2017-12-05 00:00:00 Investors English Secure funding for your startup or small business by evaluating your pitch from the perspective of the investor. https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2017/12/22101417/Entrepreneur-Evaluating-Pitch-Sound-Perspective.jpg Evaluating Your Pitch From the Investor’s Perspective

Evaluating Your Pitch From the Investor’s Perspective

4 min read

If your fundraising pitch isn’t answering the questions potential investors are asking themselves, you’re going to have a hard time securing funds. You’re trying to get someone to invest their money in your company, so it’s important that you’re transparent and informative right from the beginning. Don’t make the people who may fund your venture dig to find the answers they need. Create a pitch that addresses common concerns directly, and improve your presentation by envisioning it through the eyes of your audience. Here are some common questions investors are asking themselves as they absorb your pitch, as well as insight on how you can address these concerns.

How Will I Get Paid?

People may want to invest in your company because they believe in it, but don’t forget that they also want to make money. The first question the vast majority of investors ask themselves is, “How will I recover my initial investment plus a return?” Investors want to know if they’re going to receive a return from cash distributions, sell their appreciated shares later for profit, or a combination of both.

As you plan your business pitch, make sure you include a very clear outline of how your investors can expect to profit from their investments. Include when and how you plan to pay them, and make sure you have concrete facts to prove that your plan is realistic. For example, if you plan on providing cash flow returns, you should be able to prove that either the company is currently on track to meet necessary goals or that steps are being taken to make operational improvements and promote growth. If you plan on providing appreciation-based returns, you need to be able to prove that the company has legitimate value and expansion potential.

Is This Business Owner Qualified?

Whether you’re seeking startup financing or trying to expand an existing organization, investors are investing in you, not just your product, service, or brand. You need to show beyond a shadow of a doubt that you are the most capable and trustworthy option. Even if investors are fully convinced that your idea has potential, they’re not going to give you a cent unless they genuinely believe in you. Naturally, you should make sure that your pitch includes your accomplishments, experience, and skills. You should also go deeper, and try to help investors get to know the real you. Many investors end up making their final decisions based on gut instinct, so be confident, authentic, and honest. Be specific about what you bring to the table, and remain bold without coming off as arrogant. Don’t be surprised when investors ask personal questions unrelated to the business; they’re deciding if they want to invest in you.

How Is My Money Being Used?

Money may be the primary motivator for investors, but that doesn’t mean they’re not investing their hearts too, in addition to their time and attention. Even if the chances of a large return are high, many investors won’t lend money unless they’re satisfied with the way their money is being utilized. Make sure that your pitch clearly states exactly how the money is going to be spent, right down to the last penny. Investors aren’t paying your salary, so you can focus on being a creative genius. They’re giving you money with the expectation that it is going to be used for a specific purpose to advance the company in a particular way.

Does This Product/Service Have a Market?

Sometimes, even the best ideas simply don’t have a large enough audience. You may have grand plans to create your own demographic from the ground up, but you’re going to need investors who share your vision. The average investor is going to expect you to define your target demographic and create a customer profile. Investors want to understand the type of people who use the product or service, as well as the culture that surrounds it. Additionally, understanding the typical customer base helps investors determine if marketing strategies can offer long-term growth potential, or if the market simply isn’t there.

What Are the Downsides?

Investors are going to scrutinize every aspect of your business to try to sniff out current or potential problems. Don’t take it personally; it’s just common sense. Instead of trying to pass your company off as a flawless beacon of unwavering profitability, acknowledge its faults and explain them. Most investors have been around the block, and they understand that there are going to be kinks along the way. They would rather hear about your struggles and how you plan to overcome them than listen to a sugar-coated pitch. Explain the cons, but remind them of the pros too. Present feasible ideas for solutions, and explain how their investments make overcoming obstacles possible.

Do I Want This Person in My Life?

Investing in a company is almost always a personal endeavor. It’s a rare occasion when an investor cuts a check and then disappears until it’s time to collect. Investing in a business is creating a partnership, so it’s critical that the partners see eye-to-eye. Sometimes people just don’t form a connection, and that’s okay. Try not to be offended if someone doesn’t want to work with you simply because they feel like it’s not a good fit. As long as you’re genuine, honest, and friendly, you should be able to find someone who believes in you. Be persistent, and look at every pitch as an opportunity to learn and improve. If the first one doesn’t land, remember the questions that were asked, and have answers prepared for next time.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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