How to win over investors with a stellar start-up ...
How to win over investors with a stellar start-up pitch
Whether you’re looking to get the public to back you, or you want to catch the attention of private investors, if your pitch doesn’t sing then you won’t win.
No matter how many times you pitch, dealing with investors can still be a daunting experience. The only thing you can do is present a stellar pitch that’s going to leave investors in no doubt that your small business is the one they need to get behind.
Richard Reed, co-founder of Innocent Drink and JamJarTo help you understand what makes a solid investment pitch, we spoke to Richard, who, as well as having pitched to investors as co-founder of Innocent Drinks, now spends his time investing in businesses as the co-founder of JamJar Investments.
Katies Massie-Taylor and Sarah Hesz founders of MushWe also spoke to Katie Massie-Taylor and Sarah Hesz, founders of Mush, an app that helps mums to chat and meet up with like-minded mums with children of the same age. They told us what it is like to seek finance in the UK today, having raised £250,000 in seed funding and closed a £920,000 Crowdcube campaign at 142% of their target last year.
Below, we share some of their top tips to create a stellar investment pitch:
Show the investors the great idea, and have credibility
It’s amazing how many people don’t showcase the product during their pitch says Richard: “Do take the product to the investor meeting and get it out on the table, or if it’s a website make sure the laptop’s there and you’re showing [the investor] it.
“In the majority of pitches I sit through, no one shows me the product or service that they’re talking about! And after a while I say: ‘Shall we have a look at it?’, and then they get it out of the bag.”
Even if you don’t have a product or prototype to showcase to investors, you should be able to show them that your business idea is credible, like Sarah and Katie did for Mush – an app which connects mums in the local community.
Sarah explains that in the early days of fundraising for Mush, all they had “was essentially a PowerPoint presentation.
“A lot of people said that we would never be able to raise money pre-product, but we were both giving up our jobs and we didn’t have loads of money to build an app by ourselves, so we had to raise money that early on. It gave us a lot of discipline in what we were doing.”
Mush used crowdfunding to secure investment at the early stages. Crowdfunding is when entrepreneurs attract a ‘crowd’ of people – each of whom takes a small stake in a business idea, by contributing towards a funding target, usually via the internet.
To help their crowdfunding round gain momentum, Katie reveals that the duo marketed in their local area using traditional advertising tactics:
“We ran a really local, cheap initial test which consisted of a website where mums could put up a profile and start messaging each other, which I think cost us £10 a month, and within three weeks we had a couple of hundred mums signed up to it. We advertised it by putting flyers up in the local playgrounds.
“That site interest was enough for investors to understand that there was:
A) A need for the business
B) A good understanding of marketing to attract 200 people
“There are things that you can do on the cheap to prove your business idea is not to be dismissed.”
Show investors you’ve done your research
Investors will want to know that your idea is going to appeal to consumers and make money. What’s the best way to do that? Research – and lots of it.
Katie explains that undertaking market research helped sell Mush to investors and highlight a gap in the market:
“We did loads of research so we could tell investors that 80% of new mums felt lonely - proving the need and the problem. When you’re pitching for finance, people want to know how you’re going to be able to make money and you need to have research that supports that.”
Project confidence to investors (even if you’re not all that confident)
You don’t have to have confidence to be confident. Projecting a self-assured image will engage and appeal to potential investors.
Richard explains: “Investors like to see that you’ve got a mission for your business that encapsulates a really courageous goal.
“We invested in a business recently where the guy sat down and said, “our vision is to be the biggest consumer brand in the world of death.” You sit forward as you haven’t heard it before. That sort of statement is sharp, it’s edgy, it’s big, it’s bold.”
Katie agrees with Richard and says that you should display confidence, even when you’re nervous: “It’s all about perception. The investor will like you if you know what you’re talking about, you’re decisive, and if you’ve got faith in yourself.
“Early on, we weren’t putting ourselves forward like that to investors as we were a bit unsure, but since then, we’ve completely changed. We know our business works and, as an investor, if you don’t like the way we’re doing it then you’re not the right investor for us.”
Remember the investor should also be pitching to you
“Having got through the door to investors, you’re in a position of power so you should start thinking more in terms of: ‘we’re interviewing you for this investment as well’, explains Katie.
“I think if you can start off with that mindset, then you’ll be blessed with confidence.”
Have your strongest people involved in the investment pitch – and that includes the founder
They say you only get one chance to make a first impression, so have your best people up front – for your benefit and an investor’s.
Reflecting on the pitches he’s received, Richard remembers a time when a business failed to follow this advice: “We passed on a business because the chief executive and the founder didn’t come to the meeting. The people that came were fine, but they didn’t have that founder drive.
“Founders tend to be the people that are that bit more energetic. So always put your best team on the field.”
Lastly, learn what the investor wants to hear and emphasise this when pitching
Having been new to the experience of pitching to investors for Mush, Sarah says she and Katie soon figured out what to do - after some trial and error:
“You’ve just got to roll up your sleeves and get on with it, and you learn pretty quickly doing it that way.
“For us, we worked out what investors wanted to hear and what they were interested in; this turned out to be a lot more about our personal story and how we came up with the idea. The investors were more interested in us than what the product was going to look like.
“Sometimes it felt like we weren’t taken as seriously as we could have been in those early investor meetings, as if it was just a hobby project for us as mums of small kids.
“But, we quickly worked out where our business challenges were going to lie, and learnt from each meeting to eventually know the best way to successfully sell our idea to investors”.
Interviews were conducted as part of our Plusnet Pioneers programme, an exciting content series to help small businesses grow and reach their potential. We’ll be sharing more useful tips so please visit our Plusnet Pioneers section.