Management consultancy & finance

The Keys for Pitching to an Investor

Pitching is an important skill you will need to possess as an entrepreneur and luckily it is a skill that one can master. Pitching is in essence selling your idea to (impact) investors and strategic partners, with the aim that people believe in you and your idea and to get any type of support in return. This can be capital, network and/or business knowledge.

It is hard to pitch if you do not know what you are selling (or offering) to the investor or what the investor wants. Most investors' default position is always "no" because they hear a lot of ideas and they want to make sure they put their money and time in something worthwhile. A pitch is that opportunity to show that your idea is worthwhile and valuable to the investor and the world. You'll need to do your due diligence in crafting your pitch and presenting it. Here are tips to crafting your pitch:

1. Tell It as Your Story
Give out your pitch as a short story of roughly 5 minutes and own it. Tell the story from your perspective of how the business idea evolved and where it should go in the short and long term. Interested people want to know your dream and the path towards it, but keep it realistic.

2. Your Value Proposition
This is where you start telling your story. Begin by talking about your idea with how and why you came up with it. You expound the problem it solves and the value that it is adding to the different actors in the market. Remember: “you cannot solve all problems”! Focus on a maximum of 2 of the following aspects in existing markets:

  • Pricing Strategy: The sum of all financial and non-financial costs for the customer
  • Quality of Offering: The core benefits and quality that the product or service offers
  • Customer Process: The physical and non-physical interactions with clients
  • Brand Image: The awareness, beliefs, ideas and impressions about the brand

Note: The 4 aspects are highly connected, and you cannot exceed the market on all of them at the same time. Eg. “High quality” results in “High costs”; “Low customer process” results in “Low costs”. Hence, choose 2 of them as your competitive advantage.

3. The Sales
This is where you talk about the market that you are in and people you will be reaching out to. Who are your customers? Which segments are you targeting? Why will these customers buy from you? How will you grow and maintain your customer base? Is your market scalable in other regions and/or segments? These questions are all about stating who is the one benefitting from the idea and will be willing to pay for it.

4. Operations and Production
Only in this part the operations and production become interesting. How will you provide the previously stated market with your products or services? How do you make your product and control the needed quality? This is all about the process of making your product or service that you want to deliver for value.

5. Your Financials
This is a major part for the investor and strategic partners. It does not matter if your idea solves a problem but it cannot be a businessuntil it sells something. In this part, you talk about how much it takes to make your product or service, how much customers are willing to pay for the product and how much profit you would make from the product or service. Also pay particular attention to the gross margins here. Above all, be realistic in your assumptions. You end with the amount of capital you are asking for at this point.

6. Prepare for a Q&A
Your audience will always have questions no matter how flawless your pitch seems. Make sure you know your idea back and forth, so you are prepared to answer any question raised. Mostly your audience will poke holes in your story mainly on the market of your product and the financials in regards to capital and also the margins, it is therefore important to know your audience in preparation for the questions. Regardless, just anticipate!!

Key take-aways:

  • Tell your personal story
  • Try not to solve all the problems, but rather focus on one
  • Be confident, ready and prepared to back up your story.

All the best as you craft your pitches!!