Have you been spending sleepless nights conceptualizing your business idea? Or you have a billion-dollar idea but no money to execute it? Well then your entrepreneurial journey has just begun and you have successfully embarked on the first step. Investors are perpetually ready to fuel the jet engine of some great business ideas and the right one for you can truly elevate your business to the next level.
However, pitching your idea to investors is tricky and you may not know when it can get awry. Months of hard work and toil can go down the drain if you are not prepared well for the fundraising process. myHQ recently raised very successful funding from one of the most premium investors in the country and as a matter of fact, we have had quite an experience of pitching investors in the last year.
Here is a bit of my experience which I think will add value and help your generate valuable partnership while you go for your first investor meeting:
1. Prepare a Pitch Deck
Your pitch deck should categorically state the key aspects of your business and product. Everybody likes a document to go through while you talk. A document nicely presented shows the hard work and gives the impression that you are well prepared for the meeting. The first three slides must be brilliantly done to catch the attention of your potential investors. You may also include some visual graphics and images. Besides that, it also ensures if either side misses a point in the discussion, it’s there on the deck.
2. Narrate Your Story
When you pitch your idea to investors, you can narrate a story. Humans love stories, they inspire them. A great story will instantly connect you with potential investors and level up your game. When you narrate your story of how and why you started, it shows your passion. It shows whether you are willing to go through thick and thin of it. Startups will have more lows than highs in the initial stage and you need to show your passion and commitment towards your product.
Investors are generally not putting in money only for your idea but they also put money on people who will execute the idea. Talk about your different team members and their core competencies, how they form a MECE (mutually exclusive collectively exhaustive), their previous work experience, knowledge about the industry etc. The pedigree and the bond both are equally important.
Most investors have seen instances of founders fighting amongst themselves. Tell the investor for how long have you been working together. A strong history of working together is always helpful as it enables the investor to build trust in the team.
Pedigree of founders and team members also creates an impact. The IIT/IIM tags show you have achieved something in life. Not just these but say if you are a national level swimmer, a musician with 100K views on a video- it all shows your achievements and energy. The objective is to show you are ready to make an effort to achieve something you dearly want. You must show the desire and the investors will show you the money.
4. Competition / Industry Updates
Every business has competition, no matter how unique your services are. To crack a deal, before your first investor meeting, prepare a list of your competition and showcase how you are different from them. Also, prepare a roadmap projecting how you aim at handling the competition.
5. Market Size
Valuations are inflated – you are a company burning money right now in all likelihood (if you incorporate your salary). So they are investing in you capturing a huge market and actually justifying the slight premium in valuation they might be paying right now. They need to see a good, big upside of your business model.
6. Prepare a Financial Model
Expect a 10-minute discussion on this for sure. Your investor will be willing to put money only if you show them how your business idea will fetch them money. You must prepare a forecast quarterly financial model over the next one, three and five years before your investor meeting. You should also sketch out a monthly financial plan for the first eighteen months to offer a clear picture of your finance to your investor.
Explain your money-making strategies clearly to your potential investors. You must critically scrutinize your revenue model and should have a back plan. Being disruptive is not enough, you must show the investor how putting in funds in your business model will help him.
7. Know Your Investor
Do your homework before you go for any investor meeting. Do a thorough research before you pitch your idea to investors and understand his background. Know their style, companies they have invested in, their most successful bet and the biggest failure. You must know what makes them tick.
For this, you may also, browse your contact list and find relevant connects. Get to know more about the investor through connections. You can also take part in events where you connect and find networks. For example, an event like AMA with SAIF Partners or Founder’s Meet helps you find prospective connects and gel in with the cream.
All-in-all, be honest with your prospective investors. They look for integrity in the people they are backing up. It is advisable to do this homework before you go for an investor meeting to give yourself a good chance of raising funds from investors.
Thinking how to move next on this journey? Read this:
10 Most Active Angel Investors In India For Startups
6 Quick Steps To Set Up A Private Limited Company In India
Top 11 Startup Incubators In India Every Founder Should Know