve started your new company, congrats! Getting to this point means you have conquered numerous challenges and gained traction on the startup journey. In fact, the light at the end of the tunnel has grown so bright, you think you’re ready to take the next big step: pitch your startup to investors. Good work! But are you sure you’re ready? Here’s a few questions to consider before taking that step.
1. How much will you ask for?
Entrepreneurs get stuck on this question, and sometimes go into their pitch with a wait and see approach. There is no one-size fits all response, but the one thing every mentor, adviser, or seasoned entrepreneur will tell you is ‘do your homework.’ Determining how much money you need to keep going, and more importantly to grow, is vital to pitching your business idea. Ill-informed estimations, assumptions, and maybe’s are detrimental to a successful pitch. If you’re not good with numbers, that’s okay, but it’s time to get help. A bookkeeper, accountant, or tax preparer offer services worth their weight in gold, as is good bookkeeping software. Reach out for the help you need before you consider pitching your business.
2. Can you describe your business in 50 words or less?
Seem impossible? Then you haven’t thought about it hard enough. Your brand positioning statement is the heart and soul of what your business is all about. If you don’t have it down to 50 tight, clear, and compelling words, building an elevator pitch, let alone a pitch deck, could be a bigger and more complicated task than it needs to be. In fact, there are those who think you should have your branding position down to 25 words? Can you do it? Describe your business in 100, then 50, then 25 words. Give it a try!
3. WHO are you?
Being able to accurately and boastfully describe WHO you are, not just what you do or make, is crucial to persuading an investor to fund you. Investors want to know what makes you tick, what brought you to the problem that your company solves, and how did you find the passion to develop this solution? You must be prepared to clearly explain what’s between all those bullet points and lists on your resume or LinkedIn profile. Knowing who you are will help investors gain confidence in what you do, and predict whether they think you’ll succeed.
4. Do you have stage fright?
You may have the best business idea in the world, and you may be the slickest financial whiz to ever hit Quickbooks, but if you can’t speak comfortably and confidently in front of a crowd, it’s time to face the fear. Introversion and stage fright are not uncommon, in fact, Toastmasters and similar groups exist for people just like you. Maybe you talk too fast, can’t project your voice, murmur, stammer, scream, or shake – whatever it is, conquer your weakness and hone the skill of public speaking before going in front of an investor.
5. Finally, who wants to invest in you?
When seeking money for your business, there are several different investment resources to choose. They vary in what they offer, what they want in return, and how you will approach them. Here are a few basics about business investors that might get you started on a deeper search.
Banks: Many banks offer a variety of micro and small and business loans ($1K-$20K), and some programs are managed and backed directly by the Small Business Association. Paying a visit to your own bank, where you already have a relationship, is highly advised, and, more importantly, be sure to have a solid business plan prepared before you speak to your banker.
Angel Investors: These investors, often entrepreneurs themselves, and usually affluent, want to help other entrepreneurs in exchange for ownership equity. Their investments may range from $25K to $100K and are usually considered high risk. To find the angel you want to persuade, reach out to personal and business contacts, and talk to bankers, lawyers, or look online. You will certainly need a solid pitch prepared and practiced.
Venture Capitalists: These investors are available only when you have a successful track record, a solid business plan, and are looking for LOTS of money (think in the millions). Again, these investors will expect ownership equity, and profit. They won’t meet with you until they’re certain that a strong return on investment is more than a prayer or a promise. And your chance of getting funding from a VC? According to recent studies, it’s probably about 0.0005 percent.
Government Grants: If your business is in high tech, innovation, or scientific research, you might consider government funding available in the way of SBIR/STTR grants. These are certainly worth investigating. Remember, as with all things federal, the paperwork and reporting require a hefty time investment, but the rewards can be huge.
Family/Friends: Don’t forget the most convenient support may be right at your dinner table. Reaching out to those who already know and trust you is a reasonable option for many entrepreneurs. While there are big risks in putting this kind of pressure on personal relationships, if handled correctly (with legal advisement), it might be worth a discussion over a family meal.
These questions are just a glimpse into the myriad of considerations involved in preparing to pitch your business. Just about every entrepreneur, new or expert, will tell you, if you don’t have to go it alone, don’t. Visiting your local business incubator, SBDC, or other community startup programs, can be vital to your pitching success. You might also consider pitch training, like NACET’s Pitch Power, designed for entrepreneurs, just like you.
Wherever you are on the entrepreneur journey, doing the homework makes advancing to the next stage easier, and more profitable.