How to Pitch Your Business Idea to Potential Investors
After you've drawn up your business idea and crafted your business plan, you need funding to turn your entrepreneurial dream into a reality. When your ability to secure funds comes down to a 10-to-20-minute pitch to potential investors, it's easy to feel nervous. It's a pressure-packed moment, and you need to be at your best.
So how can you erase your anxiety and impress potential investors?
Business News Daily spoke with a handful of experts, including a former participant on ABC's "Shark Tank," about how to nail a pitch to potential investors.
1. Tell a story.
A common topic among experts was the need to be personable and create a narrative. While facts and figures go a long way, it's important to use those numbers to tell a meaningful story. Framing your business idea as a story also helps you explain your passion for your business.
"Give investors a reason to be excited about working with you so they will buy into your business plan with certainty," said Michael Simonetta, CEO of Kibii. "Show them why you're working toward your goal, not just how. Tell them why you're motivated to solve a problem and you'll have a better chance of winning them over."
Erin Beck, the founder and CEO of Wana Family Network, believes storytelling sets her presentations apart from those of her peers. Beck founded an online network for family-to-family babysitting exchange, and she says she frequently speaks with potential investors who aren't parents. With her audience lacking an emotional connection to her concept, she creates emotional appeal with an engaging pitch.
"Make the story more important than what you're selling, because once the market numbers speak for themselves, they don't connect with you for what you're doing, but why you're doing it,” said Beck, who placed second at the Glendale Tech Week 2017 Pitchfest.
2. Define the problem.
You might be head over heels about your business concept. Your prototypes for the product are all stellar and you're thrilled about your business plan. Unfortunately, if your product doesn't solve a problem or fill a need for customers, investors aren't going to share your excitement.
"Start off with the problem," said Donna Griffit, a corporate storyteller for startups. "Do you understand the need that's in the market today? Do you have the facts to back that up?"
It is critical that you can answer these questions when heading into a meeting with investors. Thorough market research along with customer surveys and interviews can show if your product is needed. If you lack the data to prove that your idea addresses a problem, it's difficult to engage the audience and even more difficult to get funding from investors.
"I've seen startups try to take shortcuts on this and end up with glazed-over eyes in their audience," Griffit said.
3. Practice as much as you can.
The weeks and days leading up to your pitch to potential investors is no time to be shy. Give your pitch to friends, family, neighbors or anyone else willing to listen. Not only does practicing help take the nerves off, but it also allows you to learn where you can improve your presentation.
"You've likely told your origin story dozens of times and have it down," said David Ciccarelli, the founder and CEO of Voices.com. "Now, get ready to tell it possibly hundreds more. During our capital raise, I told our founding story 200 times. While it's old news to you, it's new for the investor, so keep it upbeat and tell it with enthusiasm."
Don't hesitate to pitch to multiple potential investors, either. Ciccarelli went with his team to cities across the country and meet with a few investors in each city. This gave his group practice and put his business idea in front of more eyes.
Once you've gotten comfortable with your pitch, start focusing on the little details.
"Use the privacy of your home or office to talk through your pitch and work on making it flow well," Ciccarelli said. "Don't be afraid to record your pitch, both audio and video, and review it with a critical eye to make sure you nail every sentence."
Demonstrating proper body language and tightening up speaking mistakes can be the difference between successful and unsuccessful pitches. When you go over the minor details, Ciccarelli recommends planning your pauses. By doing this, you can make a perfectly rehearsed speech sound spontaneous.
"To make your pitch sound more natural, plan your dramatic pauses out," he said. "The pause gives the impression that you're coming up with the material on the fly. Plus, you'll have a moment to collect your thoughts for what you're going to say next."
4. Be realistic.
While practicing the pitch is a must, very rarely will your pitch go exactly as planned. Having realistic expectations will help when you're preparing. Erika Ashley, a social media influencer marketing consultant and TEDx speaker, says it's important to practice for a realistic presentation experience.
"We often hear 'practice your pitch' as common advice, but most investors will stop you several times during your presentation to ask for clarity or to offer their input," Ashley said. "This can throw a presenter off their game in a presentation easily, as they've practiced their presentation as a smooth, uninterrupted flow. Practicing with interruptions is much more true to life."
In addition to expecting disruptions, it's important to view the presentation from the audience's perspective. Brian Lim, a serial entrepreneur who owns three e-commerce businesses (EmazingLights, iHeartRaves and INTO THE AM) that collectively earn more than $20 million annually, pitched one of his businesses on Shark Tank in 2015. He received offers from all five judges on the show and made a deal for with Mark Cuban and Daymond John. Lim credits his success to proof of concept: He entered the show with $13 million in sales to date, and his ability to view his business from a different vantage point.
"I had to imagine myself as an investor and check off boxes that I would want to see if I were going to invest money into a company," Lim said.
Bennett is a B2B editorial assistant based in New York City. He graduated from James Madison University in 2018 with a degree in business management. During his time in Harrisonburg he worked extensively with The Breeze, JMU’s student-run newspaper. Bennett also worked at the Shenandoah Valley SBDC, where he helped small businesses with a variety of needs ranging from social media marketing to business plan writing. Contact him through email or Twitter.