10 Tips for the perfect investment pitch

So you’ve got your idea all worked out; you’ve got the skills, the plan and the team to back you up. Now you need the money. Entrepreneur and angel investor, Dave McClure, has ten handy tips for building a presentation and pitch for Venture Capital money:

1. Elevator pitch

The elevator pitch should be short, simple, and memorable and answer the ‘what’, ‘how’ and ‘why’. “And remember to keep it free of jargon too”, says McClure. “So don’t be using technical context or industry-specific context unless you know that investor has that background”.

McClure also noted that ‘X for Y’ is a good approach for the elevator pitch, as long as they are pretty similar. “So for Slideshare, it might be ‘we’re the YouTube for PowerPoint presentations. Both of these are well known, so that’s a reasonable claim. But if the points of reference are too obscure, they might not get it”.

Whilst the notion of having fun might seem a bit difficult in the face of one or more money dragons, this is something McClure says you should aim for. “Fun is infectious. So try and enjoy yourself”.

2. Think problems first, then solutions

“A lot of the time people begin by saying what their solution is”, says McClure. “But I recommend that you talk more about what the problem is. This helps you establish emotional context with the person listening”.

So if the problem is a horribly broken wrist, McClure’s point is that now’s a good time to talk about pain relievers, wrist-guards…any number of solutions to the problem. Translated into a pitch situation involving investors, you should consider scenarios that will help you connect with the people you’re facing, which may involve doing a little research into their background. “Do they have kids, are they straight, gay, old, young”? asks McClure. “Is there a context that you can tap into and share with them?”

3. Solution: Sex, money or power?

Great products and companies do 1 of 3 things: Get you laid (Sex), get you paid (Money), get you made (Power). “How does your solution tap into the emotional, powerful, evolutionary needs that we as humans have?” asks McClure.

With that in mind, all good pitches should outline how it makes customers happy, how it’s better and different to existing products/services out there. And if it isn’t different, then change the context so that it is different to everything else.

Of course, all the talk in the world can’t beat a proper demo. This is the same whether you’re pitching for press coverage, or pushing for investment. “You need something that illustrates your solution”, says McClure. So what we’re talking about is live product demos, screenshots, videos and such things.

4. Market size

“Market size matters because most investors want to know that you’ve got a big business”, says McClure. “Bigger is generally better. There are two ways to think about market size – top down, which means someone else reported this market data – such as Forrester or Gartner. Or bottom up. This is the one I prefer. A number of users, a size of transaction, and frequency.”

Another way of doing this is if there is to look at the value of an industry in an offline capacity and compare it to its present online state. This would demonstrate both size and a gap in the market.

5. Business model

“The business model – AKA ‘how do you make money”, says McClure. “I’m a big fan of simple revenue models, typically direct models, either transactional or subscription. When you’re listing sources of revenue, I recommend you keep it simple and keep it to one or two. When you list a large number of sources, generally that tells me that you don’t know how you’re making money.”

Whilst McClure acknowledged that some investors may have a different viewpoint on this, it makes sense that listing 5 or 10 sources demonstrates a lack of clear focus on where the bucks will come from. “If you do have a bigger list, at least prioritize them by biggest first”, continued McClure…

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