The best thing you can do to nail an investor pitch is to learn how the process works and be prepared. It’s sort of a Catch-22, because you don’t know what to expect until you’ve tried it a few times, but you can minimize missteps by learning from the advice (and mistakes) of others.
In a recent webinar, serial entrepreneur Caroline Cummings answered some commonly-asked questions on how to pitch and get funded. You can read her responses below, and if you have a question we missed we’d love to hear from you in the comments section.
Q: I only have 3 minutes to give the first pitch—what should I concentrate on?
A: Just focus on the market need, your business model, your team, what you’ve accomplished to date that is relevant to the investment, and your funding needs. The LivePlan Pitch page provides a great overview—so be sure to email them the link to your LivePlan Pitch before your formal pitch to give them an idea of what you’re pitching.
Q: When is the best moment for a pitch?
A: The best moment for a Pitch is anytime you have the attention of someone that wants to know more about your business. You never know who will end up being an investor, partner, or referral to the right person. Caroline Cummings recently authored an eBook about the different types of investor pitches and how to be prepared.
Q: When and how should you discuss investor incentives (perks, % of revenue, etc)?
A: This depends on the type of investment and the type of investor. Most sophisticated investors will already have terms they typically prefer in a deal, but they should be open to discussion. I recommend speaking with the founders of other companies the investors have invested in to see what kinds of perks they provided (if they are willing to share). There are also some standard term sheets you can reference to see what’s already out there. Here is a Quoro discussion on this topic: http://www.quora.com/What-are-examples-of-good-startup-term-sheets
Q: At what stage would you recommend we share a plan with a potential investor? Would you send the pitch document first and then share the full plan later if they are keen?
A: We recommend following whatever guidelines each investor group suggests. If you’re dealing with individual investors then you have much more flexibility in how you pitch your business. There is no exact science to raising investment capital, but there are definitely guidelines to follow (as I shared in my “How to Pitch and Get Funded” webinar). That said, the LivePlan Pitch page is a great initial document to share since it provides a nice high-level overview of your business model and market opportunity.
Q: Is a pitch similar to a case statement?
A: A case statement is typically a core document when fundraising in the non-profit sector, so it’s similar in that you should share all of the items found on the LivePlan Pitch page with your donors. We have several non-profits who share the LivePlan Pitch with their donors and volunteers, and share the Dashboard feature with their board members. Every 501 (c) 3 needs to have their board approve an annual budget, and LivePlan is a great tool to facilitate this. You can grant guest access to all board members and they can post comments in the “”Budget”” section of your Plan.
Q: My business has a non-profit mission. How do you pitch a social service business? Is this model one for angel funders? My company is a LadiesWhoLaunch.com for women who have been touched by domestic abuse.
A: Your business is considered a social venture—which can be a for-profit or a non-profit. Your mission has a social component to it, but it will still have all of the same needs as most businesses (i.e. determining your business model, your target markets, developing a budget, revenue forecast, how you will make money, hire people, etc.). You pitch this business just as you would any other mission, but your story will be much more compelling. There are more and more investors seeking social ventures to back. Social Venture Partners is a good resource: http://www.socialventurepartners.org/
Q: Where are some good places to look for investors & how do we look for appropriate investors for my business?
A: Creating an account on Gust is a good place to start if you’re seeking angel investment. Most angel investors like to invest within 60 miles of their home base, but VCs don’t typically have a geographic barrier. It also depends on what type of business you are, as some investor groups only invest in certain industries. I recommend searching online for “angel investing in [your city] city.” The site thefunded.com also has a great search tool for finding different types of ways to fund your business.
Q: Is it possible to get funded even if your credit has been damaged due to the down economy?
A: Investors typically do not conduct personal credit checks. Some do, but most do not. It also depends on how much money you are seeking.
Q: Please define a pitch deck and when/how it’s used. And how does it differ from your Pitch page or your Executive Summary page?
A: A pitch deck is slides you create and deliver via a tool like PowerPoint or Keynote. It’s best to use a pitch deck when on stage, or if front of a larger group when delivering your business pitch. It differs from the Pitch page in LivePlan in that you’re just breaking it up into a bunch of slides, as opposed to presenting it all on one page. Guy Kawasaki’s 10/20/30 Rule of PowerPoint is a great resource.
Q: Is the pitch created first? What order should I follow? Complete plan first and create pitch based on plan or vice-versa?
A: Our philosophy is “pitch first, plan second,” but in reality, by completing your pitch, you’re building your business plan. The parts of the LivePlan Pitch and the Plan that integrate are currently the financials and the milestones.
Did we miss your question? Please let us know in the Comments Section.