Seeking finance? Kevin Coleman of management consultancy Alliantus takes a closer look at how to structure a pitch
Great businesspeople know that the key to success lies in fully understanding customers’ needs and desires and delivering the right solutions at a profit. In the same way, when pitching to potential investors you need to be clear about what they want to know about you and your business and provide the necessary information in a clear and concise way.
Angel investors or venture capitalists are looking for growth that is above the norm and they appreciate that the risk will be higher. Indeed, it increases the focus on risk management and explains the ‘grilling’ companies can get when talking to investors.
The overall risk is a combination of the product or service simply being unsuccessful and the potential for bad decisions made by the entrepreneur or company that has the investors’ money. It’s hardly surprising then that the market opportunity and the management team are always at the forefront of investors’ minds. As a pitching company, you need to show expertise, confidence and trustworthiness along with familiarity with the financials and market.
A typical presentation should have a structure like the one below. This provides a framework around which strong answers to relevant questions can be prepared. Assume you have around 20 minutes, and modify if necessary. But don’t make the classic mistake of doing all the talking. Listen to the responses and consider what is behind the questions.
1. Introduction Slide
Use your first side to summarise the content of your presentation. Number each section and outline your overall structure.
2. What’s the problem?
Use this slide to show the gap you have identified in the market and the market position today. Knowing your market includes having an understanding of the key players and the different channels to market. You also need to demonstrate that you know where the market will be heading in the future and how to stay one step ahead. How does your solution fill the gap?
3. Your solution
Why is what you do unique or better than others? Explain why you have the only product in its class that can solve the customers’ real problems. Where possible, back it up with your track record, sales history to real customers or competitive analysis defined by credible sources. Be specific about the product category, the target buyer and how you are distinct.
4. Competitive position
In this section you need to identify how the customer can solve the same problem in another way. For example, if you are selling chocolate bars your competitors aren’t just other chocolate or confectionery sellers but other snack foods too. What are the customers’ options and how do you compare? Good entrepreneurs show a detailed understanding of the competitive landscape from an insider’s perspective, so demonstrate this knowledge.
5. Your team
Investors see the team as critical to driving the business forward and making it a success. Demonstrate your record, industry knowledge and expertise. What is the vision and why can your team build a successful company? What about advisers or non-executives on your board – who are they and how does the board function? If you are the founder, are you ready to step aside and appoint a new CEO for the next phase of growth? This may be the hardest question to answer but may be one of the key questions, so be prepared.